New York's attorney general has sued Donald Trump for $40 million, claiming the real estate mogul helped run a phony 'Trump University' that falsely promised to make students rich.
Instead, Attorney General Eric Schneiderman said that the university steered them into expensive and mostly useless seminars, and even failed to deliver promised apprenticeships.
After the lawsuit was filed on Saturday, Trump shot back that it is false and politically motivated.
Schneiderman says many of the 5,000 students who paid up to $35,000 thought they would at least meet Trump but instead all they got was their picture taken in front of a life-size picture of him.
'Trump University engaged in deception at every stage of consumers' advancement through costly programs and caused real financial harm,' Schneiderman said.
'Trump University, with Donald Trump's knowledge and participation, relied on Trump's name recognition and celebrity status to take advantage of consumers who believed in the Trump brand.'
State Education Department officials told Trump to change the name of his enterprise years ago, saying it lacked a license and didn't meet the legal definitions of a university.
In 2011 it was renamed the 'Trump Entrepreneur Institute', but it has since been dogged by complaints from consumers and a few civil lawsuits claiming it didn't fulfill its advertised claims.
Schneiderman's lawsuit covers complaints dating to 2005 through 2011 and it claims that students paid between $1,495 and $35,000 to learn from the mogul.
He said the three-day seminars failed to teach consumers everything they needed to know about real estate, as the 'university' had promised. The Trump University manual tells instructors not to let consumers 'think three days will be enough to make them successful', Schneiderman said.
At the seminars, consumers were told about 'Trump Elite' mentorships that cost $10,000 to $35,000 in which students were promised individual instruction until they made their first deal.
Schneiderman said participants were urged to extend the limit on their credit cards for real estate deals, but then used the credit to pay for the Trump Elite programs.
The attorney general said the program also failed to promptly cancel memberships as promised.
The lawsuit added that many of students were unable to land even one real estate deal and were left far worse off than before the lessons, facing thousands of dollars in debt.
But Trump's attorney accused Schneiderman of trying to extort campaign contributions from the real estate mogul through his investigation.
Attorney Michael D. Cohen told The Associated Press on Saturday that Schneiderman's lawsuit was filled with falsehoods. Cohen insisted that Trump and his university never defrauded anyone.
'The attorney general has been angry because he felt that Mr. Trump and his various companies should have done much more for him in terms of fundraising,' Cohen said. 'This entire investigation is politically motivated and it is a tremendous waste of taxpayers' money.'
State Board of Elections records show Trump has spent more than $136,000 on New York campaigns since 2010.
He contributed $12,500 to Schneiderman in October 2010, when Schneiderman was running for attorney general, records show.
An outspoken conservative, Trump himself flirted with a presidential run last year.
'Donald Trump will not sit back and be extorted by anyone, including the attorney general,' Cohen said.
Schneiderman is suing the program, Trump as the university chairman, and the former president of the university in a case to be handled in state Supreme Court in Manhattan.
He accuses them of engaging in persistent fraud, illegal and deceptive conduct and violating federal consumer protection law. The $40 million he seeks is mostly to pay restitution to consumers.
He dismissed Trump's claim of a political motive.
'The fact that he's still brave enough to follow the investigation wherever it may lead speaks to Mr. Schneiderman's character,' Schneiderman spokesman Andrew Friedman told AP.