Trump University: How Donald Trump’s for-profit seminar company allegedly ripped off poor souls who wanted to get rich quick.

Donald Trump Is Part of an Old Tradition: Ripping Off Poor Souls Who Want to Get Rich Quick

Donald Trump Is Part of an Old Tradition: Ripping Off Poor Souls Who Want to Get Rich Quick

Your money and your life.
Sept. 10 2015 2:36 PM

The Apprentices

With Trump University, Donald Trump allegedly participated in an old, persistent scam: ripping off poor souls who want to get rich quick.

Real estate mogul Donald Trump.
Lesson No. 1: perfecting the rich-guy squint. Donald Trump speaks as university President Michael Sexton, left, looks on during a news conference announcing the establishment of Trump University on May 23, 2005, in New York City.

Photo by Mario Tama/Getty Images

For Donald Trump, it’s never been enough to simply run a real estate empire. He emblazons his family name on just about everything he builds. He’s been a tabloid fixture in New York for the better part of four decades. He’s done time on reality television, bellowing out “You’re fired” on The Apprentice. He’s even been involved in education.

Education? Donald Trump?

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Yup.

Helaine Olen Helaine Olen

Helaine Olen is a former columnist for Slate and co-author of The Index Card. She was the host of the Slate Academy series the United States of Debt.

Ten years ago Trump went into the for-profit education business. Ads for the new Trump University proclaimed the Donald’s desire to share his business wisdom. “Just copy exactly what I’ve done and get rich,” said one. Another claimed, “I can turn anyone into a successful real estate investor.”

Perhaps he meant to say “mark.”

To say that Trump University did not deliver for many of its students is to indulge in understatement. New York state sued Trump and Trump University in 2013, alleging it had engaged in “persistent fraudulent, illegal and deceptive conduct.” There’s an ongoing class-action lawsuit in California, claiming the school was a “fraudulent scheme.” Trump University responded to yet another lawsuit by countersuing the lead claimant, alleging defamation.

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And finally, there are scores of unhappy former students, people like Kathleen Meese, a teacher and mother of a son with Down syndrome, who racked up $25,000 in debt to pay for her schooling after an instructor assured her she could earn the sum back within months. She couldn’t. Then there is Nora Hann of Brooklyn, out $35,000, who last week told the New York Daily News, “I went through hell and back,” adding, “They’re a bunch of frauds.”

As it turns out Trump University wasn’t a university at all—as New York state authorities pointed out, universities need charters. Instead, Trump University was something known as a wealth seminar, an insidious byproduct of our age of inequality and do-it-yourself financial planning.

How did it work?

People were invited to a free—or “FREE,” as the mailers advertising Trump University declared—seminar, held in a local hotel like the Hilton Garden Inn in Greenbelt, Maryland, the Renaissance Glendale Hotel and Spa in suburban Phoenix, or the Doubletree in Berkeley, California. There, “hand-picked” instructors would begin to school you in the intricacies of investing in real estate so that it could seem like a reasonable thing for someone to do.

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And what happened next? What’s known in the industry as the upsell, a pressure-heavy attempt to get consumers to buy in, and I mean that literally. Those attending Trump University’s free seminar were repeatedly told they should sign up for a three-day seminar called “The Apprenticeship Program,” costing $1,495, if they really wanted to get ahead.

And if they did that? According to the lawsuits, the main thing they learned in those three days was what they should say to convince credit card issuers to raise the credit limits on their cards. Why? They needed the money to fund their new businesses. Immediately. If that didn’t work, they could also apply for new cards. Students were told they should remember to include “projected income” when calculating household earnings on applications for new cards. What projected income, you might ask? Well, the real estate empires they would be setting up as soon as they left the class. But first …

Yes, another class! And another. And special mentoring. All of it could be yours—for a price. That’s the upsell. As laid out in a lawsuit filed by Tarla Makaeff, the California woman Trump University countersued, there was the Gold Elite package, costing $48,490, but available to attendees at the “one day only” special sale price of $34,995. If they couldn’t afford that, Trump University also offered Silver Elite and Bronze Elite plans at a limited-time discount.

And how should a student pay for that? Well, you remember that credit card, right?

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Many of those who signed up claim the mentorship was either spotty or nonexistent. As for the hand-picked, expert teachers? The California class action says that’s not so. And when Los Angeles Times reporter David Lazarus attended a session of Trump University in 2007, he discovered his instructor had “had his own home foreclosed upon.”

On the plus side, there were no student loans offered.

Trump University was not alone in allegedly embracing this sort of business model. The modern era of wealth seminars began in the early 1980s, basically running parallel with the worsening of income inequality, the explosion in easy credit, and federal regulatory changes that allowed television stations to more easily sell airtime to would-be gurus. One pioneer was Robert G. Allen, who pushed books like Nothing Down: How to Buy Real Estate With Little or Nothing Down.

The aughts brought us Robert Kiyosaki’s Rich Dad, Poor Dad seminar empire, which was eerily similar to Trump University. Eager acolytes would be invited to a “free” seminar located at a nearby hotel, where they would be regaled with tales of Kiyosaki’s wealth and urged to sign up for a three-day seminar, usually related to real estate investing. (Rich Dad Education, either less greedy or more savvy than Trump, charged a mere $300 for its three-day class). This was so effective that the organization came to a $1 million settlement with the state of Florida in 2008 after, to quote from the press release announcing the deal, “consumers complained that the introductory programs and seminars, touted as training that would change careers and lifestyles and give persons financial freedom and independence, covered only very rudimentary information and were used mainly to entice consumers to purchase ‘more advanced’ and significantly more expensive training programs.” When the Canadian Broadcasting Corp. show Marketplace signed up and sent a reporter off to the Rich Dad three-day seminar, the class was presented with a prepared script so attendees could call their credit card companies and have their limits raised to $100,000, supposedly for the first purchase, but, as a number of attendees suspected, as a way to pay for the next level of classes.

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So why don’t voters seem to care that Trump, a man worth an estimated $4 billion, according to Forbes,  felt impelled to take five-figure sums of money from people like Meese? Well, first, Trump claims he did nothing wrong. He says the people complaining about his classes are a few scattered malcontents, and maintains a website claiming 98 percent of the people who enrolled in Trump University described the class as “excellent.”

It’s also possible that conservative voters are inured to this sort of stuff. Journalist Rick Perlstein has pointed out that any number of Republican politicians and talking heads seem to view their supporters as cash cows, selling their email lists to outfits marketing everything from miracle arthritis cures to surefire stock tips. The “long con,” Perlstein called it in the Baffler.

And maybe we are all inured to this. After all, it’s not like the real estate crash put the wealth seminar business out of business. True, Trump University, after changing its name to the Trump Entrepreneur Initiative, all but shut down in 2011. But no worries. You can still learn how to make a fortune betting on foreclosures, flips, and rental income schemes.

The latest real estate guru on the circuit? Former Flip This House star Armando Montelongo. His organization will offer free two-hour introductory sessions in more than three dozen metropolitan areas—including Atlanta, New York, Dallas, and Colorado Springs—over the next month. “The time is NOW to invest in real estate,” his website proclaims. “Position yourself to start making money flipping houses in your area.”

If you attend the class, you’ll be urged to sign up for a three-day extended session, which costs, according to published reports, $1,496.  

Sound familiar?