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Trump U: $25M Settlement in University’s Fraud Case

Back in Novemeber of last year, now-President Trump agreed to settle a class-action fraud case against him for a whopping $25 million.  Now, months later, Judge Gonzalo Curiel-the same judge President Trump accused of prejudice for being “Mexican” (the Honorable Judge Curiel was born in Indiana)-has finally given approval for the settlement to go through.

You’re probably wondering to yourself why the settlement took so long to go through.  The answer is that, like most settlements, the settlement paid out to the many plaintiffs but admitted no fault whatsoever on the part of Trump.  For at least one plaintiff, a Ms. Sherri Simpson, this was not enough.  She felt that she wasn’t given enough of a chance to opt-out of the class action (choose to sue Trump on her own) and she has been challenging the settlement as insufficient.  Ms. Simpson wanted to see criminal racketeering charges brought against Trump and felt that she deserved at least an apology from Trump.  Ms. Simpson was quoted as saying “for him to out there and say, well ‘I didn’t do anything wrong’ it’s disgusting…I want an apology.

After much deliberation on the issue, Judge Curiel has finally determined that the settlement offer is fair-it’s around two-thirds of all the profits Trump University ever made and five times what Trump himself took in-for the entire class of plaintiffs including Ms. Simpson.  However, for those who have forgotten some of the details of the Trump U fraud case, let’s take a look at the charges brought against President Trump and why Ms. Simpson may have wanted to see some culpability on the part of President Trump.

Trump UTrump Accused of Fraud

Starting in 2005, Trump provided seminars of “Trump University” which–first and foremost–was not a university.  As soon as the “university” was established, the New York State Education Department warned Trump that he was violating New York law by failing to receive a license to operate as a school.  Trump never paid any attention to these warnings, despite a second warning in 2010, but ultimately changed the name of the business to the Trump Entrepreneur Initiative (TEI).

However, in the case itself the issues of education law violations were set aside in favor of the most important charges against Trump–fraud.  The complaints against Trump U from plaintiffs essentially alleged that, beyond providing nothing of benefit, nearly every advertised feature of the classes was untrue.  They sued under New York Executive Law 63.12, defining fraud as any “device, scheme or artifice to defraud and any deception, misrepresentation, concealment, suppression, false pretense, false promise or unconscionable contractual provisions.” The law provides remedies for ongoing and persistent cases of fraud.

TEI advertised teachers handpicked by Trump, but when asked at deposition Trump couldn’t name a single teacher at his “school.”  It became clear that Trump had had no connection to any teacher from his seminars.

While TEI was advertised as revealing Trump’s business secrets, it turned out that Trump himself had never reviewed any of the materials for Trump University whatsoever-instead allowing a third-party company (which primarily focused on making materials for motivational speaking and timeshare seminars) to design the full curriculum.  This curriculum included such riveting secrets as looking at the IRS website to learn about taxes.  In fact, many of the plaintiffs complaints revolved around the majority of the information in the curriculum–for classes which were sometimes as expensive as $35,000–being easily accessible on the internet.

TEI also promised access to private lenders, financing, a year-long apprenticeship support program, and even promised to improve the credit scores of its students.  None of these promises ever materialized.

Instead of curriculum, the “Playbook” to TEI (basically an operations manual) was focused on upselling more TEI services.  It included nothing about presentations, speakers, or teaching points.  Instead, it focused on advising employees to avoid all reporters, providing sales tactics and how to respond if a district attorney ever showed up.

So as you can see, the allegations and facts certainly seem to include false promises aplenty in Trump University–making a strong case under Executive Law 63.12.  Judge Curiel had already ruled that Trump himself could be held personally liable for fraud should the case succeed, although the statute of limitations only allowed claims for the last six years of operation.  An especially large issue since TEI closed its doors in 2011.  However, should the case have succeeded, a personally liable Trump had more at stake than you might have expected.

Why Simpson May Have Wanted to Go Further–And Why Trump Was Quick to Settle

When Trump initially settled the case, he characterized the choice to settle as a cheap way to remove an inconvenience.  He tweeted out ” “I settled the Trump University lawsuit for a small fraction of the potential award because as President I have to focus on our country.”  However, $25M is far from a small fraction of the award as mentioned above–five times what Trump himself made off TEI.  The truth is, the implications of a fraud case against Trump that stuck were serious.

A settlement is not guilt-period.  The truth is that many settle just to avoid the potential costs inherent in litigation.  This means that, without a fully litigated case, it would be irresponsible to say that Trump did or did not commit fraud here–regardless of the evidence lined up against him.  However, had Trump been found guilty of fraud–or criminal racketeering as Ms. Simpson hoped–that would fall among the high crimes and misdemeanors which can lead to impeachment.  Even when committed before a president enters offices, and determined in a civil court as opposed to a criminal court, a verdict against Trump might have left him in a particularly precarious position in terms of his presidency.

This is very likely why Ms. Simpson was so adamant about pursuing her case and holding Trump himself accountable.   It’s also, despite what Trump himself may say, likely a large factor in why Trump–up until that point doggedly fighting the lawsuit from every angle from attacking the judge in the case to filing ultimately nearly frivolous $100M counterclaims against the plaintiffs in the case–chose to settle on the eve of his inauguration.  However, with the settlement finalized there will never be a fraud ruling against Trump in this case.  Settlements aren’t and should not be thought of as admissions of guilt, they are a generally a business decision, but as this chapter closes and the settlement is finalized it’s worth looking back at the case itself and how both Trump and the plaintiffs got here.

Rep. Devin Nunes: Understanding Rep. Nunes Fall From Grace

Another day, another scandal.  Temperamental tweets from Trump are becoming the norm, yet Trump’s recent claims that Obama wiretapped him prior to winning the election still came as somewhat of a surprise.

There were previous reports that, while monitoring Russians, the intelligence community may have intercepted communications from members of the Trump team, but Trump’s tweet claimed Obama specifically ordered the wiretapping.  That’s a pretty hefty claim to make and he did so without any substantiating evidence.  Then along came Devin Nunes, who recently held a press conference making statements that appear to somewhat validate Trump’s claims.  The Congressman has been under heavy scrutiny ever since and people are questioning his ethics.

Rep. Devin NunesLet’s Take a Step Back to Get Some Context

Earlier this year, the House Intelligence Committee was tasked with investigating whether there was Russian interference into the 2016 elections as well as collusion between Russia and Donald Trump’s campaign.  The House Intelligence Committee is led by chairman Devin Nunes, which, until recently, wasn’t necessarily a household name.

A week ago, Nunes held a press conference and, to keep it simple, he announced that an unnamed source had given him information that appeared to validate, at least somewhat, Trump’s wiretapping allegations.  Here’s what Nunes said:

“First, I recently confirmed that on numerous occasions, the intelligence community incidentally collected information about U.S. citizens involved in the Trump transition.  Details about U.S. persons associated with the incoming administration, details with little or no apparent foreign intelligence value, were widely disseminated in the intelligence community reporting.  Third, I have confirmed that additional names of Trump transition team members were unmasked.  Fourth and finally, I want to be clear. None of this surveillance was related to Russia, or the investigation of Russian activities or of the Trump team.”

Because Nunes says that the information wasn’t related to the surveillance on Russia and that it also wasn’t related to the Trump-Russia investigation, Nunes’ statements suggest that some of the members of the Trump transition team were in fact under surveillance.

Why All the Fuss?

Here’s a brief rundown of how it went down:

  • On March 21st Nunes made an unscheduled trip to the White House where an unnamed source provided Nunes with information about incidental collection of Trump and his associates. That information, according to Nunes’ press conference, contained unmasked names.
  • On March 22nd Nunes held the press conference with the statement above. Nunes claims the information came from FISA surveillance.  Nunes then went directly to the White House to brief Trump on the intelligence reports.  Adam Schiff, the ranking Democrat on the House Intelligence Committee, released a statement that Nunes did not share this information with other members of the Committee before going to brief Trump.

The press conference itself wasn’t necessarily the issue; the issue is where the documents came from and why did Nunes go to Trump with the information before his own Committee members?  Regardless of whether the information was unrelated to the Trump-Russia investigation, Nunes still should have presented the information to the Committee first.  Even after Nunes apologized for going to Trump first, the water has gotten even murkier on whether Nunes had any real evidence to support the statements as he has yet to release the documents to the Committee.

Actions Affect the Committee’s Investigation

Who did Nunes meet at the White House?  Why did Nunes need to meet his source at the White House?  Why didn’t Nunes take the information straight to the Committee?  These are the unanswered questions floating around that make what Nunes did suspicious.  The running theme coming from the Democrats is that, because Nunes was a member of Trump’s transition team, Nunes is improperly providing political cover for Trump’s claims that Obama wiretapped his phone.

Nunes’ actions do affect the House Intelligence Committee’s investigation because it tarnishes the office’s credibility.  Being chairman of the House Intelligence Committee holds certain responsibilities and, as a member of that Committee, Nunes’ loyalty should have been to the Committee, especially since Trump is currently being investigated.  Instead, Nunes claimed he felt he “had a duty and obligation” to tell Trump because “he’s [Trump] taking a lot of heat in the news media”.

If Nunes is covering for Trump, he’s not being an impartial member of the Committee.  Not only does it tarnish the creditability of the House Intelligence Committee, but it also jeopardizes the ongoing Trump-Russia investigation.  There’s also a good argument Nunes’ actions violate protocols for handling classified information, which is why he’s received numerous ethics complaints.

Despite statements that all the fuss is “entirely false and politically motivated”, Nunes has since stepped aside from the Trump-Russia investigation.

H.B. 2: North Carolina Bathroom Bill Repealed for Basketball

North Carolina’s controversial “bathroom bill,” which required transgender people to use a bathroom matching the gender on their birth certificate, has been repealed–at least in part. Unfortunately, while the removal of this discriminatory rule-H.B. 2-is good news, the changes leave some of the worst elements of the law in force for the foreseeable future. In fact, the compromise reached between the conservative majority and liberal majority in North Carolina’s Congress in achieving this repeal has people on both side of the issue criticizing the outcome–some calling any compromise on the law a mistake and the other side pointing to how damaging the parts that remain are to the LGBT community.

The original rule was put in place after Charlotte passed a local law including LGBT persons in their anti-discrimination laws–the North Carolina Congress felt that it was so pressing that they called an emergency session to put a rule in effect blocking cities from passing anti-discrimination laws beyond what the state already has–the bathroom ban was a part of this law. While the bathroom rules have been repealed, the new version leaves in place the rules forbidding any individual city from passing local laws which prohibit discrimination based on sexual orientation or gender identity until 2020.   This is certainly better than the previous version which included the same restrictions but lasted indefinitely, however, it still leaves several years where the LGBT community will be left adrift.

The Democratic Governor of North Carolina, Roy Cooper, ran on a platform of repealing the “bathroom bill.”  The repeal now is a result of a number of failed initiatives to get rid of the law–ultimately leading to the compromise we see today. The Governor described the repeal as “not perfect” but “an important step forward.”  It’s certain that he has had an uphill battle in even reaching this point trying to push the change through a Republican-majority state legislature. The step is just that, a step. However, in the face of such serious restrictions on protecting the LGBT community it feels like a baby step at best.

H.B. 2The Story Behind The Rule’s Repeal

With the odds so stacked against any change to the law whatsoever, you may be wondering how any repeal got through the North Carolina Legislature at all. The truth is that the changes are as much a story of money and basketball as a story of overcoming discrimination.

When the original law was passed, it led to serious sanctions from some of the biggest cities in the nation. The mayors of Salt Lake City, Seattle, San Francisco, New York, Washington, and a number of other cities all placed bans on state-sponsored travel to North Carolina. The entire states of Connecticut, New York, Minnesota, Washington, and Vermont have banned travel by public employees and representatives to North Carolina

A number of businesses also got in on refusing to business with North Carolina. Paypal and Deutche bank are notable examples of businesses which took a stand by cancelling expansion plans in North Carolina after the law was passed. Musicians and artists, from Bruce Springsteen to Cirque de Soleil, all refused to perform and cancelled performances in North Carolina  The 2017 NBA All-Star game was pulled from Charlotte.

H.B. 2 also led to something which, for North Carolina, was maybe even more serious–sanctions from the NCAA. The NCAA pulled all tournaments out of North Carolina-golf, swimming, and (most importantly) basketball. North Carolina currently has the number one ranked college basketball team and college basketball is huge business in North Carolina. As long as H.B. 2 continued to exist, the NCAA refused to host any events in North Carolina.

All told, conservative estimates had the economic losses suffered due to H.B 2 in the hundreds of millions with projections that they would stand to lose billions in the coming years. The partial repeal of H.B. 2 came shortly before a NCAA deadline which would have cost North Carolina future hosting opportunities if H.B. 2 remained in place. It’s no stretch to say that it is near certain that economics, and not a desire to end discrimination, were the real motivation behind the changes to H.B. 2.

North Carolina May Still Not Get What They Want

Economics may be the motivation behind the changes, but the changes themselves may be too half-hearted to convince governments, businesses, and the NCAA to change their mind on North Carolina. The mayors of San Francisco, Seattle, Salt Lake City, New York and Washington have already said the changes leave the worst of the law in place and they won’t be lifting their sanctions.

The NCAA has publically announced that it based its ban, at least in part, on both the bathroom ban, the bar on local LGBT anti-discrimination laws, and the travel bans from states and cities. Both the bar on local laws and the travel bans look to be staying in place. However, in the wake of the repeal, the NCAA has “reluctantly voted” to remove their ban on hosting events in North Carolina. The decision led to much criticism after the NCAA itself described the repeal as having “minimally achieved” a non-discriminatory environment. This being said, the NCAA is making it clear that they may change their mind at any time as the situation evolves.

North Carolina Conservatives Gambling on the Fed

The Republican North Carolina Senate Leader Phil Berger has made it clear that changing the prohibition on local anti-discrimination laws from indefinite to lasting until December of 2020 is a move attempting to “allow federal litigation to play out.”  In other words, they believe Congress will pass laws explicitly limiting anti-discrimination laws when it comes to the LGBT community and make H.B. 2 irrelevant.

In the courts, the opposite trend seems to be the case. A number of cases out the EEOC in recent years have included sexual orientation and gender identity as a protected subsection of gender. In fact, just around a week ago the highest court yet–a Federal Appeals Court in Chicago—made a ruling saying just this.

On the flip side, President Trump recently rescinded an Obama-era Fair Pay and Safe Workplaces Executive Order which prohibited federal contractors from discriminating on the basis of sexual orientation or gender identity–basically saying it is alright to start discriminating on this basis.

The reliance on Congress to limit anti-discrimination in this way seems to read the priorities and positions of the Trump administration fairly well. However, the trends in the courts show that any such law would face serious legal challenge and more and more precedent saying that such a move might be unconstitutional.

The repeal of H.B. 2 feels like a mostly symbolic gesture in light of how bad the parts of it that remain are for the LGBT community. That being said, the changes still help restore some of dignity stolen from transgender people in North Carolina–and that is a victory. The story of laws like this is not over, Texas already is considering a similar law despite the backlash against North Carolina. What’s more, the belief that the issue will be addressed–one way or another–at a federal level is feeling more and more like an inevitability. This repeal is a small victory, but both sides will have eyes to the future for the ultimate determination of the underlying issue–sexual orientation and gender identity as a legally protected class.

Proof of Residency is Not Required to Eat Out

Are you required to show identification before sitting down for lunch?  If you’re ordering alcohol, sure.  But what if you were asked to show proof of legal residency?  Brenda Carrillo and a friend sat down at the Saint Marc Pub-Café, an upscale eatery in Huntington Beach, when a waiter asked:

“Can I see your proof of residency?”

When the patrons repeated the question back to the waiter in disbelief, the waiter responded with:

“I need to make sure you’re from here before I serve you.”

Is this legal?  After complaints to the manager, the patrons were offered to be re-seated, but declined and left the restaurant.  Castillo commented that she had never felt so judged in her entire life.

Proof of ResidencyNo Shoes, No Service

You know those signs that read, “We reserve the right to refuse service” or “No shoes, no service”?  Can a restaurant really refuse service to whoever they want?  The short answer is no.  After Trump’s inauguration, it seems some feel emboldened to start showing their prejudices and, despite the waiters cruel and discriminatory intent, it doesn’t come as much of a surprise to hear these types of stories popping up across the country.

When is a restaurant justified to legally refuse service then?  For starters, a restaurant can never refuse service based on discrimination.  The Civil Rights Act of 1964 explicitly prohibits places of public accommodation from discriminating based on race, color, religion or national origin.  Although a restaurant is considered private property, it’s still considered a place of public accommodation—equal protection laws still apply.

There aren’t necessarily a set of circumstances that would warrant a legal right to refuse service but, as a general rule of thumb, restaurants can refuse service if a guest puts the health, safety, or welfare of the establishment, or other guests, at risk.  That doesn’t help much, does it?  Certainly not an exhaustive list, but here are a few instances when a restaurant could legally refuse service:

  • When a guest is acting unreasonably rowdy or threatening other patrons,
  • When a guest doesn’t meet the company’s health requirements (think lacking adequate hygiene),
  • When a guest breaks lawful rules such as no-pet policies,
  • When the establishment has met capacity limits, or
  • When the establishment is getting ready to close.

Have you ever seen those signs that say ‘dress shirt and tie required’?  A restaurant can even refuse service if a guest doesn’t meet their clothing requirements., but refusing to serve a patron based on residency is not an acceptable reason because it’s a form of discrimination that the Civil Rights Act strictly prohibits.

I.D. Required Only in Limited Circumstances

The waiter had no right to ask the guests for identification.  When is proof of residency required?  One of the most obvious instances is obtaining a driver’s license or showing proof of citizenship to get a U.S. passport.  Many jobs require proof that you’re legally eligible to work in the U.S. and laws requiring a person suspected of a crime to show identification are legal as well.

The restaurant contacted Carillo with an apology after the story showed up on social media accounts.  The restaurant’s manager confirmed the behavior was not within company standards and the waiter was ultimately fired.  When the restaurant offered to host Carillo and her friends as “VIP guests,” Carillo and her friends declined the offer but, instead, asked Saint Marc Pub-Café to donate 10% of the weekend’s sales to an organization that advocates for immigrants living in the country illegally.

Did the patrons have another option?  They certainly could have brought a discrimination suit against the restaurant. Certain types of discrimination and civil rights violation allegations require a person file a claim or complaint with a federal or state agency before a lawsuit is brought, but Carillo likely would have had no problem getting the go-ahead to file a lawsuit.  At that point, it would have been up to Carillo to prove by a “preponderance of the evidence” (that it’s more likely than not that the allegations are true) that the restaurant discriminated against her.

Treason: Is It the Future for President Trump?

It’s hard to believe that President Trump has been in office for less than 100 days.  While Trump’s ties to Russia paint an incomplete picture, we are starting to see that there’s more than merely circumstantial evidence of a connection to Russia. The word “treason” is being thrown around in the same breath as Trump’s young presidency.

What is Treason?

In the most basic sense, treason is the crime of betraying one’s country. Under Article III, Section 3 of the U.S. Constitution, any person who levies war against the United States or adheres to its enemies by giving them Aid and Comfort has committed treason within the meaning of the Constitution.

treasonHow is Someone Convicted of Treason?

There are two ways to commit treason, by either levying war against the government or providing and or comfort to the enemy.

Levying war against the U.S. includes forcibly opposing the law. Planning to overthrow the government alone isn’t considered levying war. There must be an assemblage of people who intend to use force to overthrow the government. In this way, no person acting along could be guilty of levying war.

Providing aid or comfort to the enemy can include a wide array of actions, from providing financial assistance to harboring an enemy soldier. Any intentional act that helps weaken the United States or aides an enemy’s hostile design can be considered treason.

It’s important to note that the Treason Clause only applies to disloyal acts committed during times of war. If an act of disloyalty is committed during peacetime, they are not considered treasonous under the Constitution.

What Acts Have Been Found Treasonous in the Past?

Iva Toguri d’Aquino, a Japanese-American radio host who was better known as “Tokyo Rose,” was convicted of treason. Born to Japanese parents in America, she visited Japan in the early 1940s when war broke out and she became stuck in Japan. She took a job as a wartime DJ for Radio Tokyo, playing popular American music and engaged in banter that was considered a means to undermine the morale of U.S. troops. Although most later believed that her banter did not undermine U.S. troops morale, there was public outcry when Tokyo Rose asked to return to the U.S. after the war. She was tried and found guilty of one count of treason for “[speaking] into a microphone concerning the loss of ships,” per the FBI. She served over six years of a 10-year sentence.

And you’ve probably heard of Julius and Ethel Rosenberg. They were the first American civilians executed in the electric chair under the Espionage Act in 1953. Julius and Ethel were arrested in July 1950 for heading a spy ring that passed top-secret information concerning the atomic bomb to the Soviet Union. They were sentenced to death after a short trial. However, they were not charged with treason because the Soviets were not considered at war with the U.S. at the time.

No one has been convicted of treason in the United States in nearly 70 years.

Can Trump be Charged with Treason?

The short answer is “no.” Treason is only found if a country or entity has declared war or is in a state of open war. While Russia is generally a foreign adversary, we are not at war with Russia. It is much more likely that if the FBI could prove Trump’s ties to Russia, Trump could be charged under the Espionage Act. The Espionage Act is commonly used to prosecute leakers and bans the conveyance of information meant to interfere with the operation of the United States Armed Forces or promote the success of America’s enemies.

Treason Punishment

One could argue that we are at cyber war with Russia. In that case, what could Trump’s punishment be if convicted of treason?

According to the Constitution, a person who is found guilty of treason in the U.S. “shall suffer death, or shall be imprisoned not less than five years and fined…not less than $10,000; and is incapable of holding any office under the United States.” In other words, Trump would be stripped of his Presidency and likely imprisoned and fined.