The university 'scam' and $40m lawsuit stalking Trump

2016-03-10 10:27
Donald Trump. (Mark J Terrill, AP)

Donald Trump. (Mark J Terrill, AP)

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Washington - Donald Trump's race for the White House has sown panic among Republican leaders scrambling to prevent a man billed as a demagogue from clinching the party nomination, and one of their weapons is Trump University.

At the center of a $40m lawsuit in New York and potentially subject to a separate trial in California in August, the now-defunct online education company has been gleefully picked over in the volatile election campaign.

The American Future Fund, the conservative group which links to the billionaire Koch brothers, has bankrolled ads from former students attesting to Trump University trickery and urging US voters to ditch Trump.

Robert Guillo, a 76-year-old New Yorker who spent nearly $40,000 on tuition alongside his son, knows exactly how they feel.

"I learned absolutely nothing, it's an absolute scam," he told AFP by telephone. "He fooled me for $35 000, now he's fooling the people of the United States by saying things that are totally impossible to accomplish."

The University operated from 2005 until 2010 when it was forced to re-name itself the Trump Entrepreneur Institute because it had no license to call itself a university.

Legal investigations culminated with New York state filing a lawsuit in 2013 alleging that the enterprise intentionally misled more than 5,000 people across the country, including more than 600 in New York.

State attorney general Eric Schneiderman says 10 000 students enrolled in real estate courses from 2005 to 2010 that ranged from free seminars to specialized tuition costing $35,000 which earned the college $40m

They were lured by a free lecture that promoted a seminar costing $1 495, which in turn marketed the "Trump Elite" package starting at $10 000 and rising to $35 000 for a year's mentorship programme.

Minus D

Schneiderman, a Democrat, alleges that Trump made false promises to convince people to spend tens of thousands of dollars they couldn't afford for lessons they never got.

"At Trump University we teach success," said Trump in one TV advert. "Success. It's going to happen to you."

In court papers filed in New York, Guillo complained that teaching materials seemed to come from property website Zillow or could just as easily have been downloaded from the Internal Revenue Service.

Kathleen Meese, the mother of a son with Down's Syndrome from Schoharie, New York said she was guaranteed she would make her $25,000 fee back within 60 days but was still paying off the debt in 2012.

"For my $25 000, I have a lifetime membership to nothing! No one contacted me and I have not been able to contact anyone because the phone numbers have been all disconnected. There is no Trump University," she said in court papers.

Trump's lawyers hit back by submitting testimony from apparently satisfied students, including one man who claimed to make $100 000 profit and instructors attesting to their experience and hard work.

But the Better Business Bureau rated the university a D minus in 2010 owing to "multiple customer complaints."

Its A and A plus ratings, to which Trump has consistently referred, date to 2014 and 2015, by which time it was no longer operating and complaints older than three years had rolled off the business review, the Bureau said this week.

Plaintiffs also brought two suits in California, although the lead in one has since petitioned the court to drop out.

'We'll win'

Contrary to claims, none of the teachers were handpicked by Trump, many of the instructors had little relevant experience and others had gone bankrupt, New York state prosecutors allege.

None of Trump's personal investing techniques were divulged and a supposedly "special" database of lenders turned out to be a list photocopied from a trade magazine, they add.

Mentors failed to return calls or emails. Students were unable to conclude real estate deals, lost life savings or were left thousands of dollars in debt.

But the revelations have not dented Trump's political juggernaut, at least not yet. On Tuesday he won three out of the four Republican elections in Michigan, Mississippi and Hawaii.

Marco Rubio, the dashing young senator from Florida, who skewered Trump for running a "fake" school, failed to win a single delegate.

The tycoon, who has exhibited a notoriously thin skin towards criticism, claims that 98 percent of those who took his courses were satisfied customers.

He addressed the alleged scam for an umpteenth time after winning the Michigan and Mississippi primaries on Tuesday, promising to restart the school if elected.

"We'll win that case," said the billionaire. "They hit me with this Trump University."

"If I become president that means my family will start it up. We have a lot of great people that want to get back into Trump University."

Jeanne Zaino, professor of political science at Iona College, doubts the allegations will cause Trump serious problems during the campaign.

"I don't think it's going to be resolved in time to impact the election, quite frankly, so the calendar works in his favor," she said. "I do think voters will give him the benefit of the doubt."

Read more on:    donald trump  |  us  |  us 2016 elections

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