Appeals Court Reinstates Fraud Case Against Trump University

Back in Aug. 2013, the New York state attorney general’s office sued Donald Trump and Trump University, alleging that the for-profit investment school had tricked students out of $40 million by misleading them into thinking they were paying for a licensed education program with instructors handpicked by Trump. Today, a state appeals court panel breathed new life into the lawsuit, meaning the fraud case can move forward. The school was launched in 2004, but Attorney General Eric Schneiderman says that the state repeatedly advised the program’s operators that it was violating state law by using the term “University” without a charter, and because it lacked a license to offer student instruction or training in New York. Students paid upwards of $35,000 each to participate in the program, which advertised that the lecturers were “Donald Trump’s handpicked experts,” and that it could “turn anyone into a successful real estate investor, including you.” But according to the state, only one person who spoke at Trump University presentation had ever even met the real estate mogul. The original complaint included six different causes of action: fraud under NY Executive Law § 63(12); fraudulent and deceptive practices under NY General Business Law § 349; false advertising; violating state law by calling the business “Trump University” without a charter; operating an unlicensed school that did not meet state standards; and violating a federal law about cooling-off periods for contracts that obliges a seller to include the buyer’s right to cancel the transaction within three days. In 2014, a state court dismissed the Executive Law fraud allegation, though it did grant summary judgment that Trump University had been operating an unlicensed school in New York. However, this morning, a four-judge state appeals court panel found that the lower court had incorrectly dismissed the fraud complaint, and also sided with Attorney General Schneiderman’s contention that a six-year statute of limitations applies in this case, as opposed to the three-year limit argued by the defendants. The appellate court ruling does not mean that Trump University committed fraud.