Trump created Trump University to defraud students out of millions, according to two class-action lawsuits.
Two class action racketeering lawsuits and a lawsuit by the New York Attorney General have been filed against Donald Trump for swindling student-victims out of upwards of $35,000 each through their enrollment in his fictitious institution, Trump University.
The supreme court of New York ruled earlier that Trump University, now renamed Trump Entrepreneur Initiative, LLC, is liable for its violation of state education laws in its illegally calling the program a “university” without the appropriate licensure or accreditation and for allegedly defrauding students of $40 million.
“University” was “ivy league quality”
The two pending class action lawsuits make the same allegations against Trump. The first case is Makaeff v. Trump University, LLC in which the plaintiff representing the class charged that Trump University engaged in racketeering activity causing her to hand over thousands of dollars for enrollment in Trump University.
A parallel class action, Cohen v. Trump, was filed by another former “student-victim,” Art Cohen, who, according to his complaint, paid more than $35,000 after receiving a “special invitation to Trump University from Donald Trump” to attend a three-day event to learn Donald Trump’s “real estate secrets.”
Using a $6 million advertising campaign, Trump University was marketed to a database of more than one million potential students, including many senior citizens, as an “ivy league quality” university. The sales pitch claimed that Donald Trump was so “integrally involved” that student-victims would have an opportunity similar to his TV show “The Apprentice,” effectively gaining real estate secrets from Trump and his handpicked “faculty of professors and adjunct professors.”
However, Trump has already admitted in court that:
- His involvement was “completely absent.”
- He did not participate in events, teaching, content of the program.
- He did “not even know if students received a degree.”
Playbook Detailing Scheme
Donald Trump created his University as a scheme to make millions of dollars by promoting the misconception that it was a “real university with a real admissions process” that would not accept everyone who applies, according to the complaints. In marketing materials for Trump University, Trump claims to have “hand-picked” instructors — but they were actually “independently contracted high-pressure salesmen” paid on commission.
The plaintiffs charge that after being lured to a Trump University free event, students continued to be upsold various packages and products, all promising to give access to Trump’s real estate secrets. The packages started $495 and were constantly upsold with other products and packages to more than $70,000.
According to the plaintiff’s claim, the “instructors” were provided marketing guidelines, a “Playbook” script and standardized slides depicting an upsell scheme that the salesmen were contractually bound to follow.
The Playbook “armed [salesman] with objections and rebuttals” for hesitant student-victims and were also taught to “work the room with special attention to team members in possession of a credit card that needs to be run.” At the live events put on by Trump University, student-victims would fill out detailed financial goal statements for their personal goals, yet Trump University used the statements to decide who had liquid assets they could pursue.
Although Trump did not select the “faculty” or the “curriculum,” according to the complaint, he started Trump University and provided the initial operating capital, keeping a 93 percent ownership stake.
Trump University violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by conducting “an enterprise through a pattern of racketeering activity” through acts of mail and wire fraud, according to the plaintiff’s class certification motion.
According to the class actions, Trump and his University met the elements required under RICO of his “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity” causing harm to the plaintiff’s business or property.
Mail and wire fraud are the racketeering activity referenced in the class action suit. The elements required to be proven by the plaintiff are as follows:
- That Trump had a scheme to defraud.
- That Trump acted with the intent to defraud.
- That the statements or facts made or omitted were material misrepresentations capable of influencing the plaintiffs to part with their money or property.
- That Trump used mails or wires in furtherance of the scheme.
Interstate Mail and Wire Fraud
When the New York State Education Department (NYSED) informed Trump in 2005 that it was illegal to use the name “university” without a license, Trump did not change the name, but instead opened a sham office in Delaware, which was used as the address on all marketing material, but maintained his main place of operation at the original New York location.
The use of mail or wires in furthering the scheme was done through a $6 million annual “highly orchestrated” national advertising campaign. The promotional materials contained Trumps image, quotes, and signature in online videos, mass mailings of letters and personal invitations to free events.
Email blasts were consistently sent to over one million current and prospective students. The marketing campaign was used, misrepresenting Trump’s “integral involvement” to lure student-victims to the Free events, where they would be upsold enrollment products with the potential of costing $70,000, according to the complaint.
Trump attempts at procedural defenses
Trump admitted in court that his involvement in Trump University was “completely absent” other than his marketing and scheme involvement. His defense in fraudulently taking “tens of millions” of dollars in this scheme is to blame the actual student-victims. In the class action lawsuit, Trump’s defense rested on the following arguments:
- Cohen and the class failed to prove his mail and wire fraud acts caused the alleged injury,
- Cohen failed to provide any evidence of actual harm.
- That there were a “number of intervening circumstances” severing the direct link between the alleged racketeering acts and the claim of injury.
- The claims are barred by the statute of limitations.
The court found Trump’s arguments not properly considered in the class action case.
Both class action cases, Cohen v. Trump and Makaeff v. Trump University, LLC, are still pending. The case against Trump for his illegal use of “university” is The People of The State of New York v. The Trump Entrepreneur Initiative, LLC.