For-profit colleges have been on a decade long decline largely because they have oversold, overpromised, overcharged and seriously underdelivered. But even the worst of the for-profit colleges offered at least a whiff of an education program. You can’t even say that about Trump University. It wasn’t a university, it wasn’t a college, so maybe it shouldn’t even be called a for-profit college. It was simply a for-profit.
Trump U. opened in 2005 and lasted five years. It was 93% owned by Donald Trump, whose name was a key selling point. It offered “courses” in real estate, asset management, entrepreneurship and wealth creation. These courses were not unlike the sales tactics used to sell time-shares. Usually, the first one was free. Prospective students would be attracted to a webinar in a rented space, like a hotel ballroom, and once there they would learn that if they paid a lot more money they could dream of being a get-rich quick real estate investor.
The offerings started with a 3-day, $1,500 seminar. But to really get on the fast track, participants were pressured to buy up to higher level programs that varied from $10,000 to $35,000. According to a complaint filed by the New York State Attorney General Eric Schneiderman, “the contents and material presented by Trump University were developed in large part by a third-party company that creates and develops materials for an array of motivational speakers and seminar and timeshare rental companies.” Trump had little or no involvement, although students did get the opportunity to have a picture of themselves taken with a life-sized cardboard cutout of Trump.
Here what some of the employees and students of Trump U. had to say about their experience:
Ronald Schnackenberg was a former salesman for the ‘university.’ In his testimony in one of the suits brought against Trump, he said, “while Trump University claimed it wanted to help consumers make money in real estate, in fact Trump University was only interested in selling every person the most expensive seminars they possibly could. Based upon my personal experience and employment, I believe that Trump University was a fraudulent scheme, and that it preyed upon the elderly and uneducated to separate them from their money.”
The New York Times reported on the testimony of a former Trump U. event manager Corrine Sommer. “She said she was startled by the qualifications of some Trump University instructors. Ms. Sommer recalled that a member of the Trump University sales team, who had previously sold jewelry, was promoted to become an instructor. He had ‘no real estate experience,’ she said. She added that many of the instructors had the quality that the school seemed to value most: ‘They were skilled at high-pressure sales’.”
The Guardian interviewed Kathleen Meese, a Trump University student and mother of a Down’s syndrome son, who was pressured into buying a Gold Elite plan. ““I maxed out my credit card,” she said. “You were supposed to write yourself a check for $1m and tape it to your mirror, and in three years you would be able to cash it. I didn’t have three cents from them. I didn’t make a penny.”
Jeffrey Tufenkian, another former Trump University student, told CNBC , “When attorneys and other experienced real estate advisors raised red flags about the legality of techniques Trump University people were saying we should use, I knew we had been cheated.”
Both Richard Hewson and his wife were Trump U. students. In an affidavit he said “we had paid over $20,000 for nothing., based on our belief in Donald Trump and the promises made at the free seminar and three-day workshop. The whole thing was a scam.”
Regulators went after Trump U. from the very beginning. Already in 2005 the New York State Department of Education sent Trump a notice that his use of the word “university” was illegal. Eventually the name was changed to the Trump Entrepreneurial Institute, but that was near the end in 2010. That same year Texas Attorney General Greg Abbott began an investigation. No charges were ever filed, though, as Trump U. pulled out of Texas. (Trump himself would be back in 2014 as a major donor to Abbott’s gubernatorial campaign.)
When the ‘university’ folded in 2010, it was facing several legal actions. Tarla Makaoff, a former Trump University student who paid them $60,000, was the lead plaintiff in a class action suit for students in three states, California, Florida and New York, for violations of consumer protection laws in those states. A California businessman filed a class action suit in 2013 against Donald Trump the individual on behalf of consumers who bought “live events” from Trump University. The suit alleged violations of the RICO (Racketeer Influenced and Corrupt Organizations) statute stating that Trump University delivered “neither Donald Trump nor a university.” In the same year the State of New York filed a $40 million civil lawsuit charging illegal business practices and false claims.
In November of 2016, the month when Donald Trump was elected president by a minority of Americans, a $25 million settlement was announced. $21 million went as reinbursement for the plaintiffs in the two class action suits, $3 million was designated for New York residents who were not covered by the class actions and $1 million was a fine paid to New York State for the illegal use of the name “university.”
You call this a university? Pacific Standard, an online magazine published by the Social Justice Foundation, has some other suggestions: “If it’s called Trump University, what else can we call it besides a university? Try: business, enterprise, seminar, class, failure, place where people get pressured into paying tens of thousands of dollars to be taught how to flip houses by instructors who have no background in real estate and lie about having personally met Trump. There are a lot of options. Just don’t call it a university.”