Trump University a fraud, New York attorney general alleges

New York's attorney general has sued Donald Trump for $40 million US, calling the notorious real estate mogul's Trump University a phoney scheme that bilked students for up to $35,000 US each.

$40M US lawsuit filed against school and Trump himself

Donald Trump, seen speaking at a family leadership summit in Ames, Iowa, blasted a lawsuit filed against him and his Trump University as politically motivated. (Justin Hayworth/Associated Press)

New York's attorney general has sued Donald Trump for $40 million US, calling the notorious real estate mogul's Trump University a phoney scheme that bilked students for up to $35,000 US each.

Eric Schneiderman says the university relied on Trump's celebrity status "to take advantage of consumers who believed in the Trump brand."

Trump came out swinging Monday against the lawsuit, filed in a New York court Saturday, saying it was politically motivated.

"He (Schneiderman) sits up in my office asking me for campaign contributions; he's been there numerous times. He's a political hack," Trump said in an interview on the television program Fox & Friends.

Schneiderman, a Democrat, has received political contributions from Trump — about $12,500 US in October 2010, when Schneiderman was running for attorney general, records show.

Trump, who has been tipped as a potential Republican candidate for president, has spent more than $136,000 US on New York campaigns since 2010.

"He figures by going after Trump, he can get some publicity, which he will get, but we'll try and make it uncomfortable as possible," Trump said Monday.

Trump blasts lawsuit and Obama

Trump, author of The Art of the Deal and How to Get Rich, called the lawsuit "incompetent" and blamed the Obama administration for allowing it to go ahead.

Schneiderman says his lawsuit was motivated by complaints by students dating back to 2005.

Trump University promised to make them rich but instead steered them into expensive and mostly useless seminars and failed to deliver promised apprenticeships, the lawsuit alleges.

"Trump University engaged in deception at every stage of consumers' advancement through costly programs and caused real financial harm," Schneiderman alleges.

Students never met Trump

Even the promise to get advice directly from Trump was bogus, the lawsuit alleges, with students instead offered a photo taken with a cardboard cut-out of The Apprentice star. The three-day seminar promising to teach "all you need to know about real estate" instead promoted "mentorships" that cost students $10,000 and up, Schneiderman said.

The lawsuit names the program and Trump himself, as the university's chairman and former president, alleging they engaged in persistent fraud, illegal and deceptive conduct and violated federal consumer protection law.

New York state education department officials had told Trump in 2005 his school did not meet the legal definitions of a university. In 2011, it was renamed the Trump Entrepreneur Institute. There have been civil lawsuits against the school, claiming it didn't fulfil its advertised claims.

Trump's attorney, Michael D. Cohen, said Schneiderman's lawsuit was filled with falsehoods and that Trump never defrauded anyone.

He said Trump University provided nearly 11,000 testimonials to Schneiderman from students praising the program and said 98 per cent of students who responded to a survey called the program "excellent."

With files from The Associated Press