POLITICS

Donald Trump Agrees To Pay $25 Million To Settle Trump University Fraud Cases

The president-elect frequently claims he "never settles" lawsuits. Not so.

19/11/2016 3:22 AM IST | Updated 19/11/2016 8:27 AM IST
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President-elect Donald Trump on Friday agreed to pay $25 million in fines and restitution to settle three fraud lawsuits on behalf of the former customers of Trump University, the businessman’s now-defunct real estate seminar program.

Under the terms of the settlement, Trump will not admit fault, a common bargain in civil cases like this one.

“My office sued Donald Trump for swindling thousands of innocent Americans out of ​millions of dollars through a scheme known at Trump University,” Eric Schneiderman, New York’s attorney general, said in a statement Friday. “Donald Trump fought us every step of the way, filing baseless charges and fruitless appeal​s​ and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes. Today’s $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university.”

The settlement covers two class-action lawsuits pending in California, as well as the civil case brought by Schneiderman. It also marks the end of a six-year legal battle that began when thousands of people across the country alleged that Trump University had defrauded them with false advertising and deceptive business practices. 

Despite the fact that Trump did not technically admit fault in the case, the sheer size of the settlement payment is a major defeat for the brash and litigious billionaire. In addition to the money he’ll have to pay, the settlement undermines Trump’s frequent boasts that he “never settles” lawsuits against him.

Even as the Trump University case dragged into its fifth year this February, Trump remained defiant, pledging not to settle the lawsuit “out of principle!”

But as Trump morphed from a long-shot GOP primary candidate into the Republican presidential nominee, and now, the president-elect, it became increasingly clear that his traditional legal strategy ― dragging out lawsuits and burying the other guy in motions and paperwork ― could have a significant downside.

The prospect of a jury trial in California that was scheduled to begin Nov. 28 likely created a significant incentive for Trump and his lawyers to settle the cases. A spokeswoman for the Trump transition team did not respond Friday to a request for comment on the settlement from The Huffington Post. 

The settlement will pay Trump University students who were part of the class action at least 55 percent of their damages, the plaintiffs’ San Diego, California -based lawyers said in a statement. 

“With any luck, they’ll have the money they wasted on Trump University back in their wallets by the middle of next year,” said the statement from Zeldes Haeggquist & Eck.

Trump University was created in 2006, one of a number of schemes Trump pursued in order to help maximize the income he could draw from his reputation as a successful businessman. The “university” promised that students would be taught how to invest in real estate like Trump did, the implication being that they could someday become multi-millionaires like him.

Trump University’s “courses” cost as much as $30,000 per person, and a key part of their value propositions was that Trump had personally hand-picked each of the instructors, who would teach customers all of Trump’s “secrets.”

In reality, however, Trump University was little more than a traveling side show, where presenters used high-pressure sales tactics to convince people to sign up for ever more expensive “lessons” and “mentoring,” all in the hopes that someday, they might become as rich as Trump.

Not surprisingly, the real estate success rate of Trump University’s customers was very low, and practically as soon as the seminar program opened, it began receiving complaints and demands for refunds. 

Trump, however, claimed that people loved the courses, citing the positive reviews people wrote on their evaluations on the last day of class.

In 2010, Trump University went out of business, having drowned in a sea of complaints, civil fraud investigations, class action lawsuits and Trump’s own disinterest. 

As the complaints and legal issues piled up, Trump responded with his typical real estate litigation strategy. First, he blamed the victims, then he denied things that were obviously true. Thirdly, he retaliated, attacking the accusers, their families and their lawyers.

This March, Trump zeroed in on three former Trump University students who are now suing the seminar company. Listen to how Trump describes them on this video, posted on his presidential campaign website: 

As of Friday evening, Trump had yet to respond to news of the $25 million settlement, preferring to tweet out messages about his weekend schedule, and about a “one hour special on me and my life.” 

 This article has been updated to include a statement from the plaintiffs’ lawyers. 

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