In last week’s blog post, we looked at the treatment of Donald Trump’s videotaped depositions and how the media was fighting for all access, while Trump’s attorneys fought to keep it confidential. Although both class action lawsuits involving Trump University are largely based on false advertising claims, each takes a different approach to holding Trump liable for the plaintiffs’ losses. Which one, if any, will stick?
In Cohen v. Trump, the plaintiffs are asserting a Racketeering Influenced and Corrupt Organizations (“RICO”) charge, which can triple damages and attorney’s fees, but is much harder to prove. The burden of proof lies in proving Trump knew that the operation was fraudulent and proceeded with it anyway. Trump’s camp claims he put Michael Sexton in charge of TU and told him to run with it, leaving Trump with very high-level sign-off responsibilities on a limited number of business matters. In Low v. Trump, the plaintiffs must prove they based their purchase decision on advertisements, which they claim were deceptive.
There are three main false advertising claims at play: first, plaintiffs argue that use of the word “university” was misleading. Back in 2008, the New York Board of Education told TU to drop “university” from its name because 1) it didn’t offer degrees; 2) it was not accredited; and 3) its students were not eligible for federal financial aid. Instead of university-level courses, plaintiffs found themselves in a three-day business seminar, which former instructors have testified was largely nothing more than a high-pressure sales presentation.
Plaintiffs also claim the advertising promised instruction by Trump’s “hand-selected” instructors, when some of them had little to no real estate experience. Through his depositions, Trump has revealed he had little, if any, involvement in the selection of TU’s instructors, and that it rested with Sexton. One former TU employee testified that employees with no real estate experience were able to work their way up and become TU instructors.
Finally, plaintiffs claim the mentorship program, which cost about $35,000, did not deliver on its promises to teach and guide the paying customers to help them find success. Some previous TU instructors have testified that they were incentivized to recruit as many members as possible to earn commission, and they were not held to any requirements to provide mentorship or guidance. In contrast, a Harvard degree in advanced real estate costs $30,000. Were TU students paying for the Trump name, and if so, what was that designed to deliver to them?
There is also the argument that TU plaintiffs, and other students, did not succeed because of their own shortcomings. It is well documented, especially in our current online environment, that people complain more than they compliment. What percentage of TU students (or should we call them investors?) were satisfied with their purchase of the TU curriculum? Stay tuned, as these cases are just heating up alongside an active political season.