Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



5 Reasons Why Trump University Won't Make You Rich

In promotional material for Trump University, potential students were promised that they would learn all of Donald Trump's techniques for investing in real estate. And candidates were invited to copy exactly what Trump has done and "get rich."

Last Saturday, alas, we learned that it might be wise to be skeptical of the claims of Trump Entrepreneurship Institute, which was formerly known as Trump University. In a lawsuit filed by New York Attorney General Eric Schneiderman, Trump and his institute were charged with "engaging in persistent fraudulent, illegal and deceptive conduct."

After reading the filing in its entirety, I came away with five reasons why, if the allegations are true, becoming wealthy by attending Trump University isn't a sure thing.

1. The instructors might not be as qualified as you'd expect.
According to the lawsuit, there was no evidence to suggest that the instructors at Trump University were successful real estate entrepreneurs, and "not a single one was handpicked by Donald Trump" despite the claims of the promotional material.

The filing argues that many of the instructors came from jobs that had little to do with real estate. Some of the teachers, allegedly, had arrived at Trump U after real estate investing had led them to go bankrupt and quite a lot of the instructors had formerly worked at other seminar companies, where they had worked as motivational speakers or sales representatives.

 2. The free seminars weren't actually free.
The free 90-minute seminars offered by the university, according to the lawsuit, were actually an upsell for a three-day seminar costing $1,495. And the three-day seminar was actually an upsell for "Trump Elite" packages that cost anywhere from $10,000 to $35,000.

The Attorney General claims that many students ended up worse off financially than they were before as a result of the high tuition costs. The conclusion in the lawsuit is devastating:

...the promises made by Trump University regarding what would happen at the three-day seminar were false – with no instructors handpicked by Donald Trump, no appearance by Donald Trump, none of Donald Trump's own personal investing techniques, no special access to "hard money" lenders, and no "hotline" for students to call with substantive real estate questions.

3. Trump never actually shares his strategies for getting rich.
According to the filing, "no specific Donald Trump techniques or strategies were taught during the seminars." Trump never actually reviewed any of the university's curricula or programming materials. And he didn't review the content for the seminars.

The lawsuit notes that Trump never attended any of the seminars or elite programs. Instead of meeting Trump, students "were offered a chance to have photos taken with a life-size photo of Donald Trump."

4. The expensive "elite" programs didn't deliver.
The lawsuit alleges that the "Trump Elite programs" -- which typically cost around $25,000 to $30,000 -- didn't deliver. According to the filing, the elite programs failed to follow through on "promises such as adequate training, available and knowledgeable mentors, and access to hard money lenders."

Some students even ended up putting $20,000 on their credit cards to pay for these courses. This had actually been made possible, according to the suit, by an earlier Trump seminar that encouraged the students to contact their banks in order to increase their credit card limits.

5. Students didn't receive access to lenders and financing.
Despite promises, there is no evidence that the three-day seminars contained instruction on "how to raise private money" for real estate investments, according to the filing. For some of the seminars and courses, students were promised "insider access" to special financing and close mentoring by Trump instructors. The lawsuit argues that this promised access never materialized.

How to actually become a successful investor
Donald Trump disputes the charges in the lawsuit, and says he won't settle it on principle. Regardless of how this all turns out, I think investors can learn a valuable lesson from this case.

Anyone who promises that you can become a better investor in 90 minutes or three days or some other short time frame should be ignored. Successful investing, whether it's in real estate or stocks, is a long-term pursuit that takes time and effort to master. The author Malcolm Gladwell underlines this point when he notes, "in cognitively demanding fields, there are no naturals." In his popular book Outliers, Gladwell wrote, "achievement is talent plus preparation." I think it's reasonable to conclude that the only one getting rich from a three-day seminar is the person putting on the seminar.

There's, of course, nothing wrong with trying to help folks become better real estate investors. And there's certainly nothing wrong with wanting to get rich, either. It's important, though, to recognize that there's an incredible amount to learn, and most people will begin by making mistakes. True mastery in investing might take a decade or more to acquire, and Gladwell has suggested it requires 10,000 hours to become really good at something. If the end result of this case is that investors avoid "get-rich-quick" schemes and instead focus on doing the hard work that is necessary for becoming successful, then maybe Trump has taught us something valuable after all.

Learning from a real investing master
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Read/Post Comments (4) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 28, 2013, at 3:00 PM, asimon29 wrote:

    It's not intended to make YOU rich, it's intended to make HIM richer!

  • Report this Comment On August 28, 2013, at 5:07 PM, ryanchandler25 wrote:

    The author points out some great points. But then at the end of the article, they try to sell you free reports on how to get rich like Warren Buffett or invest like the Fool cofounder.

    I think it's reasonable to assume that the only ones getting rich from the Fool's newsletters and products is the Fool.

  • Report this Comment On August 29, 2013, at 8:44 AM, TomAntion wrote:

    I wrote an article called "The Top 20 Seminar Scams" I suspect many of the techniques outlined in this article were used against the students who are claiming they were defrauded.

    BTW I'm a 22 year speaking / seminar industry veteran and Past President of the National Capital Area Professional Speakers Association and considered the number one whistleblower exposing the dirt in this industry.

  • Report this Comment On August 30, 2013, at 12:29 AM, Merlin1935 wrote:

    I observe a simple principle: anyone who has a genuine formula for getting rich will be too busy applying that formula and will have no time to teach it to others. If such people want to help anyone, they typically donate their riches to some cause, but will never give away their formula for wealth. Therefore anyone promising to teach you how to get rich for a FEE is scamming you.

    Which brings us to the question: if Trump is really a billionaire, why is he involved in an alleged scheme scamming people of "small" sums like 35 grand? He allegedly made "only" $5m out of it, so why take the risk? The only logical answer is that his finances may not be as rosy as he likes to project.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2613645, ~/Articles/ArticleHandler.aspx, 9/25/2016 5:07:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes