How Trump University ran the scam: Attorney General Eric Schneiderman explains why he’s prosecuting Donald Trump’s real estate ‘education’ operation for fraud
June 10, 2016
As published in the NY Daily News on June 9, 2016.
The allegations in my office’s case against Donald Trump and Trump University have me thinking back to the 1893 World’s Fair in Chicago.
Back then, hundreds of fairgoers crowded around a stage to see “The Rattlesnake King,” a former cowboy-turned-salesman named Clark Stanley. As the crowd looked on, Stanley pulled out a two-foot rattlesnake from a sack beside him, slit it open and plunged it into a boiling pot of water.
The crowd cheered as Stanley skimmed the fat off the top of the water and appeared to ladle it into a series of small glass bottles. Stanley boasted that his concoction — “Stanley’s Snake Oil” — would cure “all pain and lameness.”
Of course, the snake oil wasn’t a cure-all. In fact, it wasn’t even snake oil. Stanley had mixed together some turpentine, beef fat and red pepper to fill the bottles — and scam consumers who were desperate for help.
Using false promises to prey on desperate people has long been a hallmark of “snake-oil salesmen.” A lawsuit by my office alleges that Donald Trump was basically doing the same thing with Trump University — swindling desperate people with phony promises.
In a lengthy written statement about the case this week, Donald Trump sought to deflect attention away from the core facts in the lawsuits against him. Trump claims he is unable to get a fair trial from the judge in two California lawsuits , Gonzalo Curiel — whom Trump has repeatedly attacked and said could not be impartial due to the Indiana native’s Mexican heritage, because Trump’s campaign is focused on “illegal immigration.”
That is absurd and offensive. And nearly as absurd is the statement’s claim that Trump University offered a “substantive, valuable education.”
The facts, as set forth in our complaint, are quite different.
We allege that the fraud ran from beginning to end, starting with the name of the scheme. New York law prevents people from operating an unlicensed university. Trump’s venture never qualified or registered as a university under state law.
Trump University was nothing more than an unlicensed scheme that promised students could get rich quick by learning Trump’s “secret” real estate tips from his “handpicked” experts.
Students were told that they would get “apprenticeship” support, access to private funding sources and even a chance to meet Trump himself.
Instead, our lawsuit shows, they got a high-pressure sales pitch. The three-day seminar started at $1,495, and recently released documents confirm that students were pressured to increase their credit card limits to enable them to pay as much as $35,000 for supposed special mentorship programs.
Those “secret” Trump sales tips were just generic strategies available in any Real Estate 101 book. Trump had nothing to do with the curriculum. He didn’t “handpick” the instructors — he never even met them.
In total, we allege that Trump University students were defrauded of $40 million, with about $5 million going to Trump himself.
Falling victim to a fraud like this is a crippling economic hit at any time, but it was an especially difficult one to endure during the depths of the recession. Many students left the “university” with little more than a mountain of credit card debt and a photo with a cardboard cutout of Trump.
Trump has, unsurprisingly, responded to these serious allegations with juvenile taunts and misdirection.
He has called into question my office’s integrity and accused me of everything from accepting a bribe to personally conspiring with the President of the United States to take him down. He has done everything he can to distract from the straight-up fraud we allege in this case — and the thousands of families that have suffered because of his phony promises.
It goes without saying that Trump’s attacks on me pale in comparison to the racist attacks he has lobbed at Curiel.
But this is about more than one judge doing his job. As Trump wrote in his recent statement: “The American justice system relies on fair and impartial judges.” I agree with that sentiment wholeheartedly.
All told, five fair and impartial judges across three different suits have now allowed litigation against Trump University to proceed to trial — including a four-judge panel that unanimously affirmed all of New York’s legal arguments in March.
The pattern is clear: Trump will say anything, use any tactic and create any distraction to avoid the real issues at the heart of this case.
He will attack prosecutors like me who attempt to hold him to account and jurists who rule against him. Yet my office will continue to pursue justice for New Yorkers and others scammed by Trump University, without fear or favor.