Trump settles fraud case against Trump University for $25M

In what New York's attorney general called a "stunning reversal," president-elect Donald Trump agreed Friday to settle fraud cases involving Trump University for $25 million.

The cases involved a lawsuit by New York state and two class actions suits in California against the university, which promised to reveal Trump's real estate investing "secrets" to people who enrolled in the courses.

New York Attorney General Eric Schneiderman, who filed suit against Trump two years ago for what he called "his phony university," said the president-elect agreed to settle the lawsuits for $25 million and pay an additional $1 million in penalties to the state of New York for violating state education laws. The deal does not require Trump to acknowledge wrongdoing.

"Today's $25 million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university," Schneiderman said in a statement.

There was no immediate comment from Trump or his lawyers.

Trump had publicly vowed not to settle the lawsuits and suggested at one point during his presidential campaign that he might reopen the school, which closed in 2010. He told supporters at a May rally that he would come to San Diego to testify after winning the presidency.

“I could have settled this case numerous times, but I don’t want to settle cases when we’re right. I don’t believe in it. And when you start settling cases, you know what happens? Everybody sues you because you get known as a settler. One thing about me, I am not known as a settler,” Trump said at the time.

Friday's settlement comes only days before trial was set to begin in California in one of the class action lawsuits. Trump's lawyers had sought a delay in the run-up to his inauguration, but the judge ruled that the trial go ahead as scheduled and that Trump would be required to testify, although likely by videotape.

Last week, at a pretrial hearing in San Diego, Trump's lawyers said they were open to settlement. U.S. District Court Judge Gonzalo Curiel, who is hearing the case in California, brought up the possibility in court of another federal judge, Jeffrey Miller, assisting the parties in trying to find a way to settle the case before trial.

"I can tell you right now I'm all ears," Trump lawyer Daniel Petrocelli told Curiel.

The New York attorney general's fraud lawsuit described the "university" as nothing but a scam designed to fleece would-be real estate developers. The scheme, he charged, lured students with false promises into paying up to $35,000 to learn Trump's real estate investing "secrets" from his "hand-picked" instructors.

"More than 5,000 people across the country who paid Donald Trump $40 million to teach them his hard-sell tactics got a hard lesson in bait-and-switch," Schneiderman said in a statement at the time. "Mr. Trump used his celebrity status and personally appeared in commercials making false promises to convince people to spend tens of thousands of dollars they couldn't afford for lessons they never got.”

Schneiderman alleged the teachers were not personally selected by Trump, despite claims in the university's ads, and that the students did not ever meet the real estate mogul. The state earlier forced Trump University to quit referring to itself as a university because it was not licensed as such in New York.

Trump, who dismissed Schneiderman as a "lightweight," vigorously denied the fraud charges and claimed 98% of the people who signed up for the courses expressed satisfaction with them.

In 2013 tweet, Trump ridiculed the move by the New York attorney general, saying: "Why did failing A.G. Eric Schneiderman, after years of looking, file his pathetic lawsuit on a SATURDAY afternoon (unheard of)? No Case!"


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