NEW YORK (Reuters) - In 2009, California businessman Art Cohen received a letter from Donald Trump with a “special invitation” and two VIP tickets for a Trump University seminar promising to help make Cohen rich.
The letter, emblazoned with a school coat of arms, urged Cohen to attend the class to learn Trump’s real estate secrets from his “hand-picked” faculty, declaring: “You’ll have what you need to succeed!”
When Cohen arrived at the Fremont Marriott Silicon Valley hotel, he found a jumbo screen projecting Trump’s photo as the theme song, “For the Love of Money,” from Trump’s TV show “The Apprentice,” played. Cohen went on to purchase a $1,495 ticket to a three-day seminar, and then went to put $34,995, plus interest and finance charges, on his credit card to become a part of Trump University’s Gold Elite Program.
In the end, Cohen said in a 2013 class action lawsuit pending in the Southern District of California, the program delivered to its 5,000 students neither Trump nor a university. Instead, the suit claims the school lured “student-victims” into its doors, only to defraud them once their checks were cashed.
TV star. Real estate mogul. Verbal grenade thrower. Donald Trump has always sought publicity.
But now that Trump has risen to the top of opinion polls in the crowded field of Republican Party contenders in the 2016 presidential election, the lawsuit, coupled with another brought by New York Attorney General Eric Schneiderman that is awaiting trial, could become politically damaging.
Trump’s deposition in the California litigation, where plaintiffs are seeking $40 million in damages, is scheduled for Aug. 26 at Trump headquarters in New York, sources on the plaintiff’s side said.
Trump’s lawyer, Alan Garten, called the allegations “totally lacking in any merit” and said that Trump would prevail in the end “whether it be by motion or at trial.”
Garten described the New York probe as politically motivated and said the California lawsuit was a “shakedown” where previously-satisfied students were now looking to sue their way to a net worth. Garten said the school received 11,000 evaluations, 98 percent of which gave the school 4 or 5 stars.
According to court documents, students who attended Trump University said they were told they would receive personal mentoring from Trump himself and would even get a chance to become his next apprentice on TV.
Students typically included a significant percentage of senior citizens, and were urged to clear out their 401k’s and max out their credit cards because Trump promised a higher return on the investments in the foreclosure market, according to the complaint.
Consumers were told the course would enable them to pay off their credit cards, cars and fully fund their retirements.
Instead, the plaintiffs claim, Trump was completely absent and the “faculty” turned out to be “high pressured salespeople hired as independent contractors and paid commissions for sales.”
Rather than curriculum designed by Trump the lawsuit said students received course materials that were created by a school official with no background in real estate as well as third party providers.
Garten denied these claims, saying Trump was personally involved in both the hiring of faculty and the creation of the course materials and case studies.
Almost immediately after founding the university in 2005, the New York State Department of Education told Trump to change the name of the institution since it was not accredited, did not have a license and offered no degree. The Texas Attorney General also began an inquiry.
Trump eventually changed the name to Trump Entrepreneur Initiative but in 2010 stopped accepting new students because of the real estate crash, Garten said.
The case is Art Cohen v Donald J. Trump, U.S. District Court for the Southern District of California in San Diego, No. 13-2519
Editing by Grant McCool