Donald ‘Never Settle’ Trump Settles Trump University Fraud Lawsuit for $25 Million
Editor's Note: This story has been updated with the final settlement.
In the not-too-distant past, President-elect Donald Trump vowed to fight lawsuits against Trump University, the now defunct eponymous real-estate seminar program that former students alleged used aggressive marketing techniques to bilk them out of tens of thousands of dollars but failed to make good on promises to make them rich.
In February, Trump tweeted, “Trump University has a 98% approval rating. I could have settled but won't out of principle!”
“I don’t settle lawsuits,” Trump later explained to an Arkansas crowd after his primary opponents began using Trump University as evidence that the real estate developer and reality television star was simply a con man. “Probably should have settled it, but I just can’t do that. Mentally I can’t do it. I’d rather spend a lot more money and fight it.”
He got the “spend a lot of money” part right, anyway.
Through his lawyers, Trump has negotiated a deal that will cost him $25 million to settle three separate lawsuits against Trump University, according to a statement released by New York Attorney General Eric Schneiderman on Friday. The victims—some 6,000 people in New York, California, and Florida—will each receive restitution while up to $1 million will be paid to New York state as a penalty for violating education laws, according to Schneiderman’s statement.
“We are pleased to announce the complete resolution of all litigation involving Trump University. 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," a spokesperson for the Trump Organization said in an emailed statement.
"In 2013, my office sued Donald Trump for swindling thousands of innocent Americans out of millions of dollars through a scheme known at Trump University. 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," Schneiderman's statement read in part.
Until now, Schneiderman has been relentless in his prosecution of Trump University, calling the business venture that reportedly brought in $40 million, “a fraud from beginning to end.” This year, Schneiderman also opened an investigation into the Trump foundation, a charity that had been violating state law by accepting donations without the proper registration.
The decision reverses claims made by Trump in dozens of interviews, stump speeches, and tweets that he would never settle.
“Do you know that almost everybody in the lawsuit has signed a letter saying how great the school was? That’s why I won’t settle because it's an easy case to win in court,” Trump said on Morning Joe in February.
“Obviously Trump getting elected as president changed his posture on settling,” a source familiar with the negotiations told The Daily Beast.
Though an exact figure cannot be known as the president-elect has refused to release his tax returns, Trump reportedly pocketed millions from the school that operated from 2005 to 2010. The school enrolled around 10,000 students in seminars that ranged between a $1,495 three-day seminar to a $35,000 program that promised (but often failed to deliver, according to former students) personal mentoring from “hand-picked” instructors, most of whom Trump had never even met, according to depositions.
Low v. Trump University, which alleges consumer fraud and elder abuse against Trump, is one of two California federal class action lawsuits against the school and was scheduled to begin on November 28, six years after the initial complaint was filed in 2010. Trump’s lawyers recently asked that the trial be delayed so that Trump could concentrate on the White House transition. . The students’ lawyers accused Trump’s counsel of seeking to stay the case indefinitely. U.S. District Judge Gonzalo Curiel is set to rule on the delay today.
Curiel, the federal judge presiding over both California cases, was attacked during the campaign when then presidential nominee Trump complained the case against him was unfair, citing Curiel's Mexican heritage (he was born in Indiana) as prejudicial against Trump, who had promised to build a wall between the United States and Mexico. Curiel has urged both sides in recent weeks to come to a settlement.
"It would be wise for the plaintiffs, for the defendants, to look closely at trying to resolve this case given all else that’s involved,” he advised at a hearing last week.
At the same hearing, the lawyers confirmed settlement talks were in progress.
“[D]espite how aggressive we are on both sides, we get along well outside of court,” the students’ lawyers told the court. Trump lawyer, Daniel Petrocelli, agreed and promised the judge “we will both put our best efforts into it.”
A third case, brought by New York's attorney general in 2013, will also be settled as a result of the California talks taking place this afternoon.
“You lose leverage,” a source familiar with the negotiations explained to The Daily Beast, noting an overlap in the victims of the three cases would make it nearly impossible to go ahead with a trial in New York. The source called the multi million-dollar settlement “significant in a case where the defendant said he had a 98 percent approval rating.”
Trump is a man known for making apologies only in rare instances, like when he said he was sorry if anyone was offended when he bragged of grabbing women by their genitals without consent. Unsurprisingly, he has never expressed regret for the the students who have come forward in the media and through their lawyers to tell of how they were pressured to max out their credit cards, or cash in their 401Ks to pay for seminars that they say imparted no actual value.
“It was a con,” 32-year-old ex-Marine Ryan Maddings told The Daily Beast in June. “Those stupid principles have led me to borrow $700,000 of other people’s money and lose it all. I’m still paying off some of that debt to this day.”
Maddings and other students says they were coerced into filling out positive evaluations. But for Trump, the glowing reviews, filled out while instructors looked on, prove Trump University was a success. So much so, in fact, that the president-elect has vowed to reopen Trump University after he moves into the White House.
“After the litigation is disposed of and the case won, I have instructed my execs to open Trump U(?), so much interest in it! I will be pres,” Trump Tweeted in June.
And in May, before a California crowd, Mr. Trump repeated his intention.
“But if I don't win, and even if I do win, we want to open—my kids will open it up again, because it was a terrific school. It was great. It was good.”
Noah Shachtman contributed reporting.