Daily Archives: March 4, 2016

DONALD TRUMP’S SWORN TESTIMONY ABOUT HIS UNIVERSITY: “I DON’T KNOW THE PEOPLE”

The Intercept:

A critical part of Trump University’s sales pitch to prospective students was the claim that Donald Trump personally selected the program’s instructors — a claim repeated over and over in the company’s marketing literature. Trump University’s direct mail advertising included letters with Trump’s signature on them that claimed that Trump University students would receive guidance from Trump’s “handpicked instructors and mentors.”

At live events, Trump University instructors recited speeches from a company-authorized script that read, in part, “I remember one time Mr. Trump said to us over dinner.” In a memorandum to the court submitted just one week ago, Trump University’s attorneys reference “instructors, who were selected based on Mr. Trump’s criteria and input.” The mantra about Trump’s “handpicked instructors” was a critical part of the recruitment strategy for a get-rich-quick scheme whose appeal centered entirely on Donald Trump’s personal reputation as a real estate business virtuoso.

But in a brief filed yesterday in a class-action lawsuit, attorneys representing thousands of former students revealed that in a video recorded deposition, Trump “confessed under oath that he did not handpick a single TU live events instructor.” Trump further “acknowledged that other instructors’ presentations showed they lied to students about their connections to him.”

Not only did Trump have nothing to do with selecting instructors, “he personally did nothing to confirm their purported qualifications” and “could not identify a single live events instructor or mentor by name or pick one out of a photo lineup,” according to the brief. (For his part, Trump claimed that the reason he never personally interviewed even his top instructors was that he had heard that the school was doing well, and thus deemed it unnecessary.)

Many of the “handpicked” instructors have testified that they have never met Trump. In the depositions, Trump was unable to even affirm whether his instructors had ever bought or sold real estate before.

A typical passage from the deposition transcript reads as follows:

  1. Chris Goff. Do you know if he was qualified to be an instructor?
  2. Okay. No, I don’t.
  3. Qualified to be a mentor?
  4. I don’t know.
  5. Steve Goff, do you know if he was qualified to be an instructor?
  6. I don’t know who they are.
  7. Do you know if he was qualified to be a mentor?
  8. I don’t know who they are.
  9. James Harris, do you know if he was qualified to be an instructor?
  10. I don’t know who it is.
  11. So that’s a no?

(Reporter seeks clarification.)

  1. I don’t know who he is.
  2. And therefore you don’t know if he was qualified to be an instructor?
  3. I don’t know.
  4. Okay. So you don’t know.
  5. I don’t know the people. I wasn’t running it. I don’t know the people.

The brief, filed in federal district court in San Diego, further asserts that Donald Trump admitted under oath that he retains no real estate techniques beyond what has been published in his books. In other words, students who paid as much as $60,000 to Trump University over the course of a year could have gotten the exact same information through a $10 book purchased on Amazon.

Exclusive: Citigroup executives avoid U.S. charges over mortgage bonds – document

U.S. authorities have decided not to pursue criminal charges against any Citigroup Inc (C.N) executives or employees involved in packaging and selling mortgage-backed securities at the heart of the 2008 financial crisis, a government report shows.

The decision, which followed Citigroup’s $7-billion settlement in 2014 resolving federal and state civil claims related to mortgage bonds, was described in a November report obtained by Reuters in response to a Freedom of Information Act request.

Its release marked the first public acknowledgement by U.S. authorities that executives at a major bank linked to the financial crisis would face no criminal charges for their involvement in selling billions of dollars of toxic mortgage bonds.

The report, by the Federal Housing Finance Agency’s Office of Inspector General, one of the agencies in the Citigroup probe, said following the settlement, prosecutors reviewed the evidence to see if any individuals could be charged and determined “there was not enough compelling evidence.”

Report on Citigroup: reut.rs/1TeOXQR

Remember That CEO Pay Cap? It’s Even Less Effective Than We Knew

Companies are increasingly using pay-for-performance to get around a $1 million federal limit on tax deductions for executive compensation.

This story was co-published with The Washington Post.

Tim Cook got almost $400 million of restricted stock when he was named Apple chief executive in 2011, succeeding Steve Jobs. Regardless of whether Apple shareholders fared well or badly over the grant’s 10-year term, all Cook needed to do to collect that stock (worth about $700 million at today’s price) was keep his job. It was the kind of deal that pay mavens derisivelycall “pay for pulse.”

But two years later, Apple and Cook retroactively changed the terms of his grant, making about 40 percent of it “pay for performance” based on how Apple shares do relative to those of other companies in the Standard & Poor’s 500-stock index. Apple quoted Cook as saying he wanted to align his interests with those of regular shareholders.

What Apple didn’t say then — and now says only in passing — is that the change also gave the company a chance to get more than $200 million in tax deductions. Under Cook’s initial deal, Apple, which declined to comment, would have received no deductions because a 1993 tax law would have barred it from treating Cook’s grant as an operating expense.

By my estimate, revising the grant has generated $58 million in tax deductions so far for Apple, which would get $168 million more over the next six years if Cook receives the rest of his performance-based stock at today’s price. In return for agreeing to revise his deal, Cook has been collecting some restricted shares each year rather than having to wait until this Augustfor the first half of his grant and until 2021 for the balance.

The Apple change is an example of how U.S. companies, in the process of making shareholders happy by putting executives’ compensation at risk, have also managed to make an end-run around the 1993 law that was supposed to limit federal tax deductions on top officers’ compensation to $1 million a year per executive.

As Cook’s modified deal shows, those pay-deductibility limits are even more porous than we at The Washington Post and ProPublica realized three weeks ago, when we wrote that the deduction cap had failed to put the brakes on executive pay.

Under that 1993 law, “performance-based” compensation isn’t subject to the $1 million limit. The law, pushed by President Bill Clinton during his first term, initially covered five “named executive officers” at companies with publicly traded stock. Now, it covers four NEOs per company. (Chief financial officers were excluded in 2007).

Since we last visited the topic, we’ve learned more about how company compensation trends have changed, particularly in recent years. We had calculated, based on expert advice, that while executive compensation overall continued to skyrocket, the portion subject to the deduction cap had outpaced the pay-for-performance component. In fact, it turns out that the reverse is true. We learned this by hiring compensation data provider Equilar to tease out the details from proxy statements of 40 big companies, including Apple.

Read on.

Exclusive: Congressional watchdog to probe lax Fed bank oversight

A U.S. watchdog agency is preparing to investigate whether the Federal Reserve and other regulators are too soft on the banks they are meant to police, after a written request from Democratic lawmakers that marks the latest sign of distrust between Congress and the central bank.

Ranking representatives Maxine Waters of the House Financial Services Committee and Al Green of the Subcommittee on Oversight and Investigations asked the Government Accountability Office on Oct. 8 to launch the “evaluation of regulatory capture” and to focus on the New York Fed, according to a letter obtained by Reuters.

In an interview, the GAO said it has begun planning its approach.

The probe, which had not been previously reported or made public, is the first by an outside agency into the perception that government regulators are “captured” by and too deferential toward the bankers they supervise, so that Wall Street benefits at the public’s expense.

Read on.

Bank of New York Mellon to face lawsuit over toxic mortgages

A U.S. judge ruled that Bank of New York Mellon must face a lawsuit seeking to hold it liable for causing $1.12 billion of investor losses due to toxic residential mortgages, an article in Reuters stated.

From the Reuters article by Jonathan Stempel:

U.S. District Judge Gregory Woods said Belgium’s Royal Park Investments SA/NV may pursue claims that the bank, as trustee for trusts dating from 2005 to 2007, ignored widespread, systemic abuse in how the underlying loans were underwritten and serviced, and failed to require that bad loans be repurchased.

“Indeed,” Woods wrote in his decision on Wednesday, “it would be implausible to assume that somehow all of the mortgage loans underlying the trusts miraculously avoided the pervasive practices of the industry at the time.”

Read on.

Zeldes Haeggquist & Eck, LLP is court-appointed Co-Lead Class Counsel in two class action lawsuits against Trump University

Here are the updates from the law firm in San Diego, CA that is suing Trump University. From Zeldes Haeggquist & Eck law firm website:

TRUMP UNIVERSITY LAWSUIT UPDATES

On November 18, 2015, the Court issued an Order primarily denying Donald Trump and Trump University’s Motion for Summary Judgment.  The Court dismissed plaintiffs’ claims for injunctive relief, but otherwise denied Defendants’ motion for summary judgment, holding that the case may proceed to trial on Plaintiffs’ claims for:

(1) Violation of California’s Unfair Competition Law (“UCL”),
(2) California’s False Advertising Law (“FAL”),
(3) California’s Consumers Legal Remedies Act (“CLRA”),
(4) Financial elder abuse under California law, Cal. Welf. & Inst. Code Section 15600
(5) Violation of New York’s consumer protection statute, Section 349 of NY’s General Bus. Law
(6) Violation of Florida’s consumer protection statute and elder abuse law, Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) and Misleading Advertising Law (“MAL”)

On September 21, 2015, Class Notice was mailed to potential class members throughout the country to advise of their rights and provide an opportunity to “opt out” or identify themselves as California or Florida senior citizen class members.  Please see  http://www.trumpuniversitylitigation.com for more information and important documents. You can also click on following to view the Mailed Notice, Long-Form Notice, and Postcard for Individuals Over 60.

On September 18, 2015, the Court issued an Order granting in part and denying in part the motion to decertify the classes.

On October 27, 2014, the Court in a RICO class action against Donald Trump issued an Order granting class certification of a nationwide class of all students who purchased live event seminars from Trump University from January 1, 2007 to the present. For more information regarding this Order, please visit our blog here.

On June 17, 2014, the Southern District Court issued an Order granting Plaintiff Tarla Makaeff’s Anti-SLAPP motion against Trump University, LLC (“Trump”), thereby dismissing Trump’s specious $1 million defamation counter-claim against Makaeff. While the victory came more than four years after Trump filed its counterclaim, Makaeff’s case resulted in an important reaffirmation of the applicability of the anti-SLAPP law in federal court. Because Makeaff’s statements arose from protected activity and Trump could not show a probability of prevailing on its defamation claim, the court granted Makaeff’s anti-SLAPP motion. The California Anti-SLAPP Project, a leader in protecting First Amendment Rights, published a thorough article discussing Makaeff’s Anti-SLAPP motion, which can be found by visiting their website here.

On February 21, 2014, the Southern District Court issued an Order granting in part Plaintiffs’ Motion to Certify a class action against Trump University, LLC and Donald J. Trump. The Court certified a class on behalf of all persons who purchased a Trump University three-day live “Fulfillment” workshop and/or “Elite” program (“Live Events”) in California, New York and Florida. The Court appointed Zeldes Haeggquist & Eck, LLP and Robbins Geller Rudman & Down, LLP as class counsel.

Also on February 21, 2014, the Southern District Court issued an Order denying Donald J. Trump’s motion to dismiss Plaintiff Art Cohen’s RICO complaint against Trump asserting violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO Statute”), 18 U.S.C. § 1962(c).

On November 27, 2013, the Ninth Circuit Court of Appeal issued an Order denying Trump University’s petition for re-hearing en banc in regard to the Ninth Circuit’s Order reversing the dismissal of Plaintiff’s Anti-SLAPP motion.

On October 18, 2013, Plaintiff Art Cohen filed a RICO complaint against Donald Trump, asserting violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO Statute”), 18 U.S.C. § 1962(c).

On April 17, 2013, the Ninth Circuit Court of Appeal issued an Order reversing the district court’s denial of Plaintiff Tarla Makaeff’s Anti-SLAPP motion. The Court held that Trump University is considered a “limited public figure,” due to its extensive advertising campaign, and thus would have to prove that Makaeff acted with actual malice when she accused it of fraud, in order to prevail on its defamation claim.

On September 26, 2012, Plaintiffs filed a Third Amended Complaint.

On September 24, 2012, Plaintiffs filed a Motion for Class Certification.

On October 12, 2010, the Southern District of California issued an Order upholding our first amended class action complaint against Trump University as to nearly all claims, including claims for breach of contract, false advertising, violation of California’s Unfair Competition Law (finding Plaintiffs stated a claim that Trump University’s conduct was unlawful, unfair and… fraudulent) and Consumer Legal Remedies Act (CLRA), with leave to amend as to the other claims.

A Second Amended Complaint was filed on December 16, 2010.

Trump University has also been named “Rogue of the Week” by the Willamette Week.

On October 12, 2010, the Southern District of California issued an Order upholding our first amended class action complaint against Trump University as to nearly all claims, including claims for breach of contract, false advertising, violation of California’s Unfair Competition Law and Consumer Legal Remedies Act (CLRA), with leave to amend as to the other claims.

We are happy to report that the Court on May 17, 2011 issued and Order Denying Donald Trump’s Motion to Dismiss and Order denying Trump University’s Motion to Dismiss, upholding Plaintiffs claims for against both Donald Trump and Trump University for Fraud, Misrepresentation, Violation of the Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising.

Trump University was sued in 2010 and 2013 in California. Here are the court documents:

 

 

And 2013 lawsuit from California businessman Art Cohen:

Docs: Trump didn’t pick Trump Univ. teachers

New York Attorney General Eric Schneiderman was interviewed on Lawrence O’Donnell show on MSNBC on Thursday about his lawsuit against Trump University.

In a Last Word exclusive, MSNBC’s Lawrence O’Donnell talks with New York Attorney General Eric Schneiderman who vows he will prove fraud in a lawsuit against Trump University. Schneiderman also responds to Trump calling him a “political hack.” watch.

2nd part:

In a Last Word exclusive, MSNBC’s Lawrence O’Donnell talks with New York Attorney General Eric Schneiderman about his state’s fraud case against Trump University and Donald Trump’s attacks on the lawsuit and Schneiderman, himself. watch.

On a side note: Schneiderman said to O’Donnell that he made his case against Trump University from Trump’s deposition in the California case.

Schneiderman sued Trump University in 2013. Here is Schneiderman’s press release. Click here.