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The story of Trump University in Texas

A fascinating read.

Long before Trump University fell in the crosshairs of Democratic presidential frontrunner Hillary Clinton, one of Donald Trump’s fellow Republicans drew a bead on the now-defunct school: Texas Gov. Greg Abbott.

Abbott, then the state’s attorney general, opened an investigation into the real-estate seminar business in 2010 raising many of the issues now reverberating in the white-hot race for the White House. Trump University ultimately closed up shop in Texas, leaving in its wake an untold number of people like Steven Branton of Mesquite — former students who were enticed by the Trump brand, only to discover a program wrought with high-pressure sales tactics and unfulfilled promises.

“It was just nonsense — I don’t know how else to say it,” Branton said, recalling how one of the seminars he went to seemed to take advantage of attendees who were not as financially able to afford them as he was at the time. “There were people in that room — I guarantee you, they were talking about giving him everything they had.”

Trump has fiercely defended the school against persistent criticisms from Clinton, who said Wednesday the billionaire “is trying to scam America the way he scammed all those people at Trump University.” He has said he will prevail in class-action lawsuits against the business and on Thursday took his confidence a step further, pledging to re-open Trump University if he becomes president.

In Texas, the Trump University probe was never fully fleshed out after the school quickly pulled out of the state. But in at least one letter to Trump’s attorneys, Abbott’s office said it found the promises the school was making to its students “virtually impossible to achieve.”

A former deputy chief of Abbott’s consumer protection division, John Owens, claims that his bosses nixed a request to sue Trump University for illegal business practices. A memo dated May 11, 2010, and provided to the Tribune and other news organizations, shows that Owens and his colleagues wanted to ask Trump University for a $5.4 million settlement.

“It was swept under the rug, and the consumers were left with no one to go to bat for them,” Owens told The Texas Tribune.

“The Texas Attorney General’s office investigated Trump U, and its demands were met — Trump U was forced out of Texas and consumers were protected,” responded Abbott spokesman Matt Hirsch.

More than three years after Trump University effectively ceased operations in Texas, Trump made two contributions to Abbott’s gubernatorial campaign, one for $25,000 in July 2013 and the other for $10,000 in May 2014. To this day, the donations to Abbott represent Trump’s only substantial foray into Texas politics — and enduring fodder for Abbott critics like the state Democratic Party, which charged Thursday that the governor is “on the corrupt Trump payroll.”

[…]

In a May 19 [of 2010] email to [Assistant AG Steve] Berlin, Trump lawyer Michelle Lokey provided an extensive defense of the school’s operation in Texas, saying it has found “no set of facts that would form the basis of a deceptive trade practices act violation here.” Lokey touted high customer ratings of the programs — 96-97 percent on average — and chalked up negative attention to “some spurious blog posts on the internet that are a consequence of doing business in this industry” and being associated with a “very public figure” like Trump.

Berlin responded to Lokey’s email three weeks later, saying the two “obviously see this case very differently.”

“Essentially what Trump U promises is virtually impossible to achieve,” Berlin told Lokey. “The audience Trump U targets for the initial workshop is the real estate novice. In effect, Trump U promises to teach these novices everything they need to know to be a successful residential real estate broker — in 3 days. In Texas, to become licensed as a real estate broker you must have 900 hours of classroom instruction and 2 years selling experience. The extensive training is required for good reason: to protect the public.”

“In addition to encouraging unlicensed activity (which is a misdemeanor in Texas), the course materials in a number of respects are simply wrong under Texas law,” Berlin wrote later in the email. “In short, we continue to have serious concerns about the course materials as well as the marketing and sales tactics used by Trump U in Texas.”

Read the whole thing, it’s well worth your time. The original reporting on this came from an AP story that brought up the Abbott connection. Trail Blazers adds some more detail:

The former deputy director of Abbott’s Consumer Protection Division now alleges that the attorney general office’s decision to quash the lawsuit against Trump — later a major donor to Abbott’s campaign — was a political move that left Texas consumers “high and dry.”

“The decision not to sue him was political,” John Owens told The Dallas Morning News. “Had [Trump] not been involved in politics to the extent he was at the time, we would have gotten approval. Had he been just some other scam artist, we would have sued him.”

Abbott’s communications director, Matt Hirsch, responded to Owens’ allegations late Thursday, saying, “The Texas Attorney General’s office investigated Trump U and its demands were met — Trump U was forced out of Texas and consumers were protected. It’s absurd to suggest any connection between a case that has been closed and a donation to Governor Abbott four years later.”

According to internal documents provided to The News about the state’s investigation into Trump University, the consumer protection division filed a formal request May 6, 2010, to sue both Trump and his namesake real estate program. Five days later, it set out settlement options to help Texas taxpayers get back the more than $2.6 million they spent on seminars and materials, plus another $2.8 million in penalties and fees.

Both requests were denied, an unusual decision, Owens says, that was made at the top of the agency.

“The refusal of the administration to do anything stunk,” said Owens, a career state employee who worked under three attorneys general and received a commendation for having “greatly contributed to the accomplishments of our office” from Abbott upon his retirement in 2011.

“We routinely got approval to sue people. We routinely went after bogus schools that offered false diplomas,” he added.

There’s a lot of good information in these stories, but I suspect there’s more to be told. I don’t know if Steve Berlin is still in the AG’s office or not, but it would be interesting to hear what he has to say. One other person involved in this investigation has now spoken up about it:

The former head of the Texas attorney general’s consumer protection division says it was he — not then-Attorney General Greg Abbott — who decided how the office should investigate Trump University, the now-defunct business seminar operation that is now facing a class-action lawsuit and a world of political scrutiny as Donald Trump continues on the presidential campaign trail.

“My decision to approve the request to investigate and to devote state resources to that investigation was made without regard to the fact that the company was associated with Donald Trump,” David Morales, who managed nearly a dozen civil litigation divisions during Abbott’s tenure as attorney general, said in a statement circulated Friday.

“To be clear, I did not discuss this matter with General Abbott,” he added of the Texas governor, who was the state’s attorney general from 2002 to 2015. Morales added that he also did not discuss it with Daniel Hodge, the governor’s chief of staff and a former high-ranking official at the attorney general’s office.

[…]

Morales, now a lawyer in Austin for the firm Kelly Hart and Hallman, also refuted the idea that politics or money played any role in his decisions.

He said that Trump University agreed to suspend its Texas operations while the state was demanding documents, and in 2010 agreed to permanently leave.

“That agreement to permanently and immediately leave Texas was, in my opinion, the most important element of resolving this investigation,” the statement said. “It ensured that no further Texas citizens would be exposed to the company and it did not preclude those consumers who felt they wanted a refund to demand it from Trump University or in court.”

He added that he would have informed Abbott and other higher-ups of the decision after the fact.

“I am proud that our Consumer Protection Division was able to get Trump University to immediately and permanently leave the State of Texas,” the statement said.

That’s cool, but it doesn’t address the question of why the settlement agreement was scuttled. Why was chasing them out of the state sufficient, and why was no effort made to get Trump U to pay back the money they scammed from customers. And now it looks like our current Attorney General really doesn’t want any of those questions to get asked.

Texas Attorney General Ken Paxton’s office sent a cease-and-desist letter Friday to a former official who has claimed his bosses nixed a lawsuit six years ago against Trump University, the beleaguered school tied to presumptive Republican presidential nominee Donald Trump.

In a letter dated Friday, First Assistant Attorney General Jeffrey Mateer asks John Owens to “immediately cease and desist from disclosing any privileged or confidential information” from his time in the office, which ended when he retired in 2011. Owens, the former deputy chief of the consumer protection division, told reporters Thursday that then-Attorney General Greg Abbott gave Trump special treatment when he declined to pursue a $5.4 million lawsuit against Trump University.

“Current and former Assistant Attorneys General have a duty to follow all rules related to the practice of law in the state of Texas,” Mateer said in a statement. “While everyone has First Amendment rights to free speech, the law strictly prohibits attorneys from releasing confidential and privileged information.”

The letter lays out a half dozen provisions Owens may have violated under state law and the Texas Disciplinary Rules of Professional Conduct. The provisions center on the possession and distribution of confidential materials related to state investigations.

Owens issued a statement denying any wrongdoing.

“I have done nothing illegal or unethical as stated in the letter,” Owens said. “I think the information I provided to the press was important and needed to be shared with the public.”

Yeah, I’m sure that will dissuade anyone from expressing any further curiosity about this. Especially given the moral authority that Ken Paxton exudes these days. Keep digging, y’all, I have no doubt there are more layers to uncover. The Chron, the Press, the increasingly vexed Erica Greider, and USA Today have more.

UPDATE: More from the Current and Kevin Drum.

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3 Comments

  1. Bill Daniels says:

    The more I learn about Trump U, the worse it sounds, and I am disappointed in Trump for doubling down on defending it. Most of what he does these days is license his name out to others. It sounds like that was what was done here, and instead of doubling down, he should just admit that it was ill conceived and executed. Other than the dollar amount involved per student, though, it doesn’t sound that much different than every other “real estate guru” offering seminars.

  2. Jen says:

    He doubled down on it because it was his scam. He didn’t try to whitewash it or put it off on someone else because it was his scam. And it was a perfect Trump con job, fraud filling wrapped with a thick layer of baloney.

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