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Bad news for Donald Trump: a court strengthened a fraud lawsuit against Trump University

Donald Trump, before running for president, tried to get into the education business.
Donald Trump, before running for president, tried to get into the education business.
Scott Gries/Getty Images

Before the presidential campaign is over, Donald Trump could end up having to testify in three separate cases about his allegedly fraudulent university.

A New York appeals court ruled Monday that a $40 million lawsuit from the state's attorney general could proceed, and that it could include evidence from up to six years ago about Trump University's deceptive practices.

That's a big deal. A lower court had applied a three-year statute of limitations — meaning that nearly all of the victims Attorney General Eric Schneiderman cited in his investigation of Trump University couldn't pursue their claims.

Trump University wasn't a university but a multilevel marketing scam

Trump University — which was never licensed to call itself a "university" — shut down in 2010. But the legal fallout, including Schneiderman's suit, has continued.

The university, Schneiderman has charged, was a "bait and switch," a classic multilevel marketing scheme: People are told that the real benefits they want are only available if they keep paying, essentially urging them to throw good money after bad.

People were lured into a free workshop with marketing materials that promised they'd learn Trump's real estate secrets from his "handpicked" instructors and maybe even from Trump himself. Instead, they were urged to sign up for a three-day seminar that cost nearly $1,500. And at that seminar, they were pushed to sign up for an elite mentorship program that could cost as much as $35,000 per year.

Trump didn't handpick the mentors. He didn't write the curriculum. He didn't even show up at the seminars. Instead, students got to take a photo with a cardboard cutout of him.

Even the most expensive mentorship didn't deliver, Schneiderman's lawsuit charges. Some mentors simply vanished. Others had no background in real estate at all.

The lawsuit accuses Trump University of other shady behavior, such as asking students to fill out information about their financial assets — so that Trump University could pick out the wealthiest participants to urge them to pay more for the next level.

They also urged participants to seek a credit line increase with the promise that it would improve their credit score. That's sometimes the case, but greater access to credit also made it easier for participants to pay more for the next level of Trump University "advice."

Trump fought back by claiming his university has a 98 percent satisfaction rate, and by suing Schneiderman, saying the attorney general used the lawsuit as a threat to force Trump's attorneys and family members to contribute to Schneiderman's campaign. But the state ethics commission dropped that complaint.

Trump is facing three lawsuits and getting more questions

When Trump's candidacy looked like a publicity stunt, Trump University mostly flew under the radar. But Trump's Republican rivals, including Sen. Marco Rubio, are now using it to attack him, and Trump might end up facing questions under oath before the campaign is done.

Two class-action lawsuits from Trump University students are also working their way through the legal system in San Diego district court. Trump University's treatment of the elderly is getting special scrutiny: Some of the plaintiffs are over 60 and sank tens of thousands of dollars into Trump University's workshops and mentorships.

The final pretrial conferences for the cases are in March and June, and at least one could go to trial as soon as August.

US District Judge Gonzalo Curiel, has said he's eager to move the cases forward and has acknowledged that it's unusual to have a presidential candidate in his courtroom, according to the San Diego Union-Tribune. And it's likely that Trump himself will have to testify: He's on the witness list.

As Time magazine's Steve Brill pointed out, Trump University's victims often look a lot like Trump's voters: lower middle class, white, often elderly, and worried about their economic situation.

Meanwhile, Trump is deflecting the allegations in characteristic fashion: by saying Curiel's Hispanic heritage means he's biased against him. (Curiel was born in Indiana, but his parents were immigrants. His job before he was appointed to the bench, incidentally, dealt with an issue dear to Trump's heart: prosecuting criminals who smuggled drugs over the US-Mexico border.)

"There is a hostility toward me by the judge — tremendous hostility — beyond belief," Trump said of the San Diego cases at a rally in Arkansas, according to the New York Times. "I believe he happens to be Spanish, which is fine. He’s Hispanic, which is fine. And we haven’t asked for a recusal, which we may do. But we have a judge who’s very hostile."