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New York AG Gives Trump University an “F” for Fraud

28 Aug, 2013 By: Doug McPherson

ALBANY, N.Y. – New York's attorney general Eric Schneiderman announced a $40 million lawsuit against Donald Trump Saturday, accusing him of helping run a phony university that promised students wealth but instead offered expensive and mostly useless seminars.

In a statement, Schneiderman said Trump appeared in ads for the school – known as Trump University (and advertised, in part, via direct response television) – making "false promises" to persuade more than 5,000 people around the country (including 600 New Yorkers) "to spend tens of thousands of dollars they couldn't afford for lessons they never got."

Scheiderman said the three-day seminars didn't, as promised, teach consumers everything they needed to know about real estate. At the seminars, consumers were told about "Trump Elite" mentorships that cost $10,000 to $35,000.

"Trump University engaged in deception at every stage of consumers' advancement through costly programs and caused real financial harm," Schneiderman said. "Trump University, with Donald Trump's knowledge and participation, relied on Trump's name recognition and celebrity status to take advantage of consumers who believed in the Trump brand."

But Trump's attorney, Michael D. Cohen, told the Associated Press that Trump and his university never defrauded anyone and that Sneiderman is trying to extort campaign contributions from Trump through his investigation of Trump.

Cohen added that Schneiderman's lawsuit was filled with falsehoods and that Trump University has provided nearly 11,000 testimonials to Schneiderman from students praising the program.

"The attorney general has been angry because he felt that Mr. Trump and his various companies should have done much more for him in terms of fundraising," Cohen said. "This entire investigation is politically motivated and it is a tremendous waste of taxpayers' money."

Trump says the Democrat's lawsuit is a political move and told Fox News on Monday that Scheiderman had met with President Barack Obama [Trump has been a vocal critic of President Obama] on Thursday night and then filed the suit on Saturday.

“What government agency brings a suit on Saturday? An incompetent one,” Trump said. “He [Scheiderman] met with Obama on Thursday night, and then I get sued on Saturday. We might have a mini-IRS situation here.”

State Board of Elections records show Trump contributed $12,500 to Schneiderman in October 2010, when Schneiderman was running for attorney general. “He wanted more,” Trump told Fox News. “He would come to my office looking for more money, unbeknownst … He asks me for campaign contributions; he’s a political hack.”

Earlier this year, Courthouse News reported that a former student, Tarla Makaeff, called Trump University’s real estate seminars “a money grab.” Makaeff filed a deceptive business practices class action against the for-profit school in 2010, claiming that Trump University took her for nearly $60,000 based on promises never delivered.

Makaeff said she paid $1,495 for the "free" three-day seminar. Trump University representatives allegedly induced her and others to spend $35,000 for the Trump University "Gold Program," and convinced them to increase their credit card limits to finance risky real estate deals.

Courthouse News reports other former students have levied and reported similar claims against the school since at least 2005.

In the Fox News interview, Trump added, “It’s an unfair situation – he’s [Schneiderman] a lightweight and not respected by anybody. He has a 4-percent approval rating; we have a 98-percent approval rating. We have a really good school with wonderful instructors. I’ve been very successful in real estate and I’ve imparted a lot of my knowledge to a lot of people. It’s rather shocking.”

Trump added that he “could have settled this [the lawsuit] very easily” and chose not to. “We’ll see how it comes out. I think the case we have is fantastic.”

In the meantime, Trump said the school will close.

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