Trump University: $25 Million Fraud Settlement, Students Defrauded of Thousands
Trump University was not an accredited university and did not grant degrees. It marketed heavily using Trump's image and promises that students would learn from Trump's 'handpicked instructors.' Playbooks obtained by Washington Post showed instructors were coached to identify students' financial resources and upsell them to higher tiers; students were encouraged to raise credit card limits to pay for more expensive packages. Former employees testified to high-pressure sales tactics. The $25 million settlement resolved claims by approximately 6,000 students and was approved by a federal judge in April 2017.
Record summary
Grade
Grade 2 of 5: Major Abuse of Power
Executive actions that exceed constitutional authority, circumvent statutory constraints, or weaponize government institutions for political ends. Scale and definitions
- Status
- Concluded
- Incident date
- Record updated
- Location
- New York, NY
- Category
- Corruption & Self-Dealing
- Legal posture
- Judicial finding
- War-crime classification
- Enabling conduct
- Verification
- Independently verified
- ICC relevance
- No
- Sources
- 4 cited
- Stable ID
trump-university-fraud-25-million-settlement- Victims
- Approximately 6,000 students who paid up to $35,000 for Trump University programs; elderly students who were pressured to spend retirement savings
- Alleged responsible parties
- Donald Trump, Founder and public face of Trump University; named defendant in fraud suits— Trump University / Trump Organization
Key points
- Trump University was founded in 2005 and operated until 2011; it was not an accredited university and could not award degrees; New York required it to stop using the word 'University' in its name
- Programs were tiered: a free preview led to a $1,497 three-day seminar, which led to pitches for the 'Gold Elite' program costing up to $35,000; students were coached to raise credit card limits and access retirement savings
- Instructor playbooks obtained during litigation showed that Trump University staff were trained to identify 'buyers' by asking about assets and to 'find the pain' — exploit emotional vulnerabilities to sell more expensive programs
- Former students and employees testified to high-pressure sales tactics, promises that were not delivered (Trump did not teach the courses himself despite marketing suggesting he would), and instructors with no meaningful real estate expertise
- New York AG Eric Schneiderman filed a $40 million civil fraud suit in 2013; separate class action suits were filed in California; Trump repeatedly attacked the California judge (Gonzalo Curiel) as biased due to his 'Mexican heritage' — Curiel was born in Indiana
- Trump agreed to pay $25 million to settle all three lawsuits on November 18, 2016 — ten days after winning the presidential election; the settlement included no admission of wrongdoing and resolved claims by approximately 6,000 students
Overview
Trump University told aspiring real estate investors they would learn from the best. They paid up to $35,000. They did not learn from Trump — he did not teach the courses. The instructors did not have significant real estate expertise. The content was available in books.
What students got was a masterclass in the sales tactics being used on them.
The Playbooks
The instructor playbooks released during litigation were unusually detailed. They described a system: draw in prospects with free events, identify buyers through financial profiling, and move them up the tier ladder using emotional pressure and manufactured urgency.
The "pain funnel" technique instructed sales staff to identify what potential students were dissatisfied with in their financial lives and use that dissatisfaction to motivate purchases they couldn't afford. Staff were coached to ask about credit card limits and home equity before suggesting the Gold Elite package.
Who Was Hurt
Former students who testified described spending retirement savings. One elderly woman described going to the free event, then the $1,497 seminar, then being told the real education was in the $35,000 package. She couldn't afford it but was told it would change her life. She borrowed the money.
This was not an edge case. It was the documented system.
The Settlement
Trump had said he would never settle. He called the lawsuits garbage and attacked the judge hearing the California case as biased because of his "Mexican heritage" (the judge was born in Indiana). He settled ten days after winning the presidency, paying $25 million, admitting nothing.
The timing made the decision easy. He had won. The cases were a distraction he no longer needed to maintain as a public narrative about his toughness. He paid and moved on.
Update log
-
Updated with settlement.
Sequence of events
-
Trump University founded
Trump University is founded. It is not an accredited institution and cannot award degrees. New York state requires it to stop calling itself a university. It operates as 'The Trump Entrepreneur Initiative' in New York.
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High-pressure sales tactics documented
Former employees and students begin describing high-pressure sales tactics, with instructors encouraged to identify financial resources and upsell students to higher tiers regardless of their circumstances. Some elderly students spend retirement savings on the Gold Elite package.
-
Trump University ceases operations
Trump University stops taking students. More than 6,000 students had paid for various programs, with the most expensive costing $35,000.
-
New York AG files $40 million fraud suit
New York Attorney General Eric Schneiderman files a $40 million civil fraud suit against Trump University, Trump, and the Trump Organization, alleging they defrauded students through false promises and high-pressure sales tactics.
-
Instructor playbooks released
A federal judge orders the release of Trump University's instructor playbooks. They document the 'pain funnel' technique for identifying financial vulnerabilities and the upselling strategy from free events to $35,000 packages.
-
Trump agrees to $25 million settlement
Ten days after winning the presidential election, Trump agrees to pay $25 million to settle three fraud lawsuits — having previously said he would never settle and called the cases 'garbage.' No admission of wrongdoing is included. The settlement is approved by a federal judge in April 2017.
Sources
- Trump Agrees to $25 Million Settlement in Trump University Fraud Cases — The New York Times
- Trump University — the inside story of a major American scam — The Washington Post
- Playbooks Revealed at Trump University Trial — The New York Times
- Trump agrees to $25 million Trump University settlement — The Associated Press