Three lawsuits were filed asserting that Trump University engaged in a variety of illegal business practices, ranging from false claims to racketeering. Two were federal class-action lawsuits: one against Trump University and its managers, including Donald Trump, and one against Donald Trump personally. A third case was filed in New York State court.
New York v. Trump Entrepreneur Initiative LLC
In 2005, the New York State Department of Education sent Trump, Sexton, and Trump University a letter saying that they were violating state law by using the word "university" when in fact Trump University was not actually chartered as one and did not have the required license to offer live instruction or training. Although Sexton promised that the organization would stop instructing students in New York State, the New York Attorney General alleged that such instruction continued.
A March 2010 letter sent by the Deputy Commissioner for Higher Education, Joseph Frey, to Trump stated: "Use of the word 'university' by your corporation is misleading and violates New York Education Law and the Rules of the Board of Regents." In June 2010, "Trump University" changed its name to "The Trump Entrepreneur Initiative."
On August 24, 2013, the State of New York filed a $40 million civil suit against Trump University alleging illegal business practices and false claims made by the company. Donald Trump denied the allegations, claiming the school had a 98% approval rating, and said New York Attorney General Eric Schneiderman was "a political hack looking to get publicity". Trump filed a complaint alleging that the state Attorney General's investigation was accompanied by a campaign donation shakedown; the complaint was investigated by a New York ethics board and dismissed in August 2015. Because of strict confidentiality laws, it is unknown whether the complaint was dismissed because Trump's claims were untrue, or because Schneiderman's alleged actions did not contravene any ethical rules.
Schneiderman described Trump University as a bait-and-switch scheme and pointed to the fact that the organization was not a university. He accused Trump of misleading more than 5,000 people to pay up to $35,000 to learn his real estate investment techniques.
In October 2014, a New York judge found Trump personally liable for operating the company without the required business license.
Lawsuits in federal court
Low v. Trump University, LLC
Tarla Makaeff, who paid nearly $60,000 to Trump University in 2008, brought a class action lawsuit against Trump University on April 30, 2010, in U.S. District Court for Southern California. The suit, Makaeff v. Trump University, LLC, sought refunds for Makaeff and other former clients of Trump University, as well as punitive damages for breach of contract, fraud, negligent misrepresentation and bad faith. It did not originally name Donald Trump as a defendant, but did so in a later amended complaint. In February 2014, U.S. District Court Judge Gonzalo P. Curiel denied recognition to the nationwide class the plaintiffs had requested and recognized the suit as class-action on the part of Trump University clients in three states - California, Florida, and New York - based on specific alleged violations of the consumer protection laws of those states. He also narrowed the case to five of the plaintiffs' original fourteen charges.
On May 26, 2010, Trump University filed a counterclaim alleging Makaeff had made defamatory statements about Trump University, "including many completely spurious accusations of actual crimes", that had caused Trump University losses of more than $1 million. On June 30, 2010, Makaeff countered that Trump University's defamation claim was an attempt to intimidate her, known as a SLAPP suit (a strategic lawsuit against public participation), and that because Trump University is a "public figure" the defamation claim required proof that she "acted with actual malice" when speaking and writing about Trump University. By invoking California's anti-SLAPP statute, Makaeff triggered procedures that hastened consideration of the defamation claim without further discovery.
On August 23, 2010, U.S. District Judge Irma E. Gonzalez ruled that Trump University was not a public figure, did not need to show malice on Makaeff's part, and could proceed with its defamation claim. Makaeff appealed to the Ninth Circuit Court of Appeals, where a three-judge panel ruled unanimously on April 17, 2013, that Trump University is a "limited-purpose public figure" and that Trump University must demonstrate malice on Makaeff's part to establish defamation; it returned the case to the district court to consider the defamation claim against that standard. After additional briefing, U.S. District Judge Gonzalo P. Curiel ruled in Makaeff's favor on June 16, 2014, and dismissed the defamation claim. Makaeff then, at the court's invitation, presented evidence of her legal costs and fees in connection with the defamation litigation. She asked for $1.3 million, and on April 20, 2015 Curiel ordered Trump University to reimburse Makaeff $798,000 in legal fees and costs.
In November 2015, the district court ruled on Trump's motion for summary judgment. In a 44-page opinion, the court denied Trump's motion for summary judgment on most of the claims, finding that there was a genuine issue of fact on plaintiffs' claims of deceptive practices and misrepresentation in advertisements in violation of California, Florida, and New York consumer protection and business law and therefore letting these claims proceed to trial. The court did grant summary judgment in Trump's favor on plaintiffs' request for an injunction, because Trump University stopped enrolling students in July 2010 and no longer sold the same seminars or other programs.
On March 21, 2016, over objections from the attorneys for Trump University, Curiel allowed Makaeff to withdraw as the lead plaintiff, naming Sonny Low in her stead, resulting in the case title Low v. Trump University, LLC.
Cohen v. Trump
On October 18, 2013, California businessman Art Cohen filed a civil lawsuit, Art Cohen v. Donald J. Trump, in U.S. District Court for Southern California, as a class action on behalf of consumers throughout the United States who purchased services known as "Live Events" from Trump University after January 1, 2007. It alleged violations of the RICO statute, essentially a scheme to defraud. It accused Trump of misrepresenting Trump University "to make tens of millions of dollars" while actually delivering "neither Donald Trump nor a university." The suit named Donald Trump as the sole defendant and sought restitution as well as damages, including punitive and treble damages.
In an order dated October 24, 2014, U.S. District Judge Gonzalo P. Curiel certified the class proposed by the plaintiff and ruled that Cohen had presented enough evidence to allow the lawsuit to proceed. Alan Garten, general counsel for the Trump Organization, said that Trump University would appeal Curiel's ruling, which he said showed a "manifest disregard for the law". In October 2015, Garten also said that Trump would ask Curiel to recuse himself because of his "animosity toward Mr. Trump and his views". However, Trump's lawyers never filed any motion to recuse, and according to legal experts such a motion would lack legal merit and possibly be considered frivolous.
In May 2016, Curiel set the trial on the suit to begin November 28, 2016, after the U.S. presidential election, with jury selection several weeks earlier.
In August 2016, the district court denied Trump's motion for summary judgment, ruling that there was sufficient evidence against Trump for the case to go to a jury.
On November 10, 2016, Curiel denied a request by Trump to delay the trial until after his inauguration as president of the United States of America. At the same time Curiel urged the parties in the lawsuits to work toward a settlement, and both sides agreed to accept an offer from U.S. District Judge Jeffrey T. Miller to facilitate such talks.
Public release of court documents
On May 27, 2016, Curiel granted a request by The Washington Post for public release of certain documents that had been filed in the case. He noted that they were "routine" and many were already publicly available. The released information included "playbooks" documenting instructions for employees to use a hard-sell approach, as well as depositions in which former employees said that Trump University had defrauded or lied to its students.
On August 2, 2016, the court denied a request by The Washington Post and other media organizations for the public release of hours of videotaped testimony from Trump's two depositions in Cohen, taken in November 2015 and January 2016. Transcripts of those depositions had already been released, showing "that Trump repeatedly indicated that he had never met instructors at Trump University, despite advertisements for the program indicating that its staff had been handpicked by the real estate mogul." Trump's attorneys had opposed the requests to release the videotapes. Curiel ruled that there was a legitimate public interest in the content of the deposition, but that interest was satisfied via public release of the transcripts. The judge also noted that if the videos were publicly released, it was "nigh-inevitable" that the footage would be used in news accounts and political ads, which might prejudice the jury pool pre-trial.
Trump's comments about Curiel
During primary campaign speeches, Trump repeatedly called the judge a "hater" and described him as "Spanish" or "Mexican" (Curiel was born in Indiana to parents who had immigrated to the U.S. from Mexico). Trump also said that Curiel should recuse himself, although his attorneys said they did not plan to ask for the judge to be removed from the case. Curiel's only comment was to write in a procedural ruling that Trump has "placed the integrity of these court proceedings at issue". Trump's references to Curiel's ethnicity, as well as his comments that "someone ought to look into" the judge, alarmed legal experts, who expressed concern about the effects of the comments on judicial independence.
On June 7, 2016, Trump issued a lengthy statement saying that his criticism of the judge had been "misconstrued" and that his concerns about Curiel's impartiality were not based upon ethnicity alone, but also upon rulings in the case.
Settlement
On November 18, 2016 it was reported that Trump agreed to pay $25 million to settle the two class-action lawsuits and the New York suit. The settlement was reached ten days before the San Diego class action was scheduled to go to trial. Of the $25 million, $21 million will go to the participants in the class-action suits, $3 million will go to New Yorkers not covered by the class-action suits, and a penalty of up to $1 million will be assessed by the state of New York for running an unlicensed university. The plaintiff's attorneys agreed to forgo their fees and work pro bono so as to maximize the amount that will go to the approximately 7,000 former Trump University students who are part of the case. The settlement also specifies that Trump, who had previously vowed he would never settle, does not admit to any wrongdoing. The settlement was brokered by U.S. District Judge Jeffrey T. Miller, who offered his services to the parties on November 10 at Curiel's request. Curiel approved the settlement on March 31, 2017.
New York Attorney General Eric Schneiderman stated that the settlement and payment by Trump "is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university." Trump himself said he settled "for a small fraction of the potential award" because he was too busy as president-elect to take it to trial. He added, "The ONLY bad thing about winning the Presidency is that I did not have the time to go through a long but winning trial on Trump U. Too bad!"
Final payment of the settlement was put on hold, because one member of the class opted out of the settlement to pursue an individual lawsuit. A district court and an appeals court rejected that individual's claim, and Curiel finalized the settlement in April 2018. Former students can now get a refund of up to 90% of the money they spent on courses.
Other investigations
In 2010, the office of Texas Attorney General Greg Abbott investigated Trump University. No lawsuit was brought, but after exchanging communications with investigators that included requests from the investigators for customer lists and internal documents, Trump University closed its operations in the state. These had included newspaper advertising, free presentations, and three-day seminars.
The office of Florida Attorney General Pam Bondi announced in September 2013 that it was considering joining a New York lawsuit against Trump University. Four days later, the Donald J. Trump Foundation donated $25,000 to "And Justice for All," a 527 group supporting Bondi's re-election campaign. Following this, Bondi declined to join New York in the lawsuit. According to a Bondi spokesman, Bondi had personally solicited the donation from Trump several weeks before her office announced it was considering joining the lawsuit. In March 2016, Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint with the IRS about the potentially illegal donation. In September 2016 it was reported that the donation violated laws against political contributions from nonprofit organizations, and that Donald Trump had reimbursed the foundation from his own money and paid the IRS a $2,500 excise tax as a penalty. Trump denied that the donation was connected to the Trump University lawsuit, saying that it was for Bondi's performance as attorney general.