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Trump University: Is it a real scandal?

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Bebeto Matthews/AP/File

(Read caption) Donald Trump, left, listens as Michael Sexton, president and co-founder of the business education company, introduces him to announce the establishment of Trump University at a press conference in New York.

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Citing authorization to bring a cause of action for fraud, a New York State appeals court has refused to throw out a fraud lawsuit against Donald Trump over his former training program for would-be real estate investors.

The Appellate Division unanimously rejected Trump's request to throw out the 2013 suit, dismissing Trump’s lawyers who claimed that the lawsuit, filed in 2013, should be tossed because the statute of limitations on the case had expired.

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The fraud lawsuit brought by New York attorney general Eric Schneiderman alleges that Trump University “intentionally misled” thousands of people across the country, promising to make students rich on real-estate deals but instead steered them into costly seminars.

"Today's decision is a clear victory in our effort to hold Donald Trump and Trump University accountable for defrauding thousands of students," said Mr. Schneiderman, according to Reuters.

“We look forward to demonstrating in a court of law that Donald Trump and his sham for-profit college defrauded more than 5,000 consumers out of millions of dollars.”

Schneiderman further alleges in the lawsuit that Mr. Trump “repeatedly deceived students into thinking that they were attending a legally chartered 'university'" and "intentionally misrepresented, through advertisements and oral misrepresentations, that prospective students would be taught by successful real estate 'experts' who were 'handpicked' by Mr. Trump when, as alleged by petitioner, not a single instructor was actually hand picked by Mr. Trump,” reads the suit, the New York Daily news reported.

His fellow Republican presidential candidates have attacked him over the litigation with Marco Rubio calling it a "fake school."

"There are people who borrowed $36,000 to go to Trump University, and they're suing now – $36,000 to go to a university that's a fake school," Mr Rubio said at the Republican debate last week. "And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump."

The Republican frontrunner and real estate mogul has long denied any wrongdoing.

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“Schneiderman continues to waste taxpayer money trying to smear me, but the fact is that the overwhelming majority of students had a great experience,” said Trump, according to Politico. “It’s a minor civil case I have not settled out of principle.”

In reality, Trump University was a series of real estate workshops in hotel ballrooms in several cities including New York, San Francisco, and Dallas. It promoted free seminars as a chance to follow in Trump’s very own footsteps. The Atlantic reported one which had Trump proclaiming, “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.”

Trump University was formed in 2004, when two businessmen proposed to offer distance-learning courses in entre­pre­neur­ship under the Trump brand. Trump gave his blessing, according to court documents, becoming a 93 percent owner of the new enterprise. By 2007, the business had evolved to focus on live real estate seminars. But Trump University was not a university in any legal sense, and beginning in 2005, New York State Education Department officials told the company to change its name because they deemed it misleading. The business became the Trump Entrepreneur Initiative in May 2010, and it stopped operating shortly thereafter, the Washington Post reported.

Mr. Trump is facing two separate class action lawsuits filed in California, in which the students allege that the university promises that advanced students could make tens of thousands of dollars each month were bogus, and that the school instead left many in debt.