Published On: Thu, Aug 18th, 2016

Trump University Under Fire after Experts Allege Students Were Advised to Perform Illegal Actions

Former Trump University students say they were scammed by the school, but now experts are saying they may have also been advised to commit illegal actions.

Legal experts teamed up with CNBC to review the now-defunct school’s curriculum, and the written advice given to students may have put in them in violation of several national and state investment and real estate laws.

Trump University, which was open for just five years, was shut down after its legitimacy came into question. The former university is now facing two class-action lawsuits, and the New York Attorney General is pursuing a third.

photo/ Mary Pahlke via pixabay

photo/ Mary Pahlke via pixabay

The course’s curriculum included lessons and advice on real estate transactions that may have been in violation of laws in several states. CNBC consulted with real estate attorneys from across the country on the matter. In several cases, the attorneys said the course’s advice violated state laws.

Jill Martin, lawyer for the Trump Organization, stated that the curriculum was not designed to conform to specific real estate investing requirements, which vary by state. Rather, the course was designed to offer “national level” curriculum.

One former student involved in the lawsuit said he knew he had been scammed when several attorneys and real estate advisers questioned the legality of the techniques taught in the course.

Jill Martin provided CNBC with a disclaimer form she said was given to all students before the course material was given. Students were asked to sign and return the form before starting the class. Former students, however, had disclaimer forms that were very different from the one Martin provided.

The court has already rejected the organization’s argument that the disclaimer protects them from liability.

Finding a Motivated Seller

The Trump University curriculum tells students that the market is “flooded” with opportunities – you just need to know where to find them.

The course instructs students to find motivated sellers, which they say includes people having issues with tenants, going through a divorce, dealing with a health crisis, or who lose their job.

Real estate attorneys say this tactic could lead to the seller claiming they were coerced into the deal when they were under duress.

Wholesaling Without Owning the Property

The course also includes a section on wholesaling property, and suggests that students can sell another person’s property without actually owning it by simply having a contract in place.

“Trump’s advice says that once you make a deposit on property, you have an equitable interest in the property,” Oregon attorney Uffelman said. “And that must make you an owner and therefore you can sell, and that’s not accurate.”

Uffelman said it’s against Oregon law to sell a property you don’t own unless you’re a real estate agent.

A Florida attorney chimed in to say that the advice may very well fall within the definition of a broker. In this case, students would need a broker’s license to legally engage in this type of activity.

Former Trump University students also allege that instructors and employees of the organization encouraged potential students to increase their credit limits if they could not afford the course.

The course then offered advice on how to get started with investing if you were short on cash: “OPM,” which stands for “other people’s money.” The course encourages students to find investors who have cash, and even says the investors do not have to be in the business.

Attorneys point out that soliciting investment funds from a doctor or an accountant not involved in the business would require complete disclosure of all material facts. Each state has its own laws regarding investments and securities, and the SEC governs these rules on the federal level.

The Trump Organization said students were told during live courses to build teams of lawyers to ensure they were within state and federal laws when putting these techniques into practice.

Author: Jacob Maslow

photo/ Lisette Brodey via pixabay

photo/ Lisette Brodey via pixabay

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