If you’ve watched or read the news at all in the past year, no doubt you’ve seen Donald Trump everywhere. The millionaire (or billionaire, depending on who you ask) presidential candidate has make a name for himself by calling for radical policy changes and other drastic measures. However, before he ever made a serious run for the presidency, he was a well-known businessman, gaining recognition for his aggressive real estate endeavors. He’s even an best-selling author, earning global acclaim for Trump: The Art of the Deal.
However, he’s also been criticized for his many business missteps, such as Trump Steaks, Trump Vodka and multiple casinos filing for bankruptcy. One such business was Trump University. Trump University offered a series of courses that taught everyday people how to flip homes and become millionaires — for the small price of $20,000 to $30,000 a class. Now, class action lawsuits have been brought against Trump. And, true to his nature, Trump has responded with loud criticisms of everyone involved.
The History of Trump University
Trump University was founded in 2004 as a limited liability corporation by its namesake and his business partner, Michael Sexton. “University” is a bit of a misnomer, as the was not an accredited school and offered no college credits. Rather, it offered seminars for individuals and small business owners who wanted to get into real estate investing. Sexton and Trump hit their first snag in 2005 when the New York State Department of Education told them they could not use the title “university,” since they were not chartered as such.
In response, Sexton told the Department that they would not hold live events in New York anymore, and instead would be moving to Delaware. However, the Attorney General was notified in 2009 that the company still operated, unlicensed, within New York. They were warned again to change their name and to get a license. So Trump University became TEI. In 2010, they still were not licensed to operate, and the Attorney General again told them to get licensed or get out. Later that year, Sexton told the Department of Education that they would cease operations.
Allegations Brought Against Trump University
One of the main reasons charges are being brought against Trump University is the way they operated. The Attorney General alleged that in their years of operation, Sexton and Trump intentionally mislead at least 5,000 people across the nation, including 600 in New York alone, into thinking they were taking classes from a licensed university. These students would pay as much as $35,000 per seminar. But it didn’t stop there.
In advertisements for his seminars, Trump said he handpicked every speaker as experts in the field. However, later investigation revealed only one of the speakers had ever met Trump. In fact, most had never worked in real estate before. Moreover, students would be lured into free seminars, in which speakers wouldn’t really say anything of substance. Rather, they would tell students to sign up for a $1,500 three-day seminar to really learn. If students attended that seminar, however, they would fall victim to a bait-and-switch. The seminar was promised to include “access to ‘private’ or ‘hard money’ lenders and financing,” and a “year-long ‘apprenticeship support’ program.”
Once they arrived, however, instructors told them that three days was not long enough to really learned what they needed to know. Further, those promised benefits were only included if they signed up for a year-long private mentorship, which would cost as much as $35,000. If attendees said they couldn’t afford to do to, the instructors berated them. They would tell attendees to max out their credit cards in order to pay for the seminars. If they couldn’t, instructors would humiliate them and ask them what could possibly be more important than becoming a millionaire. However, the real motivation lay in the instructors’ own payment: they made 10 percent of all sales.
To top it off, the year-long mentorships were also filled with false hope. Students rarely learned anything of value, as their instructors were salesmen, not real estate gurus. Attendees were drawn in with promises to quickly flip distressed properties using other people’s money. However, once they tried to buy one of these properties, banks would tell them they need financing in place. And those lenders Trump University promised? Nowhere to be found. Though the program promised to help repair credit, among many other services, it ended up ruining the lives of thousands of people nationwide.
Taking a “Snakeoil Salesman” to Court
The New York Attorney General has said that Trump University is nothing more than a scam. Others have likened the LLC to snakeoil, full of empty promises that cost thousands. So far, about 7,000 people have joined the class action lawsuit against Trump. The crux of the matter lies in the fact that the “mentors” had little to no real estate experience, on top of many other aspects of the widespread fraud. Trump’s own attorneys are working on distancing him from the University as a whole.
Technically, it could work. Due to the structure of the LLC’s holdings, he was not directly responsible for much of what went on. But, Trump himself has admitted to being part of the marketing efforts and other aspects, so the Attorney General has adamantly denied requests to throw the case out. Trump’s attorneys are using evidence like “10,000 raving reviews” (out of 7,000 students) to show that the University was a success.
As the legal battle continues, the case will only go to further the divide in public opinion on perhaps the most controversial presidential candidate in recent memory. Experts believe the legal battle will extend long past the November election. Which raises the question: Has a president ever entered office while being in the middle of a court battle?