National News

Court upholds $25 million settlement in suits against Trump University

Posted February 6, 2018 7:45 p.m. EST

SAN FRANCISCO -- A federal appeals court in San Francisco upheld a $25 million settlement Tuesday to students of the now-defunct Trump University, who said they were charged up to $35,00 and promised the secrets of real estate success but were given little more than sales pitches to take more seminars.

The settlement of two class-action suits and a third suit by the state of New York against Donald Trump's school was reached six weeks after the 2016 presidential election and was approved by U.S. District Judge Gonzalo Curiel of San Diego.

President Trump has agreed to pay the settlement, but after Curiel refused to dismiss the suit in July 2016, Trump, as a candidate, called the Indiana-born judge a ``hater'' and a Mexican who was biased against him because of his plan to build a wall on the U.S.-Mexico border.

Trump University began operations online in 2005, started holding in-person seminars in 2007 and was shut down by New York, its headquarters state, in 2010.

Students in the lawsuits said Trump advertised free workshops where they would learn the keys to successful real estate investment from his ``hand-picked instructors.'' They said the workshops amounted to recruitment for three-day educational seminars, for about $1,500, where they were induced to sign up for more-expensive ``mentorship'' programs.

The instructors had not been hand-picked, the school itself was not accredited, and the secrets of success in real estate remained a mystery, the suits said.

Trump said the allegations were unfounded and that surveys showed a high level of satisfaction among the students. Curiel granted his request to postpone a trial until after the November 2016 election, and Trump said he then settled the case to avoid interfering with his job duties.

The settlement will allow the students to recover about 90 percent of what they paid, said their lawyers, who did not charge them a fee and will not share in the payment. They said about 3,700 former students had submitted claims, most of them for $1,500.

Tuesday's ruling by the Ninth U.S. Circuit Court of Appeals ``provides a welcomed light at the end of the tunnel for those who have struggled to pay off their debt for a decade,'' said attorney Rachel Jensen.

The court rejected objections from one student who wanted to opt out of the settlement and file her own suit against Trump, a suit that could have unraveled the $25 million agreement.

Sherri Simpson of Fort Lauderdale, Fla., said she spent about $19,000 on the three-day seminar and the year-long mentoring program and wanted to hold Trump to account in a suit for triple damages.

But the appeals court, upholding a ruling by Curiel, said Simpson had agreed to be part of the class-action suit, submitted her claim for part of the settlement, and had no right to opt out afterward. The court also rejected her challenge to Curiel's approval of the settlement

The students ``would have faced significant hurdles had they proceeded to trial, including the difficulty of prevailing in a jury trial'' against the newly elected president, Judge Andrew Hurwitz said in the 3-0 ruling. He said Curiel had ``ample reasons'' to approve an agreement that provides the plaintiffs with ``almost a full recovery.''

Lawyers for Simpson and Trump could not be reached for comment.

Bob Egelko is a San Francisco Chronicle staff writer. Email: Twitter: @egelko