Here's more: I've been reading about the disgusting Trump University con. He sounded just the same promoting his phony baloney "get rich with my insider secrets" as he sounds promoting himself for President.
What I don't understand is why. He was supposedly a real estate success and had a reality show. Why did he need to swindle thousand of middle class suckers out of thousands of dollars? That is all his "university" amounted to ... seminars where conmen pushed the marks to max out their credit cards and sign up for ever more expensive classes.
IMO this really demonstrates his utter lack of character or ethics. Seriously, this guy could turn out to be a disaster for the country, the party, and the conservative cause. I don't think there's a there there .... if you peel back the arrogant bluster, there's just another layer of arrogant bluster. Don't be suckers!
ethanvanderbuilt.com
More from various media sources:
Mario Tama—Getty ImagesTrump at a news conference in New York City on May 23, 2005, announcing the establishment of Trump University.
“We’re going to have professors that are absolutely terrific—terrific people, terrific brains, successful, the best,” Trump claimed on videos shown at the seminars. “We’re going to have the best of the best. And honestly, if you do not learn from them, if you do not learn from me … then you’re just not going to make it in terms of the world of success.”
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Trump and his university–which operated from 2005 through 2010, when it was shut down as the San Diego suits and multiple state attorneys general investigations were beginning–lured approximately 7,000 consumers into paying $1,495 to $34,995 for courses where, as the promotional material put it, Donald Trump’s “handpicked instructors” would teach them Trump’s “insider success secrets” of how to invest in real estate.
Trump “created, funded, implemented and benefited from a scam that cost them … thousands, even tens of thousands of dollars each,” the lawyers suing him have argued.
Trump told me recently, in a rare discussion about the details of the case, that he “loves talking about this,” because the courses were “fantastic.” He has surveys filled out by students, he said, showing a “98% satisfaction rate” that is “better than Harvard’s.” He is “dying to go to court,” he insisted. However, his lawyers so far have thrown five years’ of procedural roadblocks in front of a trial. And at least one key decision–in which the judge in that hearing in May potentially sidelined a class action by coming down more on the side of the adulterated-juice analogy–may ultimately keep a jury from hearing the case.
Trump maintains that the lawyers’ focus on procedural issues so far does not reflect the merits of his case and the “scam” the plaintiffs are trying to pull off. But the documents that have piled up in court during the pretrial wrangling–even those produced by Trump’s own side–tell a story of a school that fell well short of fantastic. Even the claimed satisfaction rates are undercut by Trump’s own documents.
A similar case against Trump and Trump University was brought in 2013 by New York State attorney general Eric Schneiderman. But Schneiderman’s drive to attract early publicity for his case has far exceeded his skill in prosecuting it. It has also been undermined by his own alleged ethical lapses in going after Trump while soliciting campaign donations from Trump’s daughter and one of his lawyers ( see sidebar).
It is the two less-noticed, related civil cases in San Diego, filed on behalf of thousands of Trump’s customers, that provide proof that a leading presidential candidate is in court (and scheduled to sit for another deposition next month) defending a product that shortchanged thousands of vulnerable consumers, a large portion of whom were elderly, targeted with messages that Trump University was their ticket to avoiding spending their final years working as greeters at their local Walmart.
Even if the trials actually happen, they are still probably a year away. But the internal Trump University records already sitting in the case files could become a weapon wielded by Trump’s 2016 opponents. They could argue that Trump’s foray into enticing aspiring entrepreneurs to tap their credit cards to pay for get-rich-quick classes–where Trump’s actual input, other than the marketing, was restricted to a life-size poster of the mogul mounted in front of the room so they could take pictures with it–says a lot about the man under the Make America great again hat.
“The Next Best Thing”
It is “The Next Best Thing” to being Donald Trump’s “apprentice,” the Trump University ads promised, drawing on what was then the runaway popularity of Trump’s television show, The Apprentice. Mentors would be “handpicked by me,” Trump promised in a promotional video; and, his other promotional materials promised, they would teach students Trump’s “secrets,” then guide them through get-rich-quick real estate deals and even find them lenders so that their deals could be financed with “other people’s money.”
The court documents tell a different story. Michael Sexton, who was hired by Trump to be president of Trump University, testified in a 2012 pretrial deposition that “none of our instructors … were handpicked by Donald Trump” and that the curriculum was written by an outside adult-education firm.
The record is replete with evidence that many of the supposed “expert” teachers and mentors–who were mostly paid only sales commissions–had backgrounds in sales rather than experience in real estate investing, let alone successful investing. Two had filed for personal bankruptcy during the time they were mentoring.
Trump has testified in a deposition (after promising to sue the lawyers suing him) that he had no direct role in creating the curriculum or hiring the teachers. He did not know, he said, if his “university” conferred degrees. (It didn’t.) And he could not explain what the sales materials were referring to when they touted Trump’s “foreclosure system” for flipping distressed properties.
So far, Trump’s only courtroom defense beyond the procedural wrangling has been that these kinds of apparent misrepresentations are the kind of general puffery involved in any commercial marketing. A case his lawyers have cited is one in which Allstate insurance successfully defended its slogan “You’re in good hands with Allstate.”
More Than a Tough Businessman
Mitt Romney was attacked in ads in his U.S. Senate campaign and then in his presidential run for being involved in private-equity plays that caused workers to lose jobs while he made millions. Carly Fiorina suffered the same broadsides during her U.S. Senate race, stemming from her ill-fated tenure as CEO of Hewlett-Packard. But neither was accused of defrauding people or otherwise breaking the law; the rap against them was that they were hard-hearted businesspeople. As Trump advances in the 2016 contest, he could face charges of an entirely different magnitude.
The records indicate, for example, that Trump University collected approximately $40 million from its students–who included veterans, retired police officers and teachers–and that Trump personally received approximately $5 million of it, despite his claim, repeated in our interview, that he started Trump University as a charitable venture.
One of the two San Diego cases has been allowed by the judge to be brought under the Racketeer Influenced and Corrupt Organizations Act, or RICO. This means that, fairly or unfairly, opponents will be able to say that a large group of everyman voters, many of them elderly, have accused a leading contender for the Oval Office of being a racketeer.
The Trump Playbook
The Trump University “curriculum” was actually a sales funnel. At the top were a series of free 90-minute real-estate-industry workshops conducted across the country in 700 locations. They were promoted by newspaper ads and mass mailings in the form of personal invitations signed by Trump. According to the lawsuits and to Trump University’s own business plans–including an elaborate 135-page “playbook,” on file as evidence in the suit–the free sessions were meant to persuade attendees to buy a $1,495 ticket to a three-day workshop, touted to those attending the free sessions as being “all you need” to start getting rich.
In the foreword to one of the materials handed out at these sessions, Trump University president Sexton wrote, “Other organizations try to sell help alone, without the proven expertise to back it up, and just when you realize that the advice you paid for is … ineffective–they try to sell you more expensive products. They hook you on promises and never deliver. Neither I nor our chairman Donald J. Trump would stand for that at Trump University.”
Yet the playbook spells out how that session was meant to up-sell those $1,495 attendees into mentorship programs costing $9,995 to $34,995. It even uses the term set the hook to describe the process of luring people at the free preview session to take the three-day $1,495 course. Once their quarry was on the hook for $1,495, the message to be hammered home beginning on the second day of that program was that three days wasn’t nearly enough time to get the students out there making Trump-like deals. Only the more expensive mentorships could do that.
Scripts directed teachers to remind students of their instructors’ close association with Trump. “I remember one time Mr. Trump had us over for dinner,” the script read, after which the instructor recounted how Trump had confided some nugget of real estate wisdom to him.
“No, I didn’t have dinner with him,” conceded Gerald Martin, when questioned in a 2013 deposition about a recorded presentation in which he mouths the script’s dinner-with-Trump line. “I was just trying to be as close to the [script] as possible.”
“I don’t know who you’re talking about,” Trump told me when asked about Martin’s dinner tale. “But I will tell you I met many of the professors, and I also studied just about all the résumés. I’m very much into academics. You know, I was a good student.”
The “Terrific People” Promise
“We’re going to have … terrific people, terrific brains … the best of the best.” That sounds like Trump promising voters in Iowa that in his Administration, winners like Carl Icahn would be deployed to deal with China. But it’s from a 2008 video that Trump appeared in, which was used to convince students attending the three-day session of why they should step up to the mentorship program.
The best lecturer for these sessions, it turns out, was James Harris. As with all the other presenters at the free or $1,495 sessions, Harris was paid a straight 10% of whatever up-sell tickets he sold. Harris’ up-sell rate was so good that Trump University executives distributed a transcript of one of his sessions, so that they could learn from the winning elements of his unscripted Q&A at the end, where the master pitchman closed his sales.
Among the highlights of Harris’ winning presentation was his promise that Trump “only wants to leave a legacy … He does not need your $1,500.”
Trump, too, told me that “all money that I made was going to go to charity.” His marketing mailings similarly promised that he was launching the program as a way of “leaving a legacy.” However, documents and testimony in the court file indicate that Trump collected approximately $5 million in profit in a series of wire transfers and checks written to him personally by the university–and signed on behalf of the university by Trump.
Trump explained that to me by saying that he had planned to make the charitable donations from his personal accounts, but that because the university had had to shut down and was still paying legal expenses, those donations “never happened.” According to Trump lawyer Alan Garten, Trump returned the money to the university from his personal funds once the legal troubles started.
Harris also promised in his presentation that “I can show you how to do no money, no credit, no license, no loan real estate … We make money on every single deal.” Following a riff on the frustration of “working for someone else,” he offered an alternative scenario that he explained to his students could be theirs if they had the courage to part with $1,495: “I work in my robe a couple of hours a week. Folks, full time for you is going to be six to eight or 10 hours a week. That is it.”
Near the end of the session, Harris scolded an 18-year-old who said he might not be able to make the $1,495 class starting on a Friday because he was still in high school. “Take the day off,” he told the high schooler. “This is more important … This is a billionaire, and I work for him and am going to show you how to buy and sell real estate.”
According to court records filed in the cases, Harris, who boasted in his presentation about not having a college degree, has no known record of real estate success but a long record of being involved in the financial self-help speaking circuit. (The background report Trump University paid for on him simply listed multiple years of “self-employment.”)
Harris’ cell phone urges that people wanting to reach him send an email via newwealthgenerator@gmail.com. He did not return two requests for comment about his real estate background that I sent to that address.
Tapping Out Credit Cards
The instructors in the $1,495 course told students to fill out forms detailing their personal assets. The ostensible purpose was so that the instructors could counsel them on the best investments. The real purpose, according to court filings, was to ascertain whether they might be targets for the Elite $34,995 up-sell or for less expensive Silver or Gold up-sells. The instructors told their students to contact their credit card companies during a lunch break in order to get their credit limits raised–not so that they could buy properties, as the script said they were to be told, but so that they could charge the mentorship programs to those credit cards.
Kevin Scott, 46, told me that he sat in on Harris’ 90-minute presentation at a hotel in Westchester County, New York, in 2008. He then enrolled in the $1,495 course, also run by Harris, where he was persuaded to buy a $25,000 Elite package. Scott, who works for a pharmaceutical company, recalled that he was attracted by the “picture Harris painted” of being able to reap quick profits “by flipping distressed properties” using “other people’s money.”
Scott said his mentor accompanied him on a weekend tour of properties in Westchester. At first he was impressed. But when he tried to make a deal to buy and flip the houses, he was told each time by the banks that owned the properties that he had to have financing in place before they would consider his offers. And the nonbank “hard money” lenders who Harris had promised would be made available to him by Trump University were “nowhere to be found,” he said.
“It all amounts,” Scott said, to a “whole lot of nothing.” He adds that because he tapped out his credit cards to pay the tuition, “I ended up being one of those distressed properties; I now have to rent out my house and live in a small apartment.” Scott is now one of what are likely to be nearly 7,000 plaintiffs in the class actions.
Polling and Image Above All Else
As a presidential candidate, Trump claims to eschew the dependence on pollsters and obsession with image that he says disqualify his opponents. But court filings show university employees were regularly reminded that the marketing messages and dialogue they were instructed to use had been rigorously market-tested to create a carefully crafted image. The teachers were always to be called “faculty.” A crest that looked like it was borrowed from Yale or Harvard was embedded in the logo. An “admissions department” was listed on the website. The marketing guidelines had sections called “catchphrases/buzzwords” and “tone” that encouraged the use of language such as “elitist,” “Ivy League” and “Think of Trump University as a real university with a real admissions process–i.e., not everyone who applies is accepted.”
Trump’s executives made sure that the address of the university–40 Wall St., a Trump-owned building–was included on everything because it added credibility. One of the answers scripted in the playbook to handle a potential student’s objection that the Trump price was higher than those of competing financial self-help programs (like Rich Dad, Poor Dad coaching) put it this way: “Mr. Trump’s building is not in Cape Coral, Fla., or in the middle of Salt Lake City somewhere. Don’t buy a Kia when you can have a Bentley.”
The Wall Street address would eventually add to Trump University’s legal troubles. New York State law requires that anything calling itself a university must apply, be vetted, have all instructors vetted and then be certified, none of which Trump did. Despite repeated warnings from state education regulators beginning in 2005, Trump persisted in operating out of 40 Wall St. until winding down operations in 2010. That is what allowed the state attorney general to bring his suit. While still not resolved, it seems like a slam dunk in terms of the charges related to unauthorized operation of a university, even if its claims to recover the students’ tuitions have been undermined by the attorney general’s miscues.
Tapping Insecurity and Aspirations
“So you had a long day at work, huh? I think we might just have something to help you out of that 9-5 of yours.”
That’s an instruction in the playbook for dialogue designed to get people to take the plunge and buy the $1,495 course. “Let them know that you’ve found an answer to their problems and a way for them to change their lifestyle,” the playbook explains.
Those directions come from the playbook’s marketing section, titled “Building Rapport and Planting Seeds.” It’s aimed at up-selling people from the $1,495 course to the $34,995 version. (Again, in Trump’s deposition, he says he personally approved marketing and advertising materials but not the actual curriculums.)
“Give them credit for taking a great first step,” the playbook says. “But don’t let them think three days will be enough to make them successful … People will always take the path of least resistance; do not give them the option.”
My interviews with six of those who paid Trump tuition are consistent with the apparent demographic target of the promotional campaigns. They seem to be middle-class or lower-middle-class people anxious about their financial situations and aspiring to do better. In other words, they are the exact group that Trump the candidate is trying to appeal to.
Boyce Chait, 84, and his wife Evelyn, 80, live in New Jersey. They demanded but were refused a refund after their $34,995 mentorship proved, Boyce says, “to be worth nothing. When it came to the nitty-gritty, there was nothing there.”
http://time.com/4101290/what-the-legal-battle-over-trump-university-reveals-about-its-founder/
From other articles:
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One advertisement signed by Donald Trump promoting the free class read: “Come to my free class! In just 90 minutes, my hand-picked instructors will share my techniques, which took my entire career to develop. Then just copy exactly what I’ve done and get rich.” Voila!
The theme song to Trump’s show The Apprentice, “ For the Love of Money” by the O’Jays, was allegedly routinely played at the beginning and end of classes. Trump would also appear in videos played at the beginning of the courses.
The More Expensive Classes Weren’t
It Costs Money to Make Money. The complaint alleges that the seminar was actually little more than a “sales pitch for a 3-day seminar costing $1,495,” which was called at least four different names: “Fast Track to Foreclosure Investing,” “Profit from Real Estate Investing,” “The Apprenticeship Program,” and “Real Estate Investor Blueprint.” During the 3-day seminar, the complaint alleges, instructors would often encourage students to contact their banks to increase the borrowing limits on their credit cards.
The 3-day seminar was in turn an “upsell,” the complaint alleges, for so-called Trump Elite classes, which started at $10,000 and ending at $35,000 for year-long mentorship programs. Former students allege those mentorship programs consisted of little else but an occasional phone call.
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The Instructors Barely Resembled Teachers
Trump University’s instructors claimed to be “hand-picked” by Trump himself. The complaint says this was universally false, as Trump had no role in selecting teachers. “Many instructors came to Trump University from jobs having little to do with real estate investments,” the complaint reads, “and some came to Trump University shortly after their real estate investing caused them to go into bankruptcy.” Instructors’ benefits and 401(k)s were managed by the Trump Organization, which also organized contracts for the instructors’ Blackberrys.
Some instructors allegedly told students that they had access to lists of “hard money lenders.” The complaint claims that the list was actually a photocopied page from an issue of the Scotsman Guide, a publicly available magazine covering the mortgage-lending industry.
But Were Schooled on How to Sell Classes Aggressively
Always Be Closing. Instructors were given copies of the “Trump University Playbook,” which encouraged instructors to tell their students “we need longer than 3 days!” One page read, “even one coordinator giving them the impression that 3 days is enough can hurt sales.” Instructors were asked to review profile sheets filled out by students listing their liquid assets, allegedly to see who could pay for the university’s programs.
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“I can turn anyone into a successful real estate investor, including you.”
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“We’re going to have professors that are absolutely terrific—terrific people, terrific brains, successful, the best,” Trump claimed on videos shown at the seminars. “We’re going to have the best of the best. And honestly, if you do not learn from them, if you do not learn from me … then you’re just not going to make it in terms of the world of success.”
That was good enough for June Harris, of White Plains, New York, who had previously taken an online Trump real-estate investing course and found it useful. After the free June 2009 session at a hotel in Stamford, Connecticut—where participants were told to keep $1,000 in their pockets at all times as “a confidence builder for wealth”—Harris signed up for the three-day seminar, which cost her $747.50. She spent the weekend of June 19 at the seminar, where she was encouraged to call her credit-card company and increase her line of credit. “They said that we should invest in property without ever touching our own assets,” she wrote in a September 2012 affidavit. “The instructor said if we surmounted the fear of losing money then we would actually make money.”
She was then encouraged to sign up for the “Trump Gold” mentorship program—at a cost of $35,000—described as a yearlong group of seminars and private consultations with Trump instructors. When Harris declined, “The agent was very upset and quickly hung up the phone on me,” she wrote in her affidavit.
Bob Guillo, from Manhasset, New York, and his son, Alex, fell hard for the Trump line. After the free seminar and the three-day course costing nearly $1,500—and which he graded as “excellent” in his evaluation—Guillo signed up for the Trump Gold Elite program and paid nearly $35,000. He was told he would be part of a select “in-the-know group” and among “insiders” who would have access to proprietary real-estate deals. “For example,” Guillo wrote in an affidavit, “where Mr. Trump would be involved in building condominiums, we would get first choice at purchasing an apartment and then would be able to immediately sell it at a profit.”
Guillo wrote that at the first day of the Trump Gold Elite program he “began to realize I had been taken” because the information conveyed seemed to be coming from Zillow.com, a real-estate Web site, or from the I.R.S. Web site. In August 2011, Guillo wrote George Sorial, an assistant general counsel in the Trump Organization, to request a refund. But he never got his money back. Instead, “Trump staff promised to set me up with their best mentor,” Guillo wrote. He declined the offer. He just wanted his money back.
Guillo, now 74 years old and a retired legal-document processor, says he attended every one of the seminars his $35,000 bought him and at every one the Trump instructors did the same thing. “They tried to solicit more money from us,” he explains. “I got a picture of myself with a Trump cutout and basically very, very little else.”
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