The Enduring Scandal of Trump University
Donald Trump’s abrupt agreement to a settlement in the Trump University fraud cases was clearly an effort to prevent a major embarrassment. Credit PHOTOGRAPH BY BEBETO MATTHEWS / AP PHOTO
Give Donald Trump one thing: He’s mastered the political art of diverting attention from damaging news stories. On Friday afternoon, Trump’s lawyers and the Attorney General of New York, Eric Schneiderman, announced that they had reached an agreement to settle three civil cases brought against the President-elect and Trump University, the scandal-plagued learning annex that he operated from 2005 to 2011.
The lawsuits, two in California and one in New York, were filed on behalf of thousands of people, some of them elderly and of modest means, who alleged that Trump University had lured them into spending thousands of dollars on courses in real-estate speculation that turned out to be of little or no value. During the election campaign, Trump repeatedly claimed that the lawsuits were baseless, and vowed that he would never settle. But on Friday, just ten days before one of the cases was due to go to court in San Diego, he agreed to pay twenty-five million dollars in restitution and fines.
Big news, you might think. But not big enough. Earlier on Friday, Trump’s transition team had conveniently put out that the President-elect intended to nominate the Republican senator Jeff Sessions to be his Attorney General, and the Republican congressman Mike Pompeo to lead the C.I.A. The big news sites, the evening newscasts, and the next morning’s papers all led with analyses of these selections, while the Trump University settlement got secondary billing. (Even in the New York Times, the story barely made it above the fold on Saturday’s front page.) And, by midday Saturday, practically the entire media moved on to the Great “Hamilton” Brouhaha, which Trump stoked with two tweets calling on the cast of the Broadway musical to apologize for the statement that they delivered to Mike Pence, the Vice-President-elect, when he attended the show, on Friday night.
Surely, Trump and his team were relieved that the media would focus on this nothing-burger story instead of a real scandal—the fact that, for six years, Trump ran a business that, in the words of the lawsuit that Schneiderman filed in 2013, “wasn’t a university at all.” It was a “bait-and-switch scheme,” which used “high-pressure” sales tactics to persuade unwary customers to enroll in dubious courses that cost up to thirty-five thousand dollars. In some instances, Trump University employees even pressed customers to call their credit-card companies and ask for an increase in their credit limits, so that they could pay the hefty fees.
Unlike some of Trump’s other business interests, Trump University wasn’t a franchise operation or an arm’s-length marketing arrangement that merely used his name. It was a Trump-owned company run out of the headquarters of the Trump organization, at 40 Wall Street, in Manhattan, and it netted him about five million dollars in profit. According to Schneiderman’s lawsuit, both Trump and one of his senior executives, Michael Sexton, were “personally and knowingly involved with the operations of Trump University, with Sexton taking an active role in the company’s conduct, and Trump personally approving each of the misleading advertisements it published.”
One of these ads, for a costly three-day seminar, described Trump as “the most celebrated entrepreneur on earth,” and said, “He’s ready to share—with Americans like you—the Trump process for investing in today’s once-in-a-lifetime real estate market.” And yet, although Trump approved the company’s ads, he didn’t attend the seminars or even review the curricula and programming materials used in them. Trump University ads also claimed that Trump had hand-picked the tutors of the courses. This turned out to be a lie. In a sworn affidavit filed in one of the California cases, a former salesman for Trump University, Ronald Schnackenberg, said, “Based upon my personal experience and employment, I believe that Trump University was a fraudulent scheme, and that it preyed upon the elderly and uneducated to separate them from their money.”
Trump didn’t admit any wrongdoing as part of Friday’s settlement, which was clearly an effort to prevent a major embarrassment for the President-elect. Had the trial in San Diego gone ahead, the nation would have had the chance to watch a succession of witnesses explain how Trump University had used false advertising and promises to lure them into parting with their life savings. Under the terms of the settlement, “every victim will receive restitution and . . . Donald Trump will pay up to $1 million in penalties to the State of New York for violating state education laws,” Schneiderman said in a statement. But the court, and the rest of us, won’t get to hear from the victims of Trump’s scamming enterprise. And that, surely, is worth a lot more than twenty-five million dollars to the incoming Con-Man-in-Chief.
