Trump settles fraud case for $25m

Plaintiffs' attorney Jason Forge speaks after a hearing in a lawsuit against President-elect Donald Trump and the now-defunct Trump University on Friday. (AP Photo)

In what New York's attorney general called a "stunning reversal", US President-elect Donald Trump agreed on Friday to settle fraud cases involving the now-defunct Trump University for $25 million.

The cases involved a lawsuit by New York state and two class-action suits in California against the university, which promised to reveal Trump's real estate investing "secrets" to people who enrolled in the courses.

New York Attorney General Eric Schneiderman, who filed suit against Trump two years ago for what he called "his phony university," said the president-elect agreed to settle the lawsuits for $25 million and pay an additional $1 million in penalties to the state of New York for violating state education laws. The deal does not require Trump to acknowledge wrongdoing.

"Today's $25-million settlement agreement is a stunning reversal by Donald Trump and a major victory for the over 6,000 victims of his fraudulent university," Schneiderman said in a statement.

Trump's defence team said the decision was made to settle so that years of potential litigation could be avoided.

"This would have gone on for a long, long time and would have been a very significant distraction," said Daniel Petrocelli, the lead attorney who represented Trump in the case.

Trump had publicly vowed not to settle the lawsuits and suggested at one point during his presidential campaign that he might reopen the school, which closed in 2010. He told supporters at a rally in May that he would come to San Diego to testify after winning the presidency.

"I could have settled this case numerous times, but I don't want to settle cases when we're right. I don't believe in it. And when you start settling cases, you know what happens? Everybody sues you because you get known as a settler. One thing about me, I am not known as a settler," Trump said at the time.

However, an analysis by USA Today of more than 4,000 lawsuits involving Trump and his companies over the years shows that just isn't true.

USA Today tracked the records in thousands of Trump's court battles dating back to the 1980s, and found that the business mogul settled lawsuits at least 259 times. Almost 200 of those were cases where he and his companies were defendants, although the terms of the settlement agreements often are kept out of court records and plaintiffs are required to sign agreements pledging not to disclose details.

In hundreds more cases, court records indicate legal disputes were resolved outside court with the details shielded from public view.

Also, the USA Today database of court records shows the Trump University settlement is unique in its size. While there may be larger settlements in Trump's lawsuits that are shielded by non-disclosure agreements or sealed records -- notably his divorce from Ivana Trump, which remains under seal despite attempts by the media to obtain the records during the presidential campaign -- the $25-million payout is by far the largest Trump's empire has paid out to someone.

Friday's settlement comes only days before trial was set to begin in California in one of the class-action lawsuits. Trump's lawyers had sought a delay in the run-up to his inauguration, but the judge ruled that the trial go ahead as scheduled and that Trump would be required to testify, although likely by videotape.

The New York attorney general's fraud lawsuit described the "university" as nothing but a scam designed to fleece would-be real estate developers. The scheme, he charged, lured students with false promises into paying up to $35,000 to learn Trump's real estate investing "secrets" from his "hand-picked" instructors.

"More than 5,000 people across the country who paid Donald Trump $40 million to teach them his hard-sell tactics got a hard lesson in bait-and-switch," Schneiderman said in a statement at the time.

"Mr Trump used his celebrity status and personally appeared in commercials making false promises to convince people to spend tens of thousands of dollars they couldn't afford for lessons they never got."

Schneiderman alleged the teachers were not personally selected by Trump, despite claims in the university's ads, and that the students did not ever meet the real estate mogul. The state earlier forced Trump University to quit referring to itself as a university because it was not licensed as such in New York.