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Trump Institute Accused of Fraud by N.Y. Attorney General

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Billionaire Donald Trump
Billionaire Donald Trump, the New York-based Trump Organization Inc. and a former president of the Trump Entrepreneur Initiative are accused of running an unlicensed educational institution from 2005 through 2011. Photographer: Ben Nelms/Bloomberg

Aug. 25 (Bloomberg) -- Donald Trump was sued by New York Attorney General Eric Schneiderman over claims the billionaire operated a fraudulent online educational institute that swindled students out of $40 million.

Trump University, now known as the Trump Entrepreneur Initiative, operated as an unlicensed educational institution and misled students with promises that they would gain real estate investing expertise, according a copy of the petition provided by Schneiderman’s office. Yesterday’s filing wasn’t immediately available from New York Supreme Court in Manhattan.

Students paid as much as $35,000 for the institute’s programs, purportedly taught by experts “handpicked” by Trump, according to the petition. Trump didn’t select the instructors, many of whom didn’t have real-estate backgrounds or had recently sought bankruptcy because of their real estate investing failures, Schneiderman’s office alleged.

After being told that they would recoup the cost of the programs within a few months, many students were unable to conclude even one real estate deal, according to the petition.

“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,” Schneiderman said today in a statement.

5,000 Students

Trump, the New York-based Trump Organization Inc. and a former president of the institute are accused of running an unlicensed educational institution from 2005 through 2011. More than 5,000 students, including 600 in New York, paid for the educational programs, according to the petition.

Amanda Miller, a Trump Organization spokeswoman, referred questions to, a website devoted to criticism of the attorney general.

Surveys show that “98 percent of Trump University students rated the program ‘excellent’ while only 4 percent of New York State registered voters rated Attorney General Eric Schneiderman’s performance as ‘excellent’,” according to the site. “Schneiderman thinks he could be the next governor? He must be joking.”

The case is Schneiderman v. The Trump Entrepreneur Initiative LLC, 400965-2012, Supreme Court of the State of New York, County of New York (Manhattan).

To contact the reporter on this story: Christie Smythe in federal court in Brooklyn, New York at

To contact the editor responsible for this story: Michael Hytha at

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