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N.Y. AG accuses Donald Trump’s institute of fraud

Donald Trump, who opened Trump University in 2005, is accused of promising valuable real estate expertise, but instead charging up to $35,000 for substandard instruction.

Bebeto Matthews/Associated Press/File 2005

Donald Trump, who opened Trump University in 2005, is accused of promising valuable real estate expertise, but instead charging up to $35,000 for substandard instruction.

NEW YORK — Donald Trump has been sued by New York Attorney General Eric Schneiderman over claims the billionaire operated a fraudulent online educational institute that swindled students out of $40 million.

Trump University, now known as the Trump Entrepreneur Initiative, operated as an unlicensed educational institution and misled students with promises they would gain real estate investing expertise, according a copy of the petition provided by Schneiderman’s office.

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Saturday’s filing was not immediately available from New York Supreme Court in Manhattan.

Students paid as much as $35,000 for the institute’s programs, purportedly taught by experts ‘‘handpicked’’ by Trump, according to the petition. Trump did not select the instructors, many of whom did not have real estate backgrounds or had recently sought bankruptcy because of their real estate investing failures, Schneiderman’s office alleged.

After being told they would recoup the cost of the programs within months, many students were unable to conclude even one real estate deal, according to the petition.

‘‘Mr. Trump used his celebrity status and personally appeared in commercials making false promises to convince people to spend tens of thousands of dollars they couldn’t afford for lessons they never got,’’ Schneiderman said in a statement.

Trump, the New York-based Trump Organization Inc., and a former president of the institute are accused of running an unlicensed educational institution from 2005 through 2011. More than 5,000 students, including 600 in New York, paid for the educational programs, according to the petition.

Amanda Miller, a Trump Organization spokeswoman, referred reporters to www.98percentapproval.com, a website devoted to criticism of the attorney general.

Surveys show that ‘‘98 percent of Trump University students rated the program ‘excellent’ while only 4 percent of New York State registered voters rated Attorney General Eric Schneiderman’s performance as ‘excellent’,’’ according to the site.

‘‘Schneiderman thinks he could be the next governor? He must be joking.’’

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