The now-defunct Trump University, the subject of one of Marco Rubio’s attacks on Donald 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 Trump’s real estate investing acumen with students. It is still embroiled in lawsuits accusing it of misrepresentation.
Those who ultimately bought 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,” 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.”
'A cardboard cutout of Donald Trump'
As many as 7,000 people across the country bought the sales pitch, spending an estimated $40 million. New York state and many of the students are now suing 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, Trump said, “They actually did a very good job, and I’ve won most of the lawsuits.” The remark came after 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,” Rubio said. “And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump.”
Trump accused of 'bait and switch'
In fact, the cases against 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.
One ad published at least 170 times across the country in 2009, according to 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 Schneiderman’s office found that Trump had little to do with picking instructors 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 a Buffalo Wild Wings.
'Some people want their money back'
Daniel Petrocelli, a lawyer representing Trump in the California cases, said Trump believes the allegations are false. Petrocelli said participants in Trump University “were very happy with the courses.”
“They filled out surveys with extremely high ratings,” he said. “There was a refund policy, and those who asked for refunds received them. And, long after the fact, after taking these courses, some people want their money back.”
In violation of state law
Trump University was founded in 2004 as an online operation, after Michael Sexton — a Rye, New York, businessman — approached Trump with the idea. After an initial investment by Trump of about $2 million, the business was based in the Trump Building, at 40 Wall St. in Manhattan. According to the attorney general’s office, the day-to-day operations were 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 investigation. In 2010, 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 seminar was a sales pitch to attend a three-day seminar costing $1,495, the investigation found.
Earn six-figures within a year
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 Trump would show up for the seminar, saying he “often drops by” and “might show up” and “you never know when he might show up.”
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.
'Still paying off my Trump tuition'
One woman from Schoharie, New York, who was caring for a son with Down syndrome, said she had attended the three-day program at a hotel in Malta, New York. The woman, Kathleen Meese, said she was told that she would make money faster if she signed up for the Gold Elite program, a mentorship, for $25,000.
When 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,” Meese wrote in an affidavit in the attorney general’s suit.
Seminar participants, she said, were told they would have their photos taken with Trump.
“It ended up being a cardboard cutout of Mr. Trump,” she wrote.
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