If there is a consensus about the positives, they are not that relevant
Lawsuit alleges The Donald swindled millions out of students with his eponymous institute
A class-action lawsuit against Donald Trump alleges that the real estate mogul and colleagues swindled millions of dollars from people who sought to learn The Don’s real estate secrets by enrolling in his eponymous Trump University. Here’s a breakdown of the allegations in the racketeering lawsuit, brought by a California man last month, who says the institute (which is now closed) bilked him out of more than $36,000.
Not an accredited university. Though it may have charged similar rates to actual colleges for what the institute called the “full education,” Trump University had no sprawling campus. More importantly than dining halls and a quad, though, the New York State Education Department had warned Trump in 2005 that the institute was operating without the required license to call itself a “University.”
Upselling at every turn. Attendees of the free introductory seminar were pitched costly programs at every turn. First, students — a “significant” number of whom were senior citizens — were persuaded to sign up for a $1,495 three-day workshop, then they were pitched a $35,000 “Gold Elite” program. The endless upselling could have cost students who bought into it all more than $70,000. Trump “literally had a PlayBook for his scheme … (containing) a chart depicting the upsell scheme executed across the country,” which even told instructors how to prepare the room, right down to setting a specific temperature.
Thousands take the bait. Trump advertised that his handpicked “Team of Trump Experts” knew the secrets to making it big in the real estate market and you could too. One piece of mail 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.” But it was a lie. Trump didn’t handpick instructors. “In most cases, Defendant Trump did not even know who the instructors or mentors were, nor had he met them.”
“Teachers” paid to sell, sell, sell. What’s a pseudo university without a pseudo staff? Though Trump University made advertising claims that students would be lectured by a group of “professors and adjunct professors,” the instructors were in fact salespeople whose sole objective was to sign people up for more events — that’s how they got paid. In the PlayBook, the students were referred to as ‘buyers” and instructors asked them if they wanted to leave a legacy to their grandchildren and encouraged them to charge programs on their credit cards because they would “quickly make their money back.”
Secrets kept secret. Despite advertising that leaned heavily on Trump’s celebrity — like the message “Are YOU My Next Apprentice? Prove it to me!” — Trump “did not contribute in any meaningful way to the curriculum” of the institute. Thousands of students paid thousands of dollars on the premise that they would learn the “insider success secrets from Donald Trump.” But in the end, The Donald’s secrets remained his own.
The class-action lawsuit seeks to recoup money for anyone who purchased an event from Trump University dating back to Jan. 1 2007. Meanwhile a ruling last month in a similar lawsuit brought by New York State Attorney Eric T. Schneiderman found Trump personally liable for operating the institute without the required license. The case is ongoing.
Trump has maintained his innocence throughout. After Schneiderman filed the lawsuit last year, Trump launched a website where he called the allegations “baseless” and questioned the integrity of the attorney general. Now, Trump says he’s considering reopening the institute.
The schools’ management company, which receives millions in public funds each year from the schools, says that the salaries paid to school administrators should be considered a trade secret
The North Carolina State Board of Education has issued a warning to a charter-school chain for failing to comply with an agency order to disclose the salaries of school administrators. The schools have been put on "financial probationary status," which could lead to sanctions if their board does not comply within 10 business days.
This is the same charter-school chain, Charter Day School, Inc., that ProPublica wrote about last month. As we reported, the four charter schools channel millions in public education dollars each year to for-profit companies owned by the schools' founder, businessman Baker Mitchell. One of the for-profit companies, Roger Bacon Academy, is paid to run all the day-to-day operations of the schools. As we wrote:
Roger Bacon Academy functions as the schools' administrative arm, taking the lead in hiring and firing school staff.
It handles most of the bookkeeping. The treasurer of the nonprofit that controls the four schools is also t he chief financial officer of Mitchell's management company. The two organizations even share a bank account.
Mitchell's management company was chosen by the schools' nonprofit board, which Mitchell was on at the time — an arrangement that is illegal in many other states.
Charter schools, which are privately run but government-funded, often outsource back-office functions to private companies. At issue between North Carolina and Mitchell's charter-school chain is the extent to which regulators can demand to know what happens to public dollars once they move into the coffers of a private company.
State officials say they have the right to ask for information related to the schools' activities and programs – and that includes salaries of any employees assigned to work at them. Other charter schools in North Carolina have complied and turned over this information. Mitchell's schools are the only ones that have not.
In an earlier response to regulators, the schools' board chairman, John Ferrante, stated that the schools are "contractually bound to preserve [the management company's] trade secrets." He also said that the nonprofit does not actually have the salary information for management company employees.
In a letter sent by the management company to Ferrante, Mitchell's company said it would turn over the salary information so long as regulators sign an agreement to recognize the information as confidential and exempt it from public disclosure.
Through Ferrante, Mitchell declined to comment on regulators' latest demand for salary information.
On his blog and in earlier interviews with ProPublica, Baker Mitchell has maintained that private companies operating charter schools should not have to be transparent about their financials or publicly disclose what they pay their employees.