Trump University: $25 Million Settlement for Fraud and Misrepresentation
Tier 1Resolved2005-01-01 to 2018-04-09
Factual Summary
Trump University was a for-profit enterprise launched in 2005 that marketed real estate seminars as a path to learning Trump's personal investment strategies. Despite its name, it was not an accredited university. The New York State Department of Education notified the business in 2005 that it was violating state law by using the term "university." The organization was renamed Trump Entrepreneur Initiative in 2010, the same year it ceased operations.
Three lawsuits alleged that Trump University engaged in systematic fraud. Two class-action suits were filed in California by former students, and the New York Attorney General filed a $40 million civil fraud suit in August 2013. The plaintiffs alleged that the program used high-pressure sales tactics to persuade students to pay up to $35,000 for courses that promised access to Trump's "hand-picked" instructors and proprietary real estate secrets. Internal documents and former employee testimony indicated that Trump did not personally select instructors, that the "secrets" amounted to generic real estate advice, and that the program functioned primarily as a sales funnel.
In November 2016, shortly after winning the presidential election, Trump agreed to a $25 million global settlement. The settlement allocated $21 million to class-action participants, $3 million to New Yorkers not covered by the class actions, and up to $1 million in penalties to New York State. Former students received refunds of approximately 80 to 90 percent of their tuition costs.
Primary Sources
1. 9th Circuit Opinion, Simpson v. Trump University, LLC, No. 17-55635 (9th Cir. 2018): https://cdn.ca9.uscourts.gov/datastore/opinions/2018/02/06/17-55635.pdf
2. NY AG Press Release, "A.G. Schneiderman Statement On Final Trump University Settlement," April 9, 2018: https://ag.ny.gov/press-release/2018/ag-schneiderman-statement-final-trump-university-settlement
Corroborating Sources
1. NBC News: "Federal court approves $25 million Trump University settlement," February 6, 2018
2. CNN: "A judge has finalized a $25 million settlement," April 10, 2018
Counterarguments and Context
Trump maintained he would have won at trial and only settled to avoid distraction during his presidential transition. He pointed to student satisfaction surveys showing high approval ratings. The settlement did not include an admission of wrongdoing. The $25 million was reportedly paid by Trump's business partner Phil Ruffin rather than by Trump personally.
Author's Note
This entry contains no interpretive commentary at this time.