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'Trump University' sued for $40 million by New York attorney general

Donald Trump, photographed at the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, on March 15, 2013.

It looks like Donald Trump has landed back in the hot seat. New York Attorney General Eric Schneiderman is suing the real estate mogul for fraud and violating consumer protection laws. The suit stems from complaints dating back to 2005 over Trump University, now known as the Trump Entreprenuer Institute, a school of sorts, to teach people the finer points of the real estate business.

The attorney general's office alleges that students, who paid anywhere from $1,500 - $35,000, would work with handpicked instructors to land real-estate deals. According to the lawsuit, once students entered the so-called university, they were encouraged to enroll in additional mentorships that cost tens of thousands of dollars. Students thought they’d meet Trump, but all they got was their photo taken with a life-size picture of the man. Trump’s lawyers say the case is politically motivated, and that really Schneidermann is just upset because Trump didn’t write a his campaign a big enough check when he was running for office.

Both for-profit or not-for-profit higher education institutions are facing more government scrutiny lately. There’s a lot of concern that schools are luring students in, getting their tuition, and then delivering a less than stellar product.

Last week, the Obama administration issued a proposal that would rate schools on some measures like graduation rate, debt, and earnings of graduates. If you believe what New York's attorney general is saying about Trump’s school, it’s pretty easy to guess where Trump Entrepreneur Institute would fall.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.
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