RPR&C In The Media

By Pete Brush

Law360, New York (August 27, 2013, 8:04 PM ET) — If a feverishly litigated California fraud class action is any indication, New York’s attorney general can expect an all-out assault by Donald Trump on claims that his Trump University real estate seminars are a sham, lawyers say, especially since the Donald has other lucrative deals tied to his well-known name.

The television personality and real estate investor, listed by Forbes Magazine as a billionaire, said he would stop at nothing to ward off the latest allegations against the business, now known as The Trump Entrepreneur Institute, after New York State Attorney General Eric T. Schneiderman hit him with a $40 million suit.

All of it has the makings of an epic legal fight, especially because — however much money he may have to spend on lawyers — the one thing Trump can’t afford is a fraud mark on his name, according to Jerry Reisman, a Reisman Peirez Reisman & Capobianco LLP commercial litigator.

“The New York state attorney general’s office has an unlimited budget, but Trump’s budget might not be too shabby in and of itself,” Reisman said.

Schneiderman claims Trump tricked thousands of wannabe moguls into paying thousands of dollars to him and his cohorts with the expectation that they either would receive some manner of official educational credit or at least gain access either to funding or to the noted television personality himself.

Trump, who has harbored political ambitions, quickly shot back, branding Schneiderman a Democratic Party hack and implying that the East Coast lawsuit was a politically motivated attack.

Within hours, his lawyers were touting a newly launched website accusing the New York prosecutor of “wasting millions in taxpayer money” by bringing the case “even though there was already a class action lawsuit pending in California.”

Attorneys on both sides of the California dispute declined to comment to Law360, noting among other things that the San Diego federal Judge Gonzalo P. Curiel has requested the proceedings be tried in the court instead of in the news media.

That case, Makaeff v. Trump University, is well into its third year and has yet to yield a ruling on whether there is a viable class claim against the business. The case docket shows two sides going after one another hammer-and-tong, with multiple complaints amid fights over discovery, objections and attacks on witnesses’ credibility.

With a key hearing set for Friday in San Diego on whether the private plaintiffs can convert their fraud claims to a racketeering theory under the federal Racketeer Influenced and Corrupt Organizations Act, legal experts said Trump now faces at least two lawsuits that could stretch as far as the eye can see.

“That case will get litigated for five years. At the end of the day the only people that will make money are the lawyers,” said former federal prosecutor Frederick A. Tecce, now a partner at Panitch Schwarze Belisario & Nadel LLP, who added the New York litigation looks like another deep legal morass for Trump.

“Those guys aren’t worried about their time sheets,” Tecce said of the New York attorney general’s office. “They have the resources to follow this. Especially now, after Trump called Schneiderman a ‘lightweight.’ If Trump were my client, I wouldn’t have advised him to do that.”

To be sure, Schneiderman — normally a staid personality — acknowledged on CNN on Monday that Trump’s attacks on his office were not well-taken. Schneiderman expressed confidence that the allegations in his complaint alone “entitle us to a judgment” and suggested Trump blundered by not accepting a possible prelitigation settlement.

“It probably would be better if he was listening to his lawyers,” Schneiderman said.

Trump is likely to assert in the New York case, among other things, that no Trump University student could reasonably have believed he or she would receive an accredited degree, that many of his customers were happy with their experience and that there was no promise on his part to give any student a personal audience, according to Reisman and other experts.

“There’s no question that he’s going to be part of the defense,” Reisman said of Trump. “Whatever he has said, he’s going to have to stand up to it. He’s going to have to answer the questions.”

The Trump University business is not the only asset Trump likely sees as in jeopardy as a result of the twin court cases, according to commercial litigator Val Kleyman of the Kleyman Law Firm.

Aside from Trump University, Trump also has associated his name with the marketing concern ACN Inc., in which sales agents pay a fee for equipment and recruit others to come in behind them, Kleyman said. That business, too, has drawn regulatory scrutiny.

“In getting involved in these types of deals Trump is risking to be fired from our vocabulary as an icon of success,” Kleyman said.

Trump also has books for sale, lucrative speaking engagements, product placements and other money-generating activities — all bearing his name — that would be crimped by a fraud judgment, Kleyman said.

“He’s selling his name now. His business is his name and he sells it to anyone for the right price,” Kleyman said. “He’s fighting for a lot more than the $40 million at stake in New York and the money at stake in California.”

–Editing by Jeremy Barker and Chris Yates.