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Trump University: Why some students say it's a scam

Former students say Donald Trump's business seminars overpromised and underdelivered, leading to a war of words between Trump and New York State Attorney General Eric Schneiderman. 

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Donald Trump poses on the campaign trail with Iowa State cheerleaders before an NCAA college football game Saturday, Sept. 12, 2015, in Ames, Iowa. Trump faces three lawsuits over Trump University, a now-defunct series of real estate classes. Students claim the name was misleading.

Rodney White/The Des Moines Register via AP

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“I feel a lot of people listen to what I have to say,” Donald Trump told The Daily Beast in May 2012, in an interview purportedly expressing his support for then-Republican nominee Mitt Romney.

Before the real estate mogul and all-around celebrity launched his own presidential campaign this summer, thousands of small business owners were lining up, and paying up, to listen to advice from Mr. Trump's “handpicked experts” at Trump University, a short-lived initiative, in the ads for which Trump proclaimed “I can turn anyone into a successful real estate investor, including you.”

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Yet, the New York State Attorney General and two former students have brought three lawsuits against the GOP presidential candidate, alleging that “Trump University” was little more than an opportunity for Trump to do what he does best: make money.

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Students accuse Trump of running a scam, not a school, and Attorney General Eric Schneiderman filed a $40 million suit in 2013, accusing the company of operating an unlicensed university. Trump University, which was founded in 2004 as a collaboration between Trump and two partners, changed its name in 2010 to Trump Entrepreneur Initiative after the New York State Education Department warned it, in 2005, that the name was misleading. It is no longer accepting new students.

Prospective students were invited to a free, two-hour seminar, during which instructors touted the value of a further three-day workshop for $1,495, and up to tens of thousands more dollars of further instruction and mentorship.

The Washington Post reports that instructors also encouraged students to increase their credit limits, in order to improve their investment possibilities – or, as the students allege, simply so they could afford Trump University. For $35,000, one student remembers walking away with “little more than meaningless certificates of completion and a photograph of himself with a life-size image of The Donald,” according to the Post.

Trump Organization lawyer Alan Garten and former Trump Entrepreneur Initiative President Michael Sexton strongly deny the claims, arguing both that the programs provided substantive instruction that met 98 percent of students’ expectations and that it was unreasonable to expect a more "scholastic" experience.

In a signed affidavit, Mr. Sexton responds to claims that the name was misleading.

The focus of TEI’s business was offering practical instruction for building specific, real-world business skills ... for working adults, which is the antithesis of traditional, broad-based education offered by colleges and universities.

Given Donald Trump’s widespread recognition as a street-wise business person and media celebrity ... and certainly not as an “ivory-tower” educator, I did not believe that the name Trump University could possibly mislead anyone.....

Sexton also details TEI’s curriculum, defending the program against Mr. Schneiderman’s finding that instruction was created by an outside party without real estate expertise, and points out that the website stated no credits or degrees would be rewarded.

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There is seemingly no love lost between Schneiderman and Trump, who counter-sued the Attorney General for misconduct, charges that the New York ethics commission dropped in late August. The two contested the nature of Trump University in a heated exchange on Good Morning America in 2013.

The Trump Organization insists that dissatisfied students represent a tiny minority, creating a website, 98percentapproval.com, to prove it. Although the site does document students’ post-course surveys, perhaps more space is dedicated to attacking Schneiderman for mismanaging the public’s funds with what Trump deems a frivolous, politically motivated lawsuit.

98percentapproval’s homepage proclaims, “98% of Trump University students rated the program ‘excellent’ while only *4% of New York State registered voters rated Attorney General Eric Schneiderman’s performance as ‘excellent’ and Schneiderman thinks he could be the next governor?”, while another states, “This website was created to bring to the public's attention the gross incompetence of New York State Attorney General Eric T. Schneiderman.”

Although New York courts have ruled that Trump is liable for running a university without a license, Schneiderman must appeal to overcome a statute of limitations preventing him from helping most students recover their fees.