New York State Attorney General Eric Schneiderman filed a lawsuit against The Trump Entrepreneur Initiative, also known as Trump University, alleging that the educational institution is unlicensed and illegal.
Based on the complaint by the state of New York, Trump University is teaching students the strategies and techniques of Donald Trump, and it was operating its programs illegally until May 2010.
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New York State argued that Trump University is not chartered as a university. In 2005, the New York Education Department notified the institution that its use of the word “university” is a violation of state law.
According to the complaint, Trump University engaged in a widespread marketing campaign, not just in the state of New York, but across the United States to attract students to a free 90-minute seminar that serves as a sales pitch for three-day seminar that costs $1,495.
The New York State complaint pointed out that the three-day seminar was an up-sell to the more expensive Trump Elite packages starting at around $10,000 and topping out at as much as $35,000 for a one-year mentorship program.
Trump University engaged in deceptive practices to lure students
The state alleged that Trump University engaged in deceptive practices to lure students to enroll in paid courses by claiming the experts handpicked by Mr. Trump will serve as instructors or mentors.
The complaint stated that Trump University failed to prove that its instructors and mentors were successful real estate entrepreneurs. Mr. Trump did not pick any of the institution’s instructors, who have limited backgrounds in real estate investment. The state said, “Many [instructors] came to Trump University shortly after their real estate investing caused them to go into bankruptcy.”
The state emphasized that students were encouraged to enroll in courses offered by Trump University after promising them that they will be able to recoup the costs in a few months because they will gain insider access to special financing. Trump instructors would also supposedly monitor and lead them through their first real estate deal.
The lawsuit says that Trump University earned $40 million in revenue from students who spent thousands of dollars of their savings or incurred thousands of dollars of debt. Trump’s holding company managed the daily operations of Trump University, which lacks any of the required formalities of a separate corporate entity or a limited liability company.
Trump University ignored its warnings regarding its violations
“Trump University could not even issue its own checks, and it never held a board meeting,” based on the complaint by New York State. In addition, the state said that Mr. Trump and Michael Sexton were personally involved in the operations of the institution. Sexton was in charge of the misleading advertisements, which were approved by Mr. Trump.
The state pointed out that Trump University ignored warnings regarding violations for operating without a license since 2005, and deceived more than 5,000 students across the country including 600 from New York who paid as much as $35,000 each for live seminars and mentorship programs.
New York is seeking injunctive relief, restitution, disgorgement, damages and costs against Trump University for its violations.