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Donald Trump Hits Back on Investment School $40M Suit

By: ABC News Email
By: ABC News Email

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Monday, August 26, 2013

New York Attorney General Eric Schneiderman has filed a $40 million civil suit against Donald Trump, accusing "The Apprentice" TV star of defrauding thousands of people through Trump University by selling expensive iseminars based on false promises. Trump fired back at Schneiderman today, calling him "political hack from beginning to end."

"We have a school that's a terrific school. It did a fantastic job and I've never even heard of this, it had a 98 percent approval rating from students," Trump told George Stephanopoulos on "Good Morning America" this morning.

The suit, filed Saturday, alleges Trump and other defendants operated an elaborate bait and switch, even advising some students to raise their credit card limits for the next level of programs. Schneiderman claims the real estate mogul helped run a phony university that persuaded 5,000 people that they would become rich using real estate-investing techniques used by Trump himself. Instead, the lawsuit says, they were steered into useless seminars and failed to deliver promised apprenticeships.

"The complaint speaks for itself," Schneiderman told ABC News. "It was a lie from beginning to end. The only person who is guilty of a cheap publicity is America's leading expert on cheap publicity stunts -- Donald Trump."

Schneiderman is suing the program, Trump as the university chairman, and the former president of the university in state Supreme Court in Manhattan. He accuses them of engaging in persistent fraud, illegal and deceptive conduct and violating federal consumer protection law. The $40 million he seeks is mostly to pay restitution to consumers. The suit covers complaints dating to 2005 through 2011.

"They were fleeced. They were taken," Schneiderman says of the people who enrolled in Trump's program. "They were convinced by very persuasive motivational speakers and videos of Trump that they were going learn how to make money in real estate. They didn't get anything."

Trump says the lawsuit has no merit and he blasted Schneiderman.

"He comes up to my office looking for campaign contributions. He tells me lots of unflattering things about Obama. He tells me lots of unflattering things about Gov. Cuomo," Trump said of Schneiderman. "He was very upset with the fact that we didn't help him. He thought we should have helped him much more."

Schneiderman responded, saying Trump is trying to distract from the merits of this case.

"Mr. Trump supported someone against me in 2010. After I won the Democratic primary, he gave me one check. That was it," Schneiderman said in an appearance on CNBC today. "I wasn't asking him for campaign contributions."

State Board of Elections records show Trump contributed $12,500 to Schneiderman in October 2010, when Schneiderman was running for attorney general.

State Education Department officials had told Trump to change the name of Trump University, saying it lacked a license and didn't meet the legal definitions of a university. In 2010, Trump University was renamed the Trump Entrepreneur Institute.

Bob Guillo, 73, borrowed $35,000 to pay for the seminars and a retreat to help his son switch careers.

"They promised me that I would be one of the insiders. That whenever Trump put up condominium or any other type of building in the United States that we would get first crack at getting into it," Guillo said.

Guillo says he never got that opportunity and the closest he came to Trump was getting his picture taken in front of a life-size poster of the TV reality star.

"He took my self-respect and he embarrassed me," Guillo added.

Scheiderman said the three-day seminars didn't, as promised, teach consumers everything they needed to know about real estate.

Kevin Scott said he was also "humiliated" by Trump University. Scott attended a free Trump seminar in May 2008 and ultimately enrolled in a $25,000 mentorship program, which "overpromised and undelivered," Scott claims, when the "hard money lenders" the program advertised did not materialize.

"They had people built up that were interested and motivated and excited to take part in the program, and the return on the investment was certainly not there. It was quite the opposite," Scott told ABC News. "It was a huge, devastating blow."

Scott said he was forced to move out of his childhood home because of the massive debt brought on by Trump University.

"Donald Trump, you brought this on me," Scott told ABC News. "I bought into your program and I did all the right things. And you guys didn't deliver. .... It's time for you to step up and pay us back. Repay the money we paid to you and let's settle this."

The lawsuit claims many of the wannabe moguls were unable to land even one real estate deal and were left far worse off than before the lessons, facing thousands of dollars in debt for the seminar program once billed as a top quality university with Trump's "hand-picked" instructors. Trump did not pick the university's instructors and had not created the curriculums for any of its courses, the lawsuit alleges.

"He's totally wrong. I looked at every resume. I met with some people. I didn't meet with everybody. It's not my main business," Trump said. "We had a wonderful school with a fantastic approval rating. If you go to the Wharton School of Finance or if you got to Harvard, they don't have a 98 percent approval rating."

Trump also had a problem with the timing of the lawsuit.

"Who ever heard of a government agency bringing a lawsuit on a Saturday afternoon? He's been looking into this thing for two years," trump said. "He brings a lawsuit on Saturday afternoon right after he meets with President Obama. I think maybe it's a mini-IRS."

Schneiderman addressed the allegations as another diversion by Trump and pointed to the "overwhelming" evidence in this case.

"You can't run a bait-and-switch defraud 5,000 people out of $40 million and then distract things by saying things like, 'Oh, this is a conspiracy between me and President Obama,' or 'I was soliciting money from people who had some affiliation with him. The case speaks for itself. The documentary evidence is overwhelming," the attorney general said on CNBC.

"We're not going to sit down and let him make false accusations and let him lie about what the case is about. This is a classic bait -and switch scheme. You have to sent a message: no matter how powerful people are, aggressive they are about suing people who sue them -- which is something they does frequently -- they're not above the law. One set of rules for everyone. That's an important message to send."

Trump said he had the opportunity to settle the suit but decided against it despite the bad publicity.

"I don't mind the bad publicity. Who gets more bad publicity than me anyways? I'll take this. No, I don't want to settle this," he said.

The Associated Press contributed to this report.


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