Trump University (also known as the Trump Wealth Institute and Trump Entrepreneur Initiative LLC) was an American for-profit education company that ran a real estate training program from 2005 until 2010. It was owned and operated by the Trump Organization. (A separate organization, Trump Institute, was licensed by Trump University but not owned by the Trump Organization.) After multiple lawsuits, it is now defunct. It was founded by Donald Trump and his associates, Michael Sexton and Jonathan Spitalny, in 2004. The company offered courses in real estate, asset management, entrepreneurship, and wealth creation.
The organization was not an accredited university or college. It conducted three- and five- day seminars (often labelled "retreats") and used high pressure tactics to sell these to its customers. It did not confer college credit, grant degrees, or grade its students. In 2011, the company became the subject of an inquiry by the New York attorney generals office for illegal business practices that resulted in a lawsuit filed in 2013.
Trump University was also the subject of two class actions in federal court. The lawsuits centered around allegations that Trump University defrauded its students by using misleading marketing practices and engaging in aggressive sales tactics. The company and the lawsuits against it received renewed interest due to Trumps candidacy in the 2016 presidential election. Despite repeatedly insisting that he would not settle, Trump settled all three lawsuits in November 2016 for a total of $25 million after being elected to the presidency.
Michael Sexton created a business plan for a real-estate training program and presented it to Donald Trump looking to pay Trump a flat fee for the use of his name. Trump instead decided he wanted to be the principal owner.
Trump University was incorporated in 2004 by Trump, Sexton, and Spitalny, as a New York limited liability company. Donald Trump owned 93% of the company. On May 23, 2005, Trump University formally launched its education program. At the opening presentation, Trump said: "If I had a choice of making lots of money or imparting lots of knowledge, I think Id be as happy to impart knowledge as to make money". The companys original business plan focused on online education, but quickly expanded to include live, in-person instruction as well. The focus of the instruction was real estate investing, with Trump claiming in advertisements, "I can turn anyone into a successful real estate investor, including you." Typically the instruction began with an introductory seminar in rented space such as a hotel ballroom. At the introductory seminar, students were urged to sign up for additional classes, ranging from $1,495 seminars to a $35,000 "Gold Elite" program. Records produced indicate 7611 tickets in total were sold to customers attending courses. Approximately 6,000 of these tickets were for a $1,500 3-day course and 1,000 tickets were for silver, gold or elite mentored courses ranging in price from $10,000 to $35,000.
Trump claimed that students gave 98% favorable reviews to the program. But according to some former students, Trump University employees pressured students to offer favorable reviews, told them they had to fill out the forms in order to obtain graduation certificates, and did not undertake procedures often used to ensure that surveys were filled out objectively.
In an infomercial, Trump said he "handpicked" Trump Universitys instructors. He testified in a 2012 deposition, however, that he never selected the instructors for the program. According to Michael Sexton, Trump signed off on the schools advertisements. For a time in 2008 it used the name Trump Wealth Institute. In June 2010, "Trump University" changed its name to "The Trump Entrepreneur Initiative." It largely ceased operations in 2010.
The Trump Institute was a separate business. It was licensed by Trump University and Donald Trump received a cut of every seat sold, but Trump University did not own any part of it. It was owned and operated by Irene and Mike Milin of Boca Raton, Florida. It offered real estate seminars from 2006 to 2009, at which point the licensing agreement expired and was not renewed. Trump himself was not involved in the operation of the Trump Institute, but he recorded a broadcast infomercial promoting it and appeared in an introductory video before each seminar.
Three lawsuits were filed asserting that Trump University engaged in a variety of illegal business practices, ranging from false claims to racketeering. Two were federal class-actions: one against Trump University and its managers, including Donald Trump, and one against Donald Trump personally. A third case was filed in New York State court.
In 2005, the New York State Department of Education sent Trump, Sexton, and Trump University a letter saying that they were violating state law by using the word "university" when in fact Trump University was not actually chartered as one and did not have the required license to offer live instruction or training. Although Sexton promised that the organization would stop instructing students in New York State, the New York Attorney General alleged that such instruction continued.
A March 2010 letter sent by the Deputy Commissioner for Higher Education, Joseph Frey, to Trump stated: "Use of the word university by your corporation is misleading and violates New York Education Law and the Rules of the Board of Regents." In June 2010, "Trump University" changed its name to "The Trump Entrepreneur Initiative."
On August 24, 2013, the State of New York filed a $40 million civil suit against Trump University alleging illegal business practices and false claims made by the company. Donald Trump denied the allegations, claiming the school had a 98% approval rating, and said New York attorney general Eric Schneiderman was "a political hack looking to get publicity". Trump filed a complaint alleging that the state attorney generals investigation was accompanied by a campaign donation shakedown; the complaint was investigated by a New York ethics board and dismissed in August 2015. Because of strict confidentiality laws, it is unknown whether the complaint was dismissed because Trumps claims were untrue, or because Schneidermans alleged actions did not contravene any ethical rules.
Schneiderman described Trump University as a bait-and-switch scheme and pointed to the fact that the organization was not a university. He accused Trump of misleading more than 5,000 people to pay up to $35,000 to learn his real estate investment techniques.
In October 2014, a New York judge found Trump personally liable for operating the company without the required business license.
Tarla Makaeff, who paid nearly $60,000 to Trump University in 2008, brought a class action against Trump University on April 30, 2010, in U.S. District Court for Southern California. The suit, Makaeff v. Trump University, LLC, sought refunds for Makaeff and other former clients of Trump University, as well as punitive damages for breach of contract, fraud, negligent misrepresentation and bad faith. It did not originally name Donald Trump as a defendant, but did so in a later amended complaint. In February 2014, U.S. district court judge Gonzalo P. Curiel denied recognition to the nationwide class the plaintiffs had requested and recognized the suit as class-action on the part of Trump University clients in three states – California, Florida, and New York – based on specific alleged violations of the consumer protection laws of those states. He also narrowed the case to five of the plaintiffs original fourteen charges.
On May 26, 2010, Trump University filed a counterclaim alleging Makaeff had made defamatory statements about Trump University, "including many completely spurious accusations of actual crimes", that had caused Trump University losses of more than $1 million. On June 30, 2010, Makaeff countered that Trump Universitys defamation claim was an attempt to intimidate her, known as a SLAPP suit (a strategic lawsuit against public participation), and that because Trump University is a "public figure" the defamation claim required proof that she "acted with actual malice" when speaking and writing about Trump University. By invoking Californias anti-SLAPP statute, Makaeff triggered procedures that hastened consideration of the defamation claim without further discovery.
On August 23, 2010, U.S. district judge Irma E. Gonzalez ruled that Trump University was not a public figure, did not need to show malice on Makaeffs part, and could proceed with its defamation claim. Makaeff appealed to the Ninth Circuit Court of Appeals, where a three-judge panel ruled unanimously on April 17, 2013, that Trump University is a "limited-purpose public figure" and that Trump University must demonstrate malice on Makaeffs part to establish defamation; it returned the case to the district court to consider the defamation claim against that standard.[a] After additional briefing, U.S. district judge Gonzalo P. Curiel ruled in Makaeffs favor on June 16, 2014, and dismissed the defamation claim. Makaeff then, at the courts invitation, presented evidence of her legal costs and fees in connection with the defamation litigation. She asked for $1.3 million, and on April 20, 2015 Curiel ordered Trump University to reimburse Makaeff $798,000 in legal fees and costs.
In November 2015, the district court ruled on Trumps motion for summary judgment. In a 44-page opinion, the court denied Trumps motion for summary judgment on most of the claims, finding that there was a genuine issue of fact on plaintiffs claims of deceptive practices and misrepresentation in advertisements in violation of California, Florida, and New York consumer protection and business law and therefore letting these claims proceed to trial. The court did grant summary judgment in Trumps favor on plaintiffs request for an injunction, because Trump University stopped enrolling students in July 2010 and no longer sold the same seminars or other programs.
On March 21, 2016, over objections from the attorneys for Trump University, Curiel allowed Makaeff to withdraw as the lead plaintiff,[b] naming Sonny Low[c] in her stead, resulting in the case title Low v. Trump University, LLC.
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