What do you get when you cross a get-rich-quick scheme with a for-profit college, while adding a healthy dose of reality TV megalomania? The answer is Trump University–a series of “classes” designed to teach aspiring young entrepreneurs the secrets of real estate passed on from the Donald himself.

Trump University, which Marco Rubio used as fodder for his attacks on Trump during last night’s Republican primary debate, did indeed exist, and many people are mad about it. Rubio was correct when he told the debate audience that there are pending lawsuits against Trump for his involvement with the organization.

There are currently two active class action lawsuits against either Trump or his company. The first is Cohen v. Donald J Trump, a lawsuit against Mr. Trump specifically which cites a violation of the Racketeer Influenced and Corrupt Organizations Act. This lawsuit highlights that the New York State Education Department warned Trump that it was unlawful to call the unlicensed ‘school’ a university. There’s also a national lawsuit named Makaeff et al. v Trump University LLC, which cites a violation of state consumer protection false advertising and elder financial abuse laws. Some people who paid for an education with Trump University are dually covered by these class actions.

Some of the failures of Trump University can be attributed to mismanagement. But many of the complaints against it allege deception and fraudulent practices. The university promised to reveal Trump’s real estate secrets. This was done through video advertising featuring Donald himself as well as flyers mailed out with Donald Trump’s signature. When interested would-be students attended these free seminars they found a marketing pitch for a three-day conference that would cost about $1,500.

Naturally a portion of these free attendees decided to pay for the three day conference–after all who wouldn’t pay less than $2,000 to receive “the last real estate education you will ever need for the rest of your life?” But these attendees were disappointed yet again when they arrived at the three day conference only to find that they were able to take a picture with a cardboard cutout of Donald Trump, and then encouraged to sign up for a Gold Elite program. At this point, the students who hadn’t realized how similarly this program structure reflected Scientology and had never heard of a scam, agreed to charge $35,000 to their credit cards for this special program.

The lawsuits claim that Trump University even provided scripts for the students to use when calling their credit card companies to explain how they could afford such a large charge. Students were allegedly told to include potential future earnings in their income reports to allow the credit card companies to provide such a sizable sum.

In typical Trump fashion, almost every detail of the lawsuit has been denied. The executive vice president of the Trump Organization Allen Garten said that “there’s no merit to these allegations whatsoever” and that the suits came forward “completely out of a financial motivation.” Garten points to a “98 percent approval rating,” but many claimants have argued they felt pressured to fill out good ratings, with some claiming they were given the survey before the program began.

There are some participants who say that the Trump University experience was beneficial for them, including one customer who paid for the Gold Elite Package, who claims that calling the education helpful “would be an understatement.” This is in stark contrast to one of the claimants in the lawsuit saying that after her $35,000 payment she was unable to reach any of the instructors for further tutelage.

As Donald J. Trump continues to totally dominate in the polls, in the primaries, and in delegates, his opponents are scrambling to cut down his support. The scandal of Trump University may prove to be a useful tool for eroding Trump’s success, but so far, nothing seems to stick to the candidate.

Sean Simon

Sean Simon is an Editorial News Senior Fellow at Law Street, and a senior at The George Washington University, studying Communications and Psychology. In his spare time, he loves exploring D.C. restaurants, solving crossword puzzles, and watching sad foreign films. Contact Sean at SSimon@LawStreetMedia.com.

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Energy drink company Vemma is in a lot of trouble after the Federal Trade Commission (FTC) recently announced that it was temporarily shutting down the company. The FTC has stated that Vemma was running an illegal pyramid scheme that targeted young adults and students.

#FTC shuts down #vemma nutritional drink’s alleged pyramid scheme http://t.co/iPrGiIbVtP pic.twitter.com/7qhrUpCwAg

— UPI.com (@UPI) August 28, 2015

Vemma recruited “affiliates,” most of them impressionable college students, who then were required to purchase starter kits to sell the nutrition drinks to others. Products that Vemma produced included Verve, and Bod-e. The starter kits were $500 each, and then Vemma affiliates had to purchase an additional $150 in products and marketing tools each month. Vemma told the affiliates that they could make up to $50,000 a week working for the company. Despite those claims, the vast majority of participants ended up losing money, or earning very little.

But most importantly, the affiliates also helped to recruit more affiliates who were then subject to the same outrageous fees. According to the FTC, Vemma made its money by bringing on affiliates–hence the pyramid scheme accusations. Vemma made over $200 million in revenue in 2014 through these methods. Jessica Rich, Director of the FTC’s Bureau of Consumer Protection stated:

Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization. We are also alleging that Vemma is an illegal pyramid scheme.

Vemma is also being accused of misleading marketing–the promotional materials it used to try to attract the affiliates promised that if you worked for the company you’d be “driving a BMW within 90 days” and featured pictures of young people in luxury vehicles, yachts, and jets.

Vemma isn’t the first nutrition drink company to come under a watchful eye. Herbalife was also accused of running a pyramid scheme in 2013, by a hedge fund called Pershing Square. Ironically, there’s a connecting between Herbalife and Vemma as Anthony Powell jumped ship from the former to the latter that same year. The FTC is now investigating Herbalife as well.

Vemma shows the mighty fall far, as it was once heralded as a company on the rise. The Phoenix Business Journal–Vemma is based out of Arizona–named it the Number one fastest growing private company on the Arizona Corporate Excellence. However, at this point it seems like that growth was begotten through illegal means.

For now, the FTC suit is still ongoing, but it doesn’t look like Vemma will be springing back anytime soon.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

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