Lawsuits against Trump University Settled

Stephen Barrett, M.D.
June 7, 2020

Trump University—also known as the Trump Wealth Institute and Trump Entrepreneur Initiative LLC—was an American company that ran a real estate training program from 2005 until 2010. It was owned and operated by The Trump Organization.

In 2016, New York Attorney General Eric Schneiderman announced that Donald J. Trump had agreed to settle three lawsuits which charged that he and his associates had misrepresented the nature and value of real estate courses offered by Trump University. The settlement includes payment of $21 million to settle two California class-action suits and $4 million to New York State to be used to (a) reimburse former students who were not parties to the class-action suits and (b) if funds remain, to pay up to $1 million for costs and/or penalties for Trump University’s failure to obtain a license from the New York’s Education Department. Trump admitted no liability, but Schneiderman’s press release minced no words:

In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of ​millions of dollars through a scheme known as Trump University. Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes. Today’s $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university.

The third amended complaint in the California case brought by Sonny Low included these allegations against Trump University:

  • In 2010, Trump University changed its name to Trump Entrepreneur Initiative after the New York Department of Education insisted that the use of the word “university” was misleading and violated New York’s Education Law and the Rules of the Board of Regents. However, because the corporation was named Trump University when this lawsuit was filed, it is referred to as Trump University throughout the pleadings.
  • Trump University’s purported mission was to “train, educate and mentor entrepreneurs on achieving financial independence through real estate investing.” However, rather than operating like a university or college, it functioned like an infomercial, selling non-accredited products, such as sales workshops, luring customers in with the name and reputation of its founder and chairman, Donald Trump.
  • Trump and his “University” promised “mentorships” said to be the “next best thing” to being Donald Trump’s next “Apprentice.” However, these promises were empty. The primary lesson Trump University taught its students was how to spend more money by buying more Trump Seminars.
  • Contrary to defendants’ representations, many of the seminar instructors and mentors were not experienced in real estate—in fact, many had little to no personal real estate experience, and most had not engaged in the vast majority of the real-estate techniques they taught. Most were professional salespeople, hired for their ability to deliver a hard-sell sales presentation and paid exclusively on commission based on the percent of sales they delivered.
  • Representations made to consumers about the Trump Seminars were standardized. When consumers made calls to or received calls from Trump University, they spoke with a member of the Trump sales team. Each member of the sales team was given a five to six page sales script, and was required to stick to the script word-for-word.
  • The in-person seminars were also highly standardized. Speakers used the same slide presentation, the same script, and even had detailed  instructions for the presentation that even specified where the speakers and coordinators should stand, the temperature of the room, and the music to be played during the introduction (“Money, Money, Money” from the Apprentice show).
  • Insiders at Trump University have confirmed that the whole purpose of the free seminar was to get people to sign up for the $1,500 seminar, the purpose of the $1,500 seminar was to get people to sign up for the $35,000 seminar, and the entire purpose of that seminar was to get people to sign up for additional seminars, products, and books. Instructors were taught to be “armed with objections and rebuttals” and to “work the room with special attention to team members in possession of a credit card that needs to be run.”
  • In attempting to publicly defend its reputation, Trump University had the audacity to compare itself to Harvard University—claiming that it did not guarantee real estate success, just as Harvard cannot guarantee a Rhodes scholarship. Comparing Trump University to Harvard University is a bit like comparing a snake oil salesman to a brain surgeon. First, Harvard is clearly an accredited institution while Trump is not; Harvard professors are educated in their field, while Trump instructors and mentors were trained in sales, not real estate; and when Harvard students pay for a four-year education, they receive four years of teaching, whereas Trump students who paid for a one-year real estate education received three days of a hard-sell sales presentation.
  • Although prospective students were told that Donald Trump was intimately involved in developing the program and selecting the instructors, this was not true.
  • Defendants enhanced, misrepresented and in certain instances, completely fabricated student testimonials.

The class action plaintiffs were represented by the law firm of Robbins Geller. Although the firm was entitled to collect millions of dollars for its work, it waived attorneys fees to ensure the maximum possible recovery for the former students. After the agreement was signed, one former student objected and filed an appeal that delayed execution of the settlement until 2018, when the appeal was denied.

Additional Information
Relevant Documents
New York State against Donald J. Trump et al.
Art Cohen vs. Donald J. Trump
Sonny Low (formerly Tarla Makaeff) vs. Trump University at al.