Trump Must Face Claims Namesake School Swindled Students

Updated on
  • Appeals court reinstates key fraud claim against Trump U.
  • N.Y. attorney general said Trump ran sham real estate school

Donald Trump stumbled in court Tuesday when a New York State appeals court reinstated a fraud claim against his namesake real estate school in a lawsuit by Attorney General Eric Schneiderman.

The appeals court issued its decision as Trump seeks to dominate the field of Republican presidential candidates during today’s Super Tuesday primaries. The four-judge panel rejected the billionaire’s claims that the entire case should be tossed. 

Trump’s legal woes over the university have been fodder for his Republican rivals including Florida Senator Marco Rubio who has stepped up attacks over the school. The Super Tuesday primaries award as many as half of the delegates needed to win the Republican nomination for president.

The restored claim allows Schneiderman to seek certain monetary penalties against Trump University if he wins the case, including restitution for alleged victims and disgorgement of profits. The attorney general may also seek damages for alleged wrongdoing going back six years, the appeals panel in Manhattan said, overturning a lower court ruling that the claim was subject to a three-year statute of limitations.

Trump Appeal

Trump will appeal, said Alan Garten, general counsel of The Trump Organization.

“We believe the decision is internally inconsistent and admittedly contradicts its very own rulings, including rulings that the court issued as recently as 2013,” Garten said in a phone interview.

Schneiderman sued Trump and the university in August 2013, alleging the school swindled students out of $40 million by operating without a license from 2005 and 2011, and misleading students by promising real estate investing expertise in exchange for a $35,000 fee.

The Republican presidential candidate is also facing two class-action lawsuits over Trump University in California filed by former students who allege the school didn’t deliver on promises. On Sunday, Trump accused the Hispanic judge overseeing those cases of bias because of his comments about undocumented immigrants and Mexico.

‘Clear Victory’

The appeals court’s ruling didn’t address the merits of Schneiderman’s claims and focused solely on legal principles.

Schneiderman heralded the decision as a “clear victory” in his efforts to hold Trump accountable.

“As the state’s chief law enforcement officer, my job is to see that perpetrators of fraud are brought to justice,” he said in a statement. “We look forward to demonstrating in a court of law that Donald Trump and his sham for-profit college defrauded more than 5,000 consumers out of millions of dollars.”

In response to Schneiderman’s statement, Garten said “the fight has just begun.”

The New York case is Schneiderman v. The Trump Entrepreneur Initiative LLC, 400965-2012, Supreme Court of the State of New York, County of New York (Manhattan). The California case is Makaeff v. Trump University LLC, 10-cv-00940, U.S. District Court, Southern District of California (San Diego).