August 26, 2013

Trump defends his school, prosecutor calls it 'a scam'

Donald Trump's real estate school is under attack by New York's top prosecutor, and both sides took to the airwaves Monday to elaborate on the upcoming legal battle.

During separate interviews on CNN's "New Day," New York State Attorney General Eric Schneiderman called the school a "bait-and-switch scheme," and Trump accused the prosecutor of actions akin to extortion.

Still, Trump dismissed the importance of the matter.

Trump said Schneiderman "is a total lightweight. He's an incompetent attorney general who figured he could get some publicity on [my] back."

Schneiderman filed a $40 million civil lawsuit against Trump on Saturday, accusing the billionaire of defrauding students who attended his for-profit school. What was once called Trump University is now The Trump Entrepreneur Initiative.

The lawsuit claims Trump used his celebrity status to lure students into a school that over-promised and under-delivered. A free seminar urged prospective students to pay $1,495 for a three-day workshop. That, in turn, was used to sell a $34,995 "Trump Elite" course.

In the school's commercials, Trump tells viewers, "At Trump University, we teach success. That's what it's all about: success. It's going to happen to you."

Schneiderman said Monday the lawsuit was prompted by dozens of complaints from former students who contacted his office and the Better Business Bureau, a national nonprofit organization. He said the suit completes one branch of a long-running investigation into for-profit schools.

The attorney general said Trump University isn't even a university, which is defined as a collection of colleges and must be chartered, and that teachers were never certified. And although students were promised an in-person meeting with Trump, "all they got was the chance to stand next to a life-sized poster," Schneiderman said.

Among the lawsuit's accusations:

* The program teased a "special" list of lenders that was actually photocopied from the Scotsman Guide, a magazine found at any bookstore.

* Instructors promised improved credit scores using tactics that could actually hurt your FICO score,

* Trump claimed the school was philanthropic, but it actually netted $5 million.

Schneiderman said his lawsuit partly relies on the sworn testimony of Trump University's former president, Michael Sexton, who explained that Trump maintained a close eye on the school and read all of its promotional material. Schneiderman also said he got hold of the school's "playbook," which insisted that instructors keep pitching the upgraded, more expensive programs.

"This is a pretty straightforward case. The documents pretty much entitle us to a judgment," Scheiderman said on "New Day."

When Trump appeared on the program by phone later in the morning, he defended the school, saying it had received stellar evaluations by students.

"We didn't think we were going to get sued because we have a 98% approval rating," Trump said. "If you go to Wharton or Harvard, they didn't have a 98% approval rating. People loved the school. The school was terrific."

Trump then turned his attention to the prosecutor, saying Schneiderman approached Trump for political donations -- and when Trump refused, Scheiderman followed with a lawsuit as revenge.

On Twitter, Trump had called the New York attorney general "a total sleezebag" for "shaking [him] down" for money.

In response Monday morning, Scheiderman said, "Prosecutors are all used to people who commit fraud making wild accusations when they're caught."

But Trump cast the legal challenge as a power battle between an overreaching government and a private powerhouse -- himself.

"I could have settled this case very easily. They wanted to settle. I chose not to," Trump said. "We have a lot of happy students. They'll be testifying."

Meanwhile, on Twitter, Trump suggested the lawsuit was politically motivated and had something to do with President Obama, since Schneiderman had met with the president during his visit to Syracuse last week to discuss higher-education reform.

"Maybe it's a mini-IRS. I am a Republican," Trump said, referring to the recent scandal involving the IRS targeting right-wing political groups.

To that, Schneiderman said: "The president and I had much more important stuff to talk about than Donald Trump."

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