Was Trump University a fraud?

Politics, Business, Money, News

“There are people who borrowed $36,000 to go to Trump University, and they’re suing now. And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump.” –Senator Marco Rubio, during the February 25 Republican presidential debate

One of the many allegations against presidential hopeful Donald Trump is that he’s guilty of fraud in a case involving something called Trump University. As the prospect of a Trump presidential nomination becomes increasingly tangible, the volume from Senator Rubio—and others—around the University case has become noticeably louder. Should you listen?

Trump University was a real estate school that operated from 2005 to 2010, through which Trump promised to deliver courses and seminars led by experts handpicked by him. Some 10,000 people thought it sounded great and signed up.

Allegations of fraud

Three lawsuits in California and New York allege that Trump collected over $40 million through fraud. There are over 5,000 alleged victims participating in the New York suit alone. Various students have filed affidavits describing how they signed up and were unable to reach anyone, received information they could have gotten anywhere else, or simply found the program to be useless. The suits also allege that Trump University was not actually a university, was deceitful, and that Trump did not handpick instructors as promised.

New York State has already determined that the school was in violation of state education licensing laws, passing itself off as a university when it was not duly chartered as one. The school had to change its name to Trump Entrepreneur Institute because of this.

And on March 1, a mid-level New York appellate court dealt Trump a blow when it ruled that the New York fraud case could proceed. New York Attorney General Eric Schneiderman praised the ruling as “a clear victory in our effort to hold Donald Trump and Trump University accountable for defrauding thousands of students.” The Trump Organization’s attorney, Alan Garten, called the ruling “politically motivated” and vowed to appeal.

Trump fights back

Trump’s response has been to provide affidavits from former students stating how useful the program was and to vow to fight the case in court. Trump has also touted that the students primarily gave the program high ratings, as, he claims, did the Better Business Bureau (BBB). The BBB no longer has an active listing for Trump University or Trump Entrepreneur Institute, so no ratings are available to verify that claim (and of course, taking Trump at his word is often a dicey proposition).

Many students state they did provide positive ratings, but in the classroom at the end of program, before they tried to apply the material unsuccessfully. Trump has also claimed he’s already won most of the lawsuits, when in fact he hasn’t won cases but has received some favorable rulings during preliminary hearings.

Was it all a big swindle?

Attorney General Schneiderman has called Trump University a “classic bait-and-switch scam.” Plaintiffs claim the school was set up to get students to enroll in ever more expensive seminars, with some plaintiffs spending over $60,000 each. One of the cases alleges the materials were all created by a third-party curriculum company and that Trump never reviewed them or chose any of the speakers, many of whom were not experts in the field at all. Moreover, some plaintiffs claim that the program’s promised access to lenders and placement in apprenticeships never materialized.

Trump is scheduled as a witness in one of the trials slated for May. And if the cases proceed, they are likely to continue well after the November election. There’s no question that the suits are receiving heightened media attention because the defendant is the frontrunner for the Republican presidential nomination.

Trump can always choose to settle the suits, but says he will not do so out of principle. Until there is a judgment there can be no final word on whether Trump University was actually a scam. So until then, we’ll all have to decide for ourselves.

Image courtesy of washingtonpost.com