Posted on 07/16/2015 5:03:07 AM PDT by SeekAndFind
In June 2009, Richard and Shelly Hewson paid the Trump Entrepreneur Initiative, an educational venture owned by businessman and now–presidential candidate Donald Trump, $21,490 for classes that promised to teach them how to flip homes for profit. They ponied up the high price “because we had faith in Donald Trump,” Richard wrote in a January 2015 affidavit. “We thought that if this was his program, we would be learning to do real estate deals from his people who knew his techniques.”
What did the New Jersey couple get for shelling out more than $20,000 to a business bearing the famous Trump name? An instructor took them on a field trip to see dilapidated homes in rough Philadelphia neighborhoods, never bothering to explain how to reliably find properties to sell for a profit.
“We realized that Trump was not teaching us how to find these needles in a haystack,” Richard Hewson’s affidavit says. “We concluded that we had paid over $20,000 for nothing, based on our belief in Donald Trump and the promises made at the [organization’s] free seminar and three-day workshop.”
“We never tried to get our money back because at that point we thought the whole thing was a scam and that we would not be able to fight Donald Trump,” Hewson wrote.
Now Trump is fighting more than a dozen other candidates for the Republican presidential nomination, making his pitch on his business record and the respect it’s garnered him from millions of voters. But will his image as a peerless, productive entrepreneur suffer because of allegations that one of his businesses — one that promised to help ordinary Americans achieve success like his — amounted to a scam?
A class-action lawsuit in California and an ongoing civil suit brought by New York allege that Trump University defrauded up to 5,000 students.
The Hewsons are not alone: A class-action lawsuit in California and an ongoing civil suit brought by New York State allege that the now-defunct Trump University, later known as the Trump Entrepreneur Institute, defrauded up to 5,000 students, who paid as much as $35,000 to learn Trump’s real-estate investment strategies and techniques.
The venture was, as Trump enterprises go, not especially large — the New York complaint alleges Trump University earned about $40 million in revenue between 2005 and 2011. It’s just one of many businesses whose main selling point is Trump’s brand, a successful synthesis of prestige and up-by-your-bootstraps American entrepreneurship, quite at odds with the picture that recipients of a Trump education paint.
Last October, a New York trial court ruled that Trump University and Donald Trump personally were liable for restitution for all students who had taken the course since May 2010, “because it was operating illegally without a state license,” according to the attorney general’s office.
Trump representatives claim “there’s no merit to these allegations whatsoever.” Alan Garten, executive vice president and general counsel for the Trump Organization, says former students brought suit “completely [out of] a financial motivation.”
The courses, he says, were “done in a first-class manner, and the materials were high-quality and first-rate.”
According to the lawsuits, Trump University aggressively marketed a 90-minute free seminar that would reveal Trump’s real-estate investing secrets. “My hand-picked instructors will share my techniques, which took my entire career to develop,” said one mass mailer bearing Trump’s signature and offering two free VIP tickets to the event.
At the seminar, sales representatives were waiting, reportedly tasked with persuading attendees to pay an additional $1,495 for a three-day conference (which the Hewsons signed up for) that would provide “the last real-estate education you will ever need for the rest of your life.” According to New York State’s complaint, “Trump University speakers repeatedly insinuated that Donald Trump would appear at the three-day seminar, claiming that he ‘is going to be in town’ or ‘often drops by’ and ‘might show up’ or had just left.”
But instead of getting a personal lesson from Trump, both cases claim, those who signed up got to take a picture with a cardboard cutout of him — and then, the “faculty” allegedly subjected them to another sales pitch, aimed at persuading attendees to sign up for a $34,995 “Gold Elite Program,” which they said would include special training, mentorship, and access to alternative financing sources for real-estate deals.
Using high-pressure techniques, the complainants allege, salesmen tried to pressure attendees into charging the $34,995 to their credit cards.
The complainants allege salesmen tried to pressure attendees into charging the $34,995 to their credit cards. “Trump University even provided handouts with scripted talking points for students to use in their phone calls with credit-card companies, explicitly encouraging people to falsify their current income, ‘add[ing] projected income from our future real estate venture[s],’ and to deceive credit card companies by declaring income streams from corporate entities that had not been created, with the script telling students: ‘If they ask you to prove income, inform them that it will be too much trouble to put all the paperwork together,’” New York State’s complaint says.
Garten says: “There was no high-pressure sales techniques — that’s crazy. . . . Were there efforts to sell the course? Yes. . . . We think it provides people with real benefits. [But] no one was compelled or coerced to do that. It’s laughable. People can make their own decision.”
New York State alleges that some students wiped out their savings or went heavily into debt to cover the cost of the courses, which seem to have rarely delivered on the lofty promises.
The New York suit, led by Democratic attorney general Eric Schneiderman, says many of the so-called faculty “came to Trump University from jobs having little to do with real estate investments, and some came to Trump University shortly after their real-estate investing caused them to go into bankruptcy.” (Garten says the course materials were “prepared by leaders in the field,” including Ivy League professors.)
Trump’s camp points to surveys conducted by attendees that reportedly show a 98 percent approval rating, but New York State alleged that some students felt pressured by their teachers to provide high rankings or were asked to rate the course before they had even completed it.
National Review did find some former students who said they were satisfied with their Trump University experience.
“It gave me the guidelines and knowledge to enter real-estate investment, and it was helpful for me,” says Jorge Carlos Guillen, a realtor in Virginia and Maryland. “For me, it was not a scam. I paid $10,000 for it, and I got that money back pretty quickly.”
Mark Gordon, owner of MG Real Estate Solutions and Mark Gordon Properties Inc., says he paid for the whole $34,995 class and was satisfied: “Helpful would be an understatement.”
“You pay your money and take your chances, and you’d better go into these kinds of things with your eyes wide open,” Gordon says. “I don’t think [Trump is] a scam artist, and I don’t have a beef with this. Some people are very unhappy, and I get that: They spent a lot of money. [But] there was never any implied guarantee that you take their training and you’re going to make millions. I never got that.”
New York State has alleged that Trump’s for-profit educational company operated there between 2005 and 2011 despite repeated warnings from the state’s education department that it’s illegal to run an unchartered, unlicensed university. The state court has not yet determined how much restitution Trump University will have to pay. The trial court authorized Trump’s legal team to depose each of the estimated 5,000 consumers potentially eligible for money.
The Trump Organization maintains that it was upfront about what the school was. “At no time did we ever represent that it was a certified institution,” Garten says. “It’s not like we were operating in the dark. We were open and notorious. We advertised it quite extensively. People knew exactly what we were doing, including the [state] department of education, and they were fine with it.”
In October, New York State supreme-court justice Cynthia S. Kern decided that that Trump had violated state education law, writing, “It is undisputed that Mr. Trump never complied with licensing requirements.” Because of the statute of limitations, the state could not seek restitution throughout the entire time Trump operated without a license, just from 2010 onward.
The ongoing lawsuits against Trump University may prove uncomfortable for Donald Trump as he embarks on a presidential campaign. Many of his businesses, like Trump University, derive their success from his brand, and yet other Trump business practices — such as his unsuccessful casinos in New Jersey’s Atlantic City and his firms’ alleged hiring of illegal immigrants on construction projects — have come under scrutiny, too. A number of Trump ventures have gone bankrupt in spectacular fashion, and even his net worth has been a matter of controversy: In a recent press release, Trump claimed his worth to be $10 billion, but Forbes magazine has pegged it at just $4 billion.
The press release was prompted by Trump’s filing financial-disclosure forms with the Federal Election Commission, which is required for participation for the first Republican presidential debate, on August 6. There’s more news forthcoming, though, thanks to the Trump U lawsuits: A California federal judge ruled earlier this month that Trump has to testify on August 10 about both his net worth and his earnings from the real-estate classes.
— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women’s Forum.
Hillary did..... It was called University of Benghazi ! Look it up sometime media!
Go to one of the pitches some weekend ( there are almost always seminars somewhere) and listen for yourself
There is NOTHING illegal unethical or “immoral” here
Most have the same focus: find and buy tax liens on property ( liens issued by local govt for nonpayment of taxes or assessments) .... Focus on residential business land ... You choose
Either collect interest when the owner pays the lien, or take possession of the property if they do not
Once you own the property flip it, fix and flip it, rent it, or use it
The sellers Of these seminars provide an education in how the system works and the better ones have a network of research services that locate properties with tax liens and also a network of investors with cash who will buy these properties quick and cheap from you if you flip it, or you can find your own buyer
Example you buy lien for $900 on property assessed at $300k, owner defaults on it, you now own the property which you flip to investor fir $50k
Nothing illegal nothing immoral and property ts recycled back to productive asset on city tax base
No one understands better than Trump how to become a self-made investor with real estate
Not that everyone who buys the seminar will end up following the program and be successful....
Sounds like the aggrieved didn't want to do the leg work involved.
You beat me to it.
$35k? I was just quoted $47k to get an ONLINE BA in history and that was with half the credits transferred from my existing BA and MBA and work experience!
Too much for a hobby degree from an online diploma mill
Check with your local universities. It's amazing how much they do online anymore, and for a lot less than $47K.
I know people who flip houses and are very successful at it. You just need to know how to go about it. Sounds like a bunch of sour grapes to me. My question is - why would people put #34,000 on a credit card, when they could use that same money for a down payment on a foreclosure home, renovate it and then flip it for a profit? People really are stupid.
why would people put #34,000 on a credit card, when they could use that same money for a down payment on a foreclosure home, renovate it and then flip it for a profit?
Come on. Who cares what he has ever done in the past?
Haven’t you heard he is attacking illegal aliens? That is all that matters now.
/s
you do know that the NY State Supreme Court is not a “supreme court?” Right? It is one of Sheldon Silver’s appointed judges. Lowest level in the NY judicial system. The “supreme court” in New York is called the Court of Appeals.
People who can utilize these techniques and networks are not looking at fixing and flipping houses 1 at a time and only in neighborhood where they have physical access
They are paying to tap into a national network of pre-researched properties
In decent areas that support the comps, with liens coming up in short term for redemption, and all over the USA
So the pitch is you buy several liens and either just end up with the interest ( which beats the banks by far) or you end up “owning” a property 6 states away that you may never see, never have to go find and hire contractors to fix, and have investors with cash willing to buy them from you in a week - as long as you are not greedy( ie, sell home worth potentially $300k when fixed, for $10k to cash investor, based on your having got it for a $700 lien)
I hope you’re right but, no doubt, they’ll harp on this forever.
If he actually had a 98% satisfaction rate, I'd say it was the first type. Those that felt they would get something out of the connection to the Trump name.
I think whether it was licensed or not is a silly complaint used to smear him. Whether the University used high pressure selling techniques on naïve people will need to be settled in court.
Did the people who were unsatisfied try to get their money back or did they go for the class action law suit? The couple cited in the article did not try to get their money back. That's a red flag that they are filing this suit for other reasons than the money. Lots of unanswered questions here.
Lol it won’t matter.
a. People don’t care- most if not all know it’s an attempt to damage Trump and has no real basis.
b. Trump will just use the controversy to his advantage by telling the truth
Goldman Sachs and Neuberger Berman employees make up the bulk of ¡Jeb!’s paltry 12,334 donors.
Lol....maybe Trump will sue National Peeyiew.
Did Trump make fake candy for poor kids? It now begins seeing’s how Jeb is faltering.
Yeah. They probably didn’t offer these solid majors like other universities around America:
Women’s studies
Gender studies
Secularism
LGBT studies
Film
Puppetry
English Literature/Literary Criticism
Music Therapy
Sequential Art
Surf Science and Technology
Golf Management
Evolutionary biology
Journalism
Perhaps you’re right about that and I was misled by the author’s mention of “New York State supreme-court justice Cynthia S. Kern”. The Bush loyalists and other such Democrat-lites in the GOP may be pushing this story, but Trump’s name and image being used as the basis of what looks like a squalid scam gave them that opening. And I have to say it reinforces my own long time opinion of Mr. Trump. I can agree with and be pleased with his blowing the lid off the illegal immigrant and sanctuary cities issue, and his DILLIGAF? attitude in general. But that doesn’t mean I trust him.
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