At the Trump University launch event in May 2005, Donald Trump showcased a group of distinguished professors and “said he shelled out big bucks to assemble a topnotch faculty”. Left unsaid was that the firm Trump University would partner with to allegedly “co-develop” its curriculum and perform “lead generation”, Prosper Inc., would ultimately be the subject of a two part 2012 expose accusing it of being a “boiler room” selling high-priced get-rich “snake oil.” By the end of 2005, the words “Donald Trump” were part of the most common SPAM headline of the entire year, according to AOL. And, it seems, things only got worse from there.
While news reports from 2005 assumed the “Donald Trump” messages were “counterfeit”, that may not be the case. Like prehistoric insects stuck in amber, “Donald Trump” SPAM messages from 2005, promoting Trump University, appear to have been preserved for posterity when users posted them to a web-based Yahoo Group and an online forum. An analysis of the content of these messages suggests links to both Prosper, Inc. and a known sender of SPAM.
The preserved SPAM message on Yahoo has almost the exact same headline later reported by AOL to be so prolific—bolstering its provenance. The message reveals links to Prosper Media, which appears to be related to Prosper, Inc. It also says it was sent by “Newageoptin.com” and contains a call to action link to the domain “tihpscap.com”. According to Spamhaus, the domain was registered to Boris Mizhen at the time, who happened to be the owner of New Age Opt In Inc. Spamhaus indicates that Mizhen was sued by Microsoft, for aggressive SPAM related activities, and the Federal Trade Commission (FTC).
The second forum message does not contain the original subject, but contains images and links that reference the domains “prospermedia.net” and “esioffers.com”. An archived version of esioffers.com from that time period contain a reference to Prosper, Inc. in the footer and has a copyright notice from Education Success, Inc. Utah incorporation records show that firm shares a registered agent (L S MCCULLOUGH II) with Prosper, Inc. and a corporate address (5072 N 300 W PROVO, UT 84070) with Prosper Media, Inc.
Deposition testimony from Trump University president Michael Sexton suggests that he was aware that materials being used to promote Trump University by “affiliates” or “subaffiliates” of Prosper, Inc. were different than what his company had “approved”:
Q. Was -- were the ads -- were the ads approved by you or somebody else at Trump University?
A. They were all supposed to be approved, but one of the reasons we -- I guess I would say one of the reasons that we had a bit of a tenuous relationship with them [Prosper, Inc.] was that we would find at times ads that came back to us from third parties that had no resemblance to what we had approved.
And from their standpoint – their defense was they only had control over so much. As soon as they let it out the door, Prosper -- as soon as Prosper contracted with a publisher, who then contracted with another publisher, an affiliate or a subaffiliate…
An August 2005 press release announcing that Education Success, Inc. was syndicating its Trump University offer through the Share Results affiliate program exemplifies the type of indirect relationship that Sexton was alluding to. Despite Sexton’s characterization of the relationship with Prosper as “tenuous”, and the (probably) unwanted attention shined on Trump University marketing by the 2005 AOL report (which appears to have been broadly reported on only a few short months after the Trump University launch event), Sexton states that the relationship with Prosper, Inc. lasted “two or three years, something like that. I'm not sure.”
If Sexton’s boast about the company’s financial success in early 2006 is to be believed, one could understand why he would be reluctant to change the marketing program. In January 2006, Trump and Sexton were asked about the launch of Trump University’s new MP3s by UPI:
The online Trump University was launched in May in response to "hucksters" offering get-rich-quick schemes on TV, Trump said.
"A lot of them have never been in real estate," he said.
Since its launch, the Web site has generated million of hits and raked in about $10 million in course sales, Sexton said.
It does not appear that Donald Trump’s brush with infamy, atop an annual SPAM list at the end of 2005, discouraged Trump from associating with unsavory characters who employed questionable sales and marketing tactics. If anything, generating $10 million in course sales in seven months may have emboldened him. According to Ars Technica, Trump:
struck a licensing deal with [the founders of the National Grants Conferences (NGC)] the Milins in 2006. The couple created the “Trump Institute,” using much of the same pitch material and some of the same pitchmen.
As Ars Technica explained:
But just as the Trump Institute got rolling, the Milins ran into legal troubles….
fully 33 state attorneys general sent a letter to the Federal Trade Commission, singling out NGC and urging the agency to strengthen its deceptive advertising rules.
“NGC used consumer endorsements to sell ‘program’ materials for nearly $1,000 a set,” the attorneys general wrote, even though the company “lacked substantiation for its claims.”
NGC eventually disappeared in a blizzard of legal woes.
Rather than abandoning the business model in response to the implosion of NGC, it appears that Trump University soldiered on after the Trump Institute license “was not renewed” in 2009. The Trump University playbook from 2010 reflects that the firm had learned from its experience with the Milins. As the state attorney generals’ complaint against the Milins centered on testimonials that “lacked substantiation”, the “Trump University Rules of Engagement” explicitly state:
You many not share a personal story or testimonial unless and until appropriate documentation in support has been provided to TU and the story/testimonial has been approved in advance.
The playbook also contains a dedicated “Attorney General” section:
If an attorney general arrives on the scene, contact April Neumann immediately.
By law, you do not have to show them any personal information unless they present a warrant; however, you are expected to be courteous.
Despite the compliance measures, Trump University ultimately found itself the subject of multiple lawsuits alleging fraud. On April 30, 2010, Zeldes Haeggquist & Eck, LLP and Robbins Geller Rudman & Dowd announced a class action lawsuit against Trump University, noting:
in January, 2010, the Better Business Bureau gave Trump University a D-minus rating, and the New York Department of Education recently demanded that Trump University remove “University” from its title, insisting that the “use of the word ‘university’ by your corporation is misleading and violates New York Education Law and the Rules of the Board of Regents.”
On August 25, 2013, New York Attorney General Eric Schneiderman filed suit, alleging:
persistent fraudulent, illegal and deceptive conduct in connection with the operation of Trump University.
On October 18, 2013, plaintiff Art Cohen filed suit against Trump University seeking class action status:
Donald Trump was accused of operating a racket by a California businessman who signed up for real estate programs at Trump University, which he alleges didn’t deliver on the promise of teaching Trump’s secrets.
All three cases are still ongoing.
(Author’s note: this story was originally published to The-NewsHub.com, and is republished above in its entirety.)