Saying it could be a “mini IRS” scandal, Donald Trump blasted President Obama and New York’s attorney general Monday morning, suggesting the two may have planned a lawsuit to smear the outspoken critic of the president.
Mr. Trump was responding to the lawsuit filed Saturday by Eric Schneiderman, a Democrat, in which the attorney general charged the real estate mogul with running a bait-and-switch scam with his former “Trump University.” The suit seeks $40 million in restitution for the alleged defrauding of consumers.
According to the suit, the celebrity billionaire ran the unlicensed educational institution from 2005 to 2011, promising to teach enrollees his “very own real estate strategies and techniques” with instructors “handpicked” by Trump himself – claims the suit says are false. Trump University changed its name to the Trump Entrepreneur Initiative in 2010 after the New York State Education Department told him use of the word “university” was misleading and illegal.
"More than 5,000 people across the country who paid Donald Trump $40 million to teach them his hard sell tactics got a hard lesson in bait-and-switch," Mr. Schneiderman said in a statement Saturday. "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.”
Calling in on “Fox & Friends” Monday, Trump responded by calling Schneiderman a “political hack,” seeking publicity with the lawsuit. And over the weekend, one of his lawyers said the suit was “tantamount to extortion,” since Trump had previously contributed $12,500 to the attorney general’s first-term campaign in 2010.
Trump said Schneiderman came to his office often, seeking contributions and the names of his “big-business friends.” The attorney general, he also said, was unhappy with the amount he had contributed.
“I’m not a very paranoid person, but when this lightweight attorney general, who is not respected by anybody, when he meets with the president and then files a suit, you know, 24 hours later, I think, yes, I think I’ve been targeted, and I think it’s a big problem, and I think people ought to look into it,” Trump said to “Fox & Friends.”
“I’ve never heard of such a thing,” he continued. “Now he meets with the president on Thursday night, he sues me on Saturday. It was a terribly drawn suit, incompetently drawn suit, and they obviously did it very quickly. But probably Obama – maybe this is a mini IRS, maybe we have to get the tea party after these people, because this could very well be a mini IRS,” he said, referring to the controversy over the Internal Revenue Service singling out certain political groups.
The attorney general denied talking about Trump with the president.
Schneiderman began an investigation into the school in May 2011, after a string of consumer complaints and the reprimand from the state’s Education Department. In advertisements, Trump promised his that “handpicked instructors” would share his techniques and that students could “just copy exactly what I’ve done and get rich.”
Students responding to these advertisements began with a free 90-minute seminar, which simply urged the purchase of a $1,495 three-day seminar. Instructors then urged students to purchase the “Trump Elite” package, billed as a personal mentorship program costing $35,000 a course – a classic “upsell” in a bait-and-switch scheme, the suit alleges.
“There is a kind of groupthink that goes on in such seminars, in which each speaker is idolized and thought to be a 'messiah' of sorts who is able to bestow the keys to the castle, if only you buy his outrageously expensive package of materials,” says Dr. Carole Lieberman, a Los Angeles-based author and media expert familiar with Trump’s seminars. “The problem is that in this highly charged atmosphere – where the pot of gold seems to be at your fingertips – the temptation to believe is overwhelming, especially in these desperate economic times.”
According to Schneiderman’s suit, students in the three-day seminars did not receive any substantive instruction or extensive “apprenticeship support,” as ads promised, but merely a list of lenders from a commercially available magazine. And instead of meeting Trump, as some Elite enrollees were led to expect, students were simply given the chance to take a picture with a life-size photo of “The Donald.”
The New York attorney general’s office has been conducting a number of probes into the for-profit education industry over the past few years, and Schneiderman has investigated how recruiters at such schools may misrepresent their accreditation and their ability to find graduates jobs, as well as the costs of instruction.
Last week, Schneiderman announced a $10 million settlement with Career Education Corp., a global company that offers “career-focused learning” and “career opportunities” in online and traditional classrooms. The company, which offers degrees from associate’s to PhDs, had misrepresented its accreditations and significantly inflated its graduates’ job placement rates.
Trump said he was shocked his for-profit educational company was included in this investigation.
“You can turn on television at 2 in the morning, you’ll see everybody and his neighbor advertising to buy this school and buy this book and go into these courses,” he told “Fox & Friends.” “I’ve done really well in real estate: I’ve really imparted a lot of my knowledge to other people, and I really think that we have a great school. They’ve done a fantastic job. When you get 98 percent approval ratings from the people who took the courses, and then you get sued, is rather shocking."
"You have hundreds of schools operating in New York, and they don’t get sued?" he continued. "But Trump gets sued. You tell me, the day after he meets with the president and I get sued?”
Trump has since closed his former university.