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Aug 03 2016

Ay Caramba! Fed Judge Rules Trump Must Stand Trial Over “Trump U” Fraud Case

It’s not what The Donald waned to hear I’m sure. Federal Judge Gonzalo Curiel — the same judge who Trump accused of being biased against him due to the Indiana native’s Mexican ancestry and Trump’s controversial positions on border security — is ordering Trump to stand trial in a Federal civil case field against him by former students of his on-line real estate education company called Trump University. Trump and his lawyers had moved to dismiss the case arguing that the claims had no merit and that it was improper for the plaintiffs to use the civil RICO statute against him.

While it is true that RICO was originally written to fight against organized crime, the statute has been broadly expanded and used to target corporations allegedly engaging in fraudulent behavior through the use of an enterprise. Not surprisingly, it was Trump’s own words and actions that the judge said requires the case to be heard by a jury.

The plaintiffs are claiming that they were defrauded because there was no promised teaching of Trump’s personal system and because they were led to believe that they were going to be getting a more serious, formal education because it was called Trump University. Trump had argued that he only had minimal involvement in the school and the using the term “university” was merely puffery and boasting and not any indication of the level or value of the education received by the students. But the judge quickly shot those arguments down by referring to an introductory video featuring the GOP Presidential candidate himself where he told the students:

We’re going to have professors and adjunct professors that are absolutely
terrific. Terrific people, terrific brains, successful. . . . The best. We are going
to have the best of the best and honestly if you don’t learn from them, if you don’t learn from me, if you don’t learn from the people that we’re going to be putting forward — and these are all people that are handpicked by me — then you’re just not going to make in terms of the world of success. . . . we’re going to teach you better than the business schools are going to teach you and I went to the best business school. … Newspaper advertisements displayed a large photograph of Mr. Trump,
stating “[l]earn from Donald Trump’s handpicked expert,” and quoted Mr. Trump as saying: “I can turn anyone into a successful real estate investor,including you.Similarly, other advertisements displayed large photographs of Mr. Trump and included statements such as “Learn from the Master,” “The next best thing to being his Apprentice,” and “Nobody on the planet can teach you how to make money in real estate better than I can.”

In addition, the plaintiffs presented evidence that Trump approved all marketing materials even micro-managing the work to the point of noting that a newspaper ad for Trump U should have appeared on an odd-numbered page in the newspaper as those tend to be in better viewing position for the reader. The court also scrutinized the marketing guides given to Trump U employees to try and make the sales which made them use terms and lingo common to universities:

[For example] See, TU Marketing Guidelines describing the “Trump University Community” as including “Staff,” “Faculty,” “Instructors,” and “Program Directors (Trump University’s Admissions Department)
including under “Catch Phrases/Buzz Words”: “Ivy League Quality” and under “Tone”: “Thinking of Trump University as a real University, with a real Admissions process—i.e., not everyone who applies, is accepted”; and encouraging TU employees to “[u]se terminology such as” “Enroll,” “Register,” and “Apply”

Judge Gonzalo Curiel

Judge Gonzalo Curiel

Judge Curiel said that it was for a jury to decide if this was an attempt to defraud students and that it was for a jury to determine if Trump played a significant role in running the operation. Both of those things will be hard for Trump to refute as he is on record in a number of places touting his involvement in Trump U and as he admitted that he approved all marketing materials that bore his name or picture. This case will not be tried before the November election, but it will likely be raised in debates and attack ads by the Clinton campaign. You can bet that Trump will downplay this decision and file an immediate appeal, but his time is running out on this case. The appeal is almost certainly going to be denied and Trump will have to hear from a jury whether they agree with him or the plaintiffs in the case. If he loses the damages could total in the millions of dollars. The question is What will a jury of Donald Trump’s peers look like?

You can read the entire decision HERE

Follow me on Twitter @oscarmichelen

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