Trump University - A Lesson in Bad Business Decisions

Trump’s Failed Business Ventures

Trump University continues to follow Donald Trump as he moves forward in his fight for the GOP nomination. While he is famous for his wealth and successes, this primary season has brought forth many unsavory details about his questionable leadership and failed business ventures.

Marco Rubio first brought Trump University into the public eye in February during his heated debate exchange with the outspoken billionaire. Voters searched Google to learn more about this online college and why it failed. The real story sheds light on how the Trump brand makes business decisions and it’s contempt for ordinary Americans.

Trump University – Profit Over Value

Trump University LLC. used to be called the Trump Wealth Institute. It was initially set up as a online wealth training program that leveraged the Trump brand to teach people valuable business lessons.

The program initially used reputable college professors like John Vogel of Dartmouth College’s Tuck School of Business to record professional courses. Many Ivy League school professors signed on in the early stages to provide quality training and education. “There were some pretty legitimate people involved at the beginning,” Vogel told the Wall Street Journal. Trump’s school made numerous strategic hires of highly qualified people to create content for the online college. The program shifted from legitimate training to a seminar based profit engine turning off many of the original academics to the high pressure sales operation. “Had I realized they were going to change course from providing high-quality online education to something that was closer to a boiler room operation and these ‘how to get rich’ seminars, I never would have gotten involved,” John Vogel said.

The Trump University Seminar Scam

The online “University” quickly realized that selling the idea of success is sometimes more profitable than actually earning it.This is the point where Trump University morphed into a seminar sales machine. After abandoning its lofty goals of providing quality content from Ivy League academics, the brand shifted towards selling a “No Money Down” style of foreclosure flipping training. The “University” learned that more people would pay money to learn Trump’s real estate secrets than attending boring classes on mortgage interest rates.

Thousands of people attend seminars hosted at local hotels and event centers, drawn in by online advertising that appealed to their desire of quick riches. If Donald Trump could become a billionaire buying and selling real estate and offered a free seminar to share his secrets, who would not want to show up? This was the hook to draw in potential students.

A slick spokesperson representing Trump University would take the stage and wow the audience with dreams of real estate riches. The motivational seminar would get the audience fired up about the idea that they too could bask in the glamourous world of Trump. All they needed was a small investment of $1,495 for the introductory training program.

This golden ticket bought seminar attendees access to a library of information on how to locate distressed properties and foreclosures that could be flipped for a hefty profit. $1,495 seemed a small price to pay for success, not realizing that a user guide on Zillow was almost equally informative.

Shortly after the training was purchased, many buyers would fall out of the program confused or too lazy to do the actual work needed to acquire properties. Promises of access to hard money investors never materialized and for many the training left them feeling more hopeless.

Right before failure completely set in, a highly motivated salesperson would call the Trump University student and coach them into upgrading their package. The first step was identifying their financial picture, asking questions about credit card balances and income. Once a full view of how much money was available to spend materialized, the conversation would shift to getting every penny to buy the “Gold Elite”Trump University training. This sometimes went as high as $36,000. The sales were done by boiler room specialists called “closers” who used every trick in the book to convince people to invest everything they had to buy the dream of getting rich.

The New York Times reported, “Interviews and documents show that employees of Trump University at times applied pressure on students to offer favorable reviews, instructed them to fill out forms in order to obtain their graduation certificates, and ignored standard practices used to ensure that the surveys were filled out objectively.

“It’s absolutely a con” said Mr. Cuillo who spent $36,000 on Trump University classes and later requested a refund. “The role of evaluations were a defense against any legal actions. They anticipated those actions”

This was not the Trump University ideals that the originally professors signed on to. However idealistic the original business model was designed, it shifted to a hard sales profit model that left a wake of dissatisfied people who the State of New York determined were scammed out of their money.

New York filed a $40 million lawsuit against Trump University in 2013. The lawsuit claimed that the fake university used illegal business practices to swindle money. New York Attorney General Eric Schneiderman claimed the company used bait and switch tactics and adopted the false “University” moniker to mislead people into thinking it was a legitimate school.

Fox News reports, “A New York judge decided Tuesday that a fraud case against Donald Trump over his former school for real estate investors will go to trial – raising the possibility that the Republican presidential primary front-runner could testify during campaign season.”

Waterboarding Lawsuit

A Trump University sales representative sued his employer for using actual waterboarding to motivate the sales team. During the spring of 2007, near the height of the Trump University sales boiler room operation, Chad Hudgens was waterboarded by his employer in front of his co-workers. His boss poured a gallon of water over the his face while his teammates held him down and told everyone, “You saw how hard Chad fought for air right there. I want you to go back inside and fight that hard to make (Trump University) sales.” The Washington Post covered this story in 2008.

It is no wonder people felt pressured to buy into the Trump University scam. With a waterboarding motivated sales force, who could withstand the pressure they placed on individuals to enroll in the “Gold Elite” training packages.

Failed Trump Businesses

Mitt Romney recently touted many of Trump’s failures. Romney, a successful businessman and former GOP Presidential nominee claimed that Trump inherited his business and left a wake of bankruptcies and failed companies. Aside from Trump’s famously unsuccessful Atlantic City casinos, Trump has made a number of poor business decisions that left many people unemployed and unpaid.

Here is a list of some of Trump’s failed businesses:

Trump Mortgage – In 2006 Trump got into the mortgage business just as the real estate bubble was starting to burst. Always eager to jump on a money making trend, the mortgage business went bust and Trump Mortgage lasted only a year and a half.
Trump Steaks – Trump paraded steaks during his victory speech in Florida after getting hammered in the debates about his business failures. The trouble with the steaks that were shown was they were not even Trump Steaks, they were from Bush Brothers Provisions Company.
Trump Airlines – Launched in 1989 Trump picked up Eastern Airlines Shuttle and attempted to rebrand the air service. The moderately successful discount airline was made over with flashy wood and gold trim and increased prices. The company never turned a profit and was turned over to creditors by 1992.
Trump Network – Donald Trump jumped on the MLM bandwagon with the Trump Network. In 2009 he launched a customized vitamin business that sold a urine test kit. The test would determine which vitamins people needed and gave people the opportunity to sell these test kits and vitamins. Selling people the opportunity to test their own urine for $100 per kit did not take off and the company folded within two years.
Trump Vodka – Trump attempted to sell a premium vodka. This business lasted longer than most, a full five years before realizing that the market did not like the taste of Trump.

Donald Trump is a successful entertainer and has developed a well known brand. His dangerous campaign rhetoric leaves many voters to question his true intentions. Which Trump will lead America, the brash real estate deal maker or failed get rich quick huckster? Republican voters are running out of primary elections to change course or be forced to learn exactly what kind of leader he may be.