The Contrarian

“In the investment markets, what everyone knows is usually not worth knowing.”

Trump settles Trump University “Fraud” charges for $25 million

The president elect Donald J Trump (DJT) has settled the lawsuit charging Trump University with fraud. That sounds so terrible. But is it? And was fraud actually committed?

Preparing to be the next President of the US is understandably more important for DJT than going to trial with this questionable lawsuit. The lawsuit is a minor irritant.

We believe his goal is to try to go down in history as the best President ever. He may not achieve that, but we are convinced he will try.

We were curious about what the “fraud” charges against Trump were. So, we looked it up. We were amazed to find that perhaps many of the same accusations could be made against most colleges and universities in the country by their students.

The State of NY brought the suit. Here is an excerpt:

The petition filed in New York Supreme Court in Manhattan by Attorney General Schneiderman details the advertisements run by Trump University in major newspapers across the country and the direct mail solicitations sent to entice consumers to attend a free workshop. These ads prominently displayed Donald Trump’s photograph and signature, or were styled as letters written by Trump himself.

The advertisements were replete with false claims, including claims that consumers would learn “from Donald Trump’s handpicked instructor a systematic method for investing in real estate that anyone can use.” Other ads promised “my handpicked instructors will share my techniques” or “learn from my hand-picked expert” and “just copy exactly what I’ve done and get rich.”

An investigation by Attorney General Schneiderman revealed that Donald Trump did not handpick even a single instructor at these seminars and had little or no role in developing any of the Trump University curricula, or seminar content.

The investigation also revealed that officials used the name “Trump University” even though they lacked the charter necessary under New York law to call themselves a University. They were also unlicensed under New York State Education Law, evading an array of legal protections designed to protect New Yorkers from fraud.

Even though Trump University was notified by the New York State Education Department (“NYSED”) as early as 2005 that these practices violated New York law, Trump University did not change its name until May 2010 and never received a license to operate in the state. As a result, many students believed they were attending a University, when they were not. This misconception was reinforced by Trump University’s use of a University-like seal on much of its material and awarding diploma-like Certificates of Completion bearing Donald Trump’s signature.

Despite Trump University’s advertised claims, consumers attending free seminars did not learn Donald Trump’s real estate techniques. Instead, Trump University’s instructors made multiple misrepresentations to convince consumers to sign up for a $1,495 three-day seminar. These misrepresentations included false claims about the three-day seminars such as:

Instructors also insinuated Donald Trump himself would appear at the three-day seminar.

In reality, many of the promises made at the free seminars went unfulfilled. Despite claims to the contrary, consumers who paid for and attended the three-day seminars were not taught everything they needed to know about real estate investing. For example, consumers did not receive substantive instruction on how to raise money from hard money lenders or receive an extensive “apprenticeship support” program.

Instead of a personal appearance from Donald Trump as some consumers were led to expect, some participants got their photographs taken with a life-size photo of Mr. Trump.

Read the above charges against Trump again, slowly. Is this what our legal system has come to? Calling it “fraud” when, in a three day seminar for $1,495, someone isn’t trained to be a billionaire real estate developer? If success were only that easy.

It would seem logical that anyone bringing the suit had unrealistic expectations. The problem seems to be with the student, not the seminar. However, judging by our own experience, ‘logic’ and the basic assumption that a person understands life does not apply today.

From recent experience, we have learned that even casual emails apparently can now be interpreted as parts of a contract although they were never intended as such. That’s why you get an increasing number of emails from companies with “Disclaimers” at the bottom. We always thought this was superfluous. No, they are not. An unethical lawyer who needs the money will claim that an email is a “representation” and therefore, can be “fraudulent.”

A 3-day seminar for $1,495, as Trump University charges, is very reasonable from what we have seen over the years. Tony Robbins charges $10,000 for 5 days in Las Vegas according to an article. Anyone who thinks that a 3-day seminar will make him a billionaire like Donald Trump needs help in something else aside from business coaching. Dr. Phil might be able to help him/her.

If these charges were valid, all colleges and universities could become targets for lawsuits about “misrepresentation.” Many Universities charge $60,000 per year and more and students learn very little that’s useful for life. Forget about learning to be successful.

Upon graduation, many earn less than a plumber, although their career counselor told them about the huge salaries they would be able to command with a degree, especially with the upgrade sell of an MBA.

In their literature, universities tell prospective students about the high quality of their professors. They don’t reveal that some of the professors were imprisoned for blowing up federal buildings, killing people, preaching violence to topple our government, and founded a terrorist organization, such as the ‘Weather Underground.’

USA Today researched lawsuits against Trump. Reportedly there have been over 3,500 lawsuits against Trump over the past 30 years. Another article in the same newspaper said it was 4000+. It’s close enough for “newspaper” work. That makes you wonder why anyone would want to be in any business.

I have a friend who has about a dozen hotels branded with a major hotel chain. He owns the hotels. He said that almost every day he is named in at least one lawsuit having to do with the hotels. That’s our legal system: hungry and unethical lawyers sue to settle.

I trade the markets actively. I get stacks of documents from “class action” lawyers, offering me to be part of a class action for one of the stocks I had traded. I may have more than 50 such announcements in a file right now. Is this what we want in our country?

The lawyers sue to settle! That’s the key. To go to trial costs them too much. Therefore, the charges and allegations always include the word “FRAUD.” A large company, or a highly reputable person, usually does not want its reputation smudged. They are easy targets.

The settlement in a class action usually awards investors or customers a pittance, while the law firm gets hundreds of millions of dollars in cash. Look up the definition of “extortion.” I consider such suits legalized “extortion.” But then, I am not a lawyer.

Perhaps the new president will change that. He has talked about changing the Defamation laws, which today protect that type of legal extortion. In the meantime, judges can do their part in putting an end to these despicable legal tactics.

One way would be to have the lawyers take an oath that the allegations and accusations have been researched and are truthful, under the penalty of perjury, with heavy fines and disbarment for violations.

Wishing you success over the next four years,

Bert Dohmen