In a stark reversal, President-Elect Donald Trump has agreed to pay $25 million to settle three lawsuits asserting longstanding fraud allegations against him and his now-defunct Trump University, according to an announcement from New York State Attorney General Eric Schneiderman late Friday afternoon.
Schneiderman’s office sued Trump, Trump University and its former president, Michael Sexton, in 2013, accusing the billionaire of, among other schemes, scamming more than 6,000 victims out of more than $40 million through bogus courses that promised to teach his real estate investing techniques yet never delivered on its stated promises. Two federal class-action lawsuits filed in San Diego made similar claims. Collectively, the lawsuits created controversy for his presidential candidacy along the campaign trail and ultimately set the stage for the unprecedented predicament of a sitting U.S. president having to face multi-million dollar fraud charges in federal court.
Trump had consistently refuted the merit of the cases and refused to settle, instead doubling down on verbal attacks against the federal judge overseeing the cases, sparking controversy by calling U.S. District Judge Gonzalo Curiel a “hater” at a campaign rally, and his “Mexican heritage” an “absolute conflict” of interest in an interview, due to Trump’s plan to build a wall between the United States and Mexico to keep illegal immigrants out.
Friday’s announcement that the former star of The Apprentice reality TV show is agreeing to pay millions as a settlement, therefore, denotes a remarkable change of course.
“In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of millions of dollars through a scheme known as Trump University,” Schneiderman said in a statement. “Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes. Today’s $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university.
“I am pleased that under the terms of this settlement, every victim will receive restitution and that Donald Trump will pay up to $1 million in penalties to the State of New York for violating state education laws,” he continued. “The victims of Trump University have waited years for today’s result and I am pleased that their patience—and persistence—will be rewarded by this $25 million settlement.”
Between 2005 through 2011, not only did Trump University operate as an unlicensed educational institute, the attorney general’s office had charged, but its advertisements—many featuring Trump himself—made a slew of false claims, among these that the so-called school would use his “handpicked experts” to teach the get-rich real estate techniques, with some students shelling out up to $35,000 for programs that did no such things.
In an August 2013 announcement outlining the filing of his suit against Trump, Schneiderman’s office said an investigation discovered that Trump “did not handpick even a single instructor at these seminars and had little or no role in developing any of the Trump University curricula, or seminar content.” It also revealed that “officials used the name ‘Trump University’ even though they lacked the charter necessary under New York law to call themselves a University. They were also unlicensed under New York State Education Law, evading an array of legal protections designed to protect New Yorkers from fraud.”
At the time, Schneiderman, a Democrat, declared that Trump University’s thousands of victims across the country “got a hard lesson in bait-and-switch.”
“Mr. Trump used his celebrity status and personally appeared in commercials making false promises to convince people to spend tens of thousands of dollars they couldn’t afford for lessons they never got,” he stated. “No one, no matter how rich or popular they are, has a right to scam hard working New Yorkers. Anyone who does should expect to be held accountable.”
Besides, Schneiderman said, Trump University wasn’t even a real university, since it hadn’t received an actual license to operate in the state—duping students even more so, and reinforcing this misconception by use of a university-like seal on related materials and awarding diploma-like certificates of completion emblazoned with The Apprentice star’s autograph.
Trump’s instructors made misrepresentations to get those attending free seminars to enroll in $1,495 three-day seminars, according to his office, and instead of receiving the stipulated instruction, those who signed up were given a list of lenders taken from a magazine—and those promised a personal visit from Trump instead got a photo with a life-sized picture of him.
Rather than the promised services, instructors also used the three-day seminars to pitch $10,000 to $35,000 “Trump Elite mentorship programs,” the AG’s office stated, and were encouraged to contact their credit card companies during breaks to raise their credit limits to supposedly fund real estate deals. Instead, those higher credit limits were requested in order to pay for the “Elite” programs, said the office.
“Many consumers who made the costly investments did not receive the individual mentor attention promised,” Schneiderman’s office stated in 2013. “After an initial three-day session, many mentors failed to return phone calls or emails and provided little to no follow-up assistance. Despite diligent efforts, many consumers were unable to conclude even a single real estate deal and were left worse off than they had been before enrolling in the Trump University programs.
“Some consumers faced thousands of dollars of debt due to the expensive cost of the Elite Programs,” it continued. “Many felt they had been victims of an elaborate scam.”
Trump University also violated federal consumer protection law, it added, by repeatedly failing to honor students’ requests to cancel.
Trump, in June, clarified his comments regarding Judge Curiel, touted positive reviews of Trump University from students—viewable on a website as well, 98percentapproval.com—and vowed to continue to fight the lawsuits.
“It is unfortunate that my comments have been misconstrued as a categorical attack against people of Mexican heritage,” he stated on his campaign website. “I am friends with and employ thousands of people of Mexican and Hispanic descent. The American justice system relies on fair and impartial judges. All judges should be held to that standard. I do not feel that one’s heritage makes them incapable of being impartial, but, based on the rulings that I have received in the Trump University civil case, I feel justified in questioning whether I am receiving a fair trial.”
“While this lawsuit should have been dismissed, it is now scheduled for trial in November,” Trump continued. “I do not intend to comment on this matter any further. With all of the thousands of people who have given the courses such high marks and accolades, we will win this case!”
President-Elect Trump does not admit any wrongdoing in agreeing to the settlement.