Trump University’s Checkered Past Haunts Trump

NY TIMES

The now-defunct Trump University, the subject of one of Marco Rubio’s attacks on Donald J. Trump at the Republican presidential debate Thursday night, was not a real university at all but a series of seminars held in hotels across the country that promised to share Mr. Trump’s real estate investing acumen with students. It is still embroiled in lawsuits accusing it of misrepresentation.

Those who ultimately purchased premium packages paid as much as $35,000 for the privilege of additional training, called mentorships and apprenticeships.

“Seventy-six percent of the world’s millionaires made their fortunes in real estate,” Mr. Trump said in an email marketing blast sent to tens of thousands of potential customers. “Now it’s your turn. My father did it, I did it, and now I’m ready to teach you how to do it.”

As many as 7,000 people across the country bought the sales pitch, spending an estimated $40 million. Both the State of New York and many of the students are now suing Mr. Trump for misrepresentation. Three cases are pending: one in New York brought by the attorney general and two in California, certified as class actions.

Defending the venture at the debate, Mr. Trump said, “They actually did a very good job, and I’ve won most of the lawsuits.” The remark came after Mr. Rubio accused Trump University of being a fake school.

“There are people that borrowed $36,000 to go to Trump University, and they’re suing him now,” Mr. Rubio said. “And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump.”

In fact, the cases against Mr. Trump have not been resolved. One of those that remains pending was filed in 2013 by the New York State attorney general, Eric T. Schneiderman. It accuses Trump University of running a “bait and switch” scheme and said widely distributed advertisements for the program were replete with false claims.

A.G. Schneiderman Sues Donald Trump, Trump University & Michael Sexton For Defrauding Consumers Out Of $40 Million With Sham "University"

One ad published at least 170 times across the country in 2009, according to Mr. Schneiderman’s office, promised that students would “learn from Donald Trump’s handpicked instructors, and that participants would have access to Trump’s real estate ‘secrets.’ ”

But an investigation by Mr. Schneiderman’s office found that Mr. Trump had little to do with picking instructors at the seminars or developing the curriculums for the seminars, which were run largely by people with motivational speaking backgrounds who were compensated based on how many people they persuaded to buy additional seminars. One of them was a manager at Buffalo Wild Wings.

The inquiry also found that the curriculums were developed largely by a private company that makes materials for seminar companies and motivational speakers, including companies that sell time shares.

Trump University was founded in 2004, beginning as an online operation, after a Rye, N.Y., businessman, Michael Sexton, approached Mr. Trump with the idea. After an initial investment by Mr. Trump of about $2 million, the business was based in the Trump Building, at 40 Wall Street in Manhattan. According to the attorney general’s office, the day-to-day operations were directly managed by the Trump Organization and its affiliates.

As early as 2005, the New York State Department of Education warned Trump University that it was operating an unlicensed educational institution in violation of state law, according to the inquiry. In 2010, after several years of back-and-forth with the department, Trump University’s name was changed to the Trump Entrepreneur Initiative.

The marketing plan remained the same, however, beginning with a pitch to attend what was called a free 90-minute seminar to learn how to make money in real estate. In reality, the 90-minute seminar was a sales pitch to attend a three-day seminar costing $1,495, the investigation found.

The instructors tried to persuade students to purchase the three-day seminar with unrealistic predictions of their success, the attorney general says. In some seminars, students were told that if they signed up for the three-day seminar, they could earn six-figure incomes within a year working five to seven hours a week. The speaker repeatedly implied that Mr. Trump would show up for the three-day seminar, saying he “often drops by” and “might show up” and “you never know when he might show up.”

At the three-day program, students were told they could go to the next level by signing up for the Elite mentorship and apprenticeship programs for additional costs of up to $35,000.

One woman from Schoharie, N.Y., who was caring for a son with Down syndrome said she had attended the three-day program at a hotel in Malta, N.Y. The woman, Kathleen Meese, said she had been pulled aside and told she would make money faster if she signed up for the Gold Elite program, a mentorship, for $25,000.

When Ms. Meese said she had a credit card with a $30,000 limit but could not spend it on the program, she recounted, she was told by a Trump University trainer that “I had to find the resources to invest in my future.” She was promised that she would make the money back within 60 days, she said.

But the mentorship involved visiting a few rental properties.

“I was unable to get my refund and am still paying off debts from my Trump tuition,” Ms. Meese wrote in an affidavit in the attorney general’s suit.

During the three-day seminar, she said, participants were told they would have their photos taken with Mr. Trump.

“It ended up being a cardboard cutout of Mr. Trump,” she wrote.