Donald Trump Settles Trump University Case For $25M

Donald Trump broke his repeated promises to fight three fraud-related lawsuits against Trump University, agreeing to pay $25 million as part of a settlement reached Friday, 10 days before he was to stand trial on the first of the complaints. The agreement eliminates the prospect of a U.S. president-elect on trial over claims he bilked thousands of financially struggling people out of millions of dollars.

The agreement covers all three lawsuits pending against Trump University, bringing an end to litigation that dogged Trump during his presidential campaign and could have become a major distraction during his efforts to build a workable administration before his Jan. 20 inauguration.

Under terms of the agreement, Trump admitted to no wrongdoing. The Trump Organization said in a statement that jurors would have found him and Trump University blameless.

Nevertheless, his decision to pay $25 million to stay out of court marked a rare turn and some degree of defeat for a man who has publicly mocked businessmen for settling lawsuits against their companies (while not mentioning that he himself has settled many lawsuits). He also is known for his willingness to spend millions of dollars in court fighting relatively petty claims filed against him and his companies, and, before Thursday's agreement, he had vowed to he would never settle the university-related suits.

Any trial, Trump had maintained, would end in his favor.

"I will win the Trump University case. I already am, as far as I'm concerned," he said in June. "I could settle that case. I could have settled that case. I just choose not to."

In February he Tweeted why he would continue to fight "out of principle!"

Whatever changed his mind, the settlement spares him what was certain to be a brutal trial, which had been scheduled to begin Nov. 28, the Monday after Thanksgiving.

The Trump University students who paid thousands of dollars for courses they say were useless include many who come from the same middle-class and low-income pool of voters Trump won over in part by promising that he would always watch out for them.

Some of those older students were expected to testify that they decided to pay for the get-rich courses out of financial desperation, but found that rather than providing education about real estate, Trump University taught little or nothing about buying or selling property.

The students say they fell for pitches from Trump University sales people who sold them on promises they soon discovered were lies. Some sales people encouraged students without enough cash to pay for courses to increase the limit on their credit cards to cover the costs. The more courses the students enrolled in, they were told, the more secrets they'd learn and, thus, the greater financial windfall they'd realize through real estate.

Testimony confirming the student complaints had been expected from former Trump employees, some who worked out of the skyscraper on Wall Street that that housed Trump University headquarters.

Court papers indicate they would have testified that Trump University sales people routinely sold courses using a prepared pitch that included fraudulent tactics that ranged from clever deception to audacious lies.

Most instructors were not real estate experts "hand-picked" by Trump, as students were told, according to several former employees. In reality, they have said, courses were led by sales people whose purpose was not to offer instruction on real estate but rather to up-sell students on yet more Trump courses.

When selling to the most financially desperate, one former employee testified in preparation for the trial, sales people merely dangled the illusion that the courses offered what their targets craved most: some tiny glimmer of hope.

The lawsuits were generated after hundreds of complaints about Trump University were filed with attorneys general around the country. Numerous investigations were launched, leading to the three lawsuits, which included two federal class-action complaints in San Diego and a separate lawsuit filed by New York Attorney General Eric Schneiderman.

“I am pleased that under the terms of this settlement, every victim will receive restitution and that Donald Trump will pay up to $1 million in penalties to the State of New York for violating state education laws,” Schneiderman said in a statement announcing the settlement. “The victims of Trump University have waited years for today’s result, and I am pleased that their patience — and persistence — will be rewarded by this $25 million settlement.”

The amount of the settlement reflects the scope of the alleged fraud, which included courses that cost students up to $35,000.

If the settlement hadn't been reached, attorneys for the students would likely have taken time at the trial to show jurors a promotional video for the university that featured Trump himself. Staring at the camera, he boasts to potential students that his instructors would “teach you better than the best business school.”

While the settlement killed the opportunity for a four-star courtroom drama, it provides an end to a years-long quest for 7,000 or so students who, their lawyers told The New York Times, will share almost all of Trump's money. Some students will be eligible for payments equalling at least half of what they spent at Trump University, and some could receive a full refund, the lawyers said.

The Trump Organization maintained that Trump agreed to pay the $25 million despite his confidence that Trump University would have won at trial.

"While we have no doubt that Trump University would have prevailed at trial based on the merits of this case, resolution of these matters allows President-Elect Trump to devote his full attention to the important issues facing our great nation," the statement said.

Prior to the settlement, Trump's attorneys had asked for the Nov. 28 trial date to be pushed back until after inauguration day, citing the "critical and all-consuming" time the president-elected needs to prepare to assume office.

Federal Judge Gonzalo Curiel — bashed during the presidential primaries by Trump as unable to treat him fairly because of the judge's Mexican heritage — had signaled his intent to proceed with the trial as scheduled.

Trump University offered only online courses when it opened in 2004. Then, beginning in 2007, it began holding free seminars across the country. Former Trump University employees testified in preparation for the trials that the seminars were designed to lure students who viewed the sessions as risk-free only to succumb to pressure to purchase courses that would provide the information they had thought they'd get at no cost.

A former Trump sales manager, Ronald Schnackenberg, said in written testimony in preparation for trial that he had been reprimanded for not pushing a financially struggling couple sign up for a $35,000 real estate class. He had concluded, he said, that the cost would have endangered the couple's financial future, forcing them to use disability income and secure a risky home-equity loan to pay for the course.

After he declined to pressure the couple, he testified, another sales manager stepped in and persuaded the couple to pay the $35,000 for the course.

“I believe that Trump University was a fraudulent scheme and that it preyed upon the elderly and uneducated to separate them from their money,” Schnackenberg wrote.

Telephone sales people sold the Trump courses in part by selling Donald Trump himself. A former sales executive testified that he and others selling by phone were required to read from a script that assured potential students that Trump was actively involved in Trump University.

The executive said that during in his seven months working at Trump University headquarters, he saw Trump come in the building only once, spending five to 10 minutes consulting with Michael Sexton, a Trump associate who co-founded the university.

"He didn't talk with or interact with anyone else, as far as I could see," the sales executive testified, "and his body guard wouldn't even permit Trump University employees to try to shake his hand."

Schneiderman said Trump “had little or no role in developing any of the Trump University curricula, or seminar content.” In a deposition, Trump could not provide names of Trump University instructors or how he knew them.

Schneiderman, a supporter of Hillary Clinton during the election, called the settlement a "stunning reversal by Donald Trump."

"In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of millions of dollars through a scheme known as Trump University," Schneiderman said in his statement. "Donald Trump fought us every step of the way, filing baseless charges and fruitless appeals and refusing to settle for even modest amounts of compensation for the victims of his phony university. Today, that all changes."

Pending approval by the courts, Trump will be required to pay $21 million to settle the two California class-action suits and $4 million to end the New York suit.

Image via Gage Skidmore, Flickr, used under Creative Commons