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Thursday, March 10, 2016

Trump University: A Fraudster for President?

I am currently rewriting my textbook on Consumer Law (with a frightening deadline of April 1, which, alas, sounds like an April Fool’s joke to someone currently as far behind on this project as I am), and in my notes are various things about the three lawsuits brought against Donald Trump and his “Trump University.”  This so-called “university” took money from trusting people in return for promising to teach them how to make a fortune, as The Donald did, in selling real estate.  Instead the university gave them a free lecture about obvious things, then asked them to invest a large amount in their education to reach the next level, where they learned more obvious things before asking them to invest a final whopping wad of money to top off their new career.  Their funds gone, they “graduated,” but then were dropped (even though much impressive mentoring had been earnestly promised).

Oh, but it all sounded wonderful in the beginning!  Trump made a two minute promotional video [you can view it in the National Review article entitled “Yes, Trump University Was a Massive Scam” at], touting the virtues of attending his university and learning from the instructors he “hand-picked” himself.  This was a lie, as he subsequently testified in a deposition in which he said he had no control over the school or its selection of instructors.  Donald has also said that he had a “charitable motive” in starting his school: by golly that selfless motive was simply to help others learn what he did to become a success!

Instead the school fleeced thousands of people, gathering in $40 million dollars, $5 million of which went into Donald’s pocket.

Trump’s victims were lower class and middle class Americans (teachers, retired police officers, veterans, many of them elderly), and the major requirement to get into the school was to have a credit card in their pocket (which was checked at the door, at which point attendees were advised to call the credit card company and attempt to get the maximum amount raised).  The basic plan for this “get rich quick” venture was first to have these people come to a free 90 minute lecture (some 700 of these were held across the country), and once they were there to tell them that they couldn’t really learn what they needed to know in so short a period.  Instead, to get to that pie-in-the-sky goal, they must pay $1,495 to attend a wonderful three-day workshop to learn how to really become a successful real estate investor.  But Trump instructors (who were chosen primarily for their expertise in salesmanship and not their experience in real estate finance) had an elaborate “playbook” which actually used phrases like “set the hook” in describing how to move people attending the three-day event on to the next level, which was a “mentoring program” costing between $9,995 and $34,995!  The “playbook,” which had elaborate rules on things like how to keep the media from surreptitiously recording the proceedings, also contained the following advice: “If a district attorney arrives on the scene, contact the appropriate media spokesperson immediately.”

Supposedly the Trump people would help graduates by connecting them up with hard money lenders so they could buy real estate and then sell it at a profit to others, but—what a surprise!—that never happened.  Instead the last things the proud grads received was a form to fill out announcing they were satisfied with the program (with instructors standing over their shoulders), and then they were whisked out the door, patted on the back, wished good luck.  When they tried to apply the lessons learned (and for which they’d maxed out those credit cards and/or drained their savings accounts) they couldn’t find any lenders who would loan them startup money.  Many graduates ended up in bankruptcy, lost their homes, or even became homeless.

Things began to go downhill for Trump’s scheme (which operated from 2005 to 2010) when the State of New York made the school stop pretending to be a “university,” which is a term defined by New York law in a way that TU couldn’t pretend to meet.  The name was then changed to “The Trump Entrepreneur Initiative,” which is vague but sounds damned impressive.

Lawsuits were filed.  There are two class action lawsuits in California, plus a suit by the New York Attorney General in New York (which represents 5000 claimants so far).  In one of these suits, which the judge recently allowed to go forward, Trump is accused of violating the Racketeer Influenced and Corrupt Organizations Act [RICO], a federal statute condemning interstate deceptive practices acts.  Hmm.  Trump as a “racketeer”?  The other suits merely allege common law fraud (the civil action for lying).

Trump, furious at being accused of fraud and worse, hates being sued, knows that the best defense is to go on offense, so he struck back.  He filed an ethical complaint against the New York Attorney General, contending the AG’s suit was tainted by a campaign donation, but that allegation was investigated and dismissed last August.  Trump University then filed a $1 million defamation suit against one of the class action plaintiffs, only to have that backfire.  The plaintiff was Tarla Makaeff who'd paid $37,000 to TU and then publicized her resulting anger on social media.  Trump University lost the lawsuit in federal court last April and was ordered by the judge to pay $798,774.24 in attorneys fees and costs.  When TU appealed, arguing that Makaeff had filled out a form stating she was “satisfied” with the course, the Ninth Circuit affirmed the judgment below, with the comment in the photo below. 

In all three lawsuits, one of which will go to trial during the presidential campaign, Donald Trump has unsuccessfully tried to get himself excused from liability using the argument that he really had nothing to do with Trump University (other than allowing attendees at the seminars to have their pictures taken with a cutout of him).  But since that didn’t work he’s still a defendant, and American voters will be treated to watching him on the witness stand as he battles allegations that he fleeced thousands of innocent people, many of whom are the very sort of voters he’s was hoping to appeal to come November.

But here’s the sad thing.  The people who attended this pretend “university” truly idolized Donald Trump.  They wanted to be his apprentice, learn from him, share his success.  In his video urging them to sign up, that’s just what he promised.  But it isn’t what Donald Trump ever really intended.  Oh, no.  All along Donald Trump just wanted to take their money and add it to his already bloated bank account, giving them nothing in return.

And he might get away with it.  Two of his victims Boyce Chait (84) and his wife Evelyn (80) tried in vain to get a refund of their $34,995 membership fee when they realized that in the end what they paid for was “worth nothing.  When it came to the nitty-gritty, there was nothing there.”  Nonetheless, faced with a choice between Trump and Hillary, they say they’d still vote for Trump because they’re proud members of the Tea Party.

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[Addendum to above, added May 9, 2016:

U.S. District Judge Gonzalo Curiel, who is presiding over the class action in San Diego, has now scheduled jury selection for the case to begin in late November of this year, raising the possibility of the new president-elect (please, no!) testifying in his fraud trial before even being sworn in as president.  Trump—ever the diplomat—has suggested that Gonzalo Curiel, a Hispanic, may be biased against him because of Trump’s positions on immigration.  Not only is that offensive, but it must make Trump’s lawyers bang their heads against the wall in despair since it’s a really stupid legal maneuver to piss off the judge in a case in which you are the defendant.]

Related Posts:

“A Guide to the Best of My Blog,” April 29, 2013;

"Why Hillary Will Stomp Donald in November," June 30, 2016;

“A President Born in Canada? Cruz, Lawrence Tribe, Natural Born Citizen, and the Law,” January 23, 2016;

“Why I Love Bernie Sanders’ Ideas, But Hope He Won’t Be the Nominee,” October 20, 2015;

“Go, Ben, Go: Why I Want Ben Carson To Win the Republican Nomination,” November 30, 2015;

“A Criminal Controls the Detective: Why Trump Will Soon Fire Robert Mueller”;

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