During the 2016 presidential campaign, candidate Donald Trump happened to be in the middle of a major federal class-action lawsuit spanning several states over an allegedly fraudulent operation called Trump University. You may recall that one of his first racist scandals during the 2015 primary campaign came about after he claimed the judge in that federal fraud case was biased against Trump because of his Hispanic heritage. The Trump University suit was a big story during that campaign but, as always, there was so much chaos surrounding Trump that I’m not sure people really understood what it was all about. It should have been the biggest story because it was unfolding during the campaign and illustrated everything the people needed to know about Donald Trump. It showed, in living color, that Trump was a real, bonafide con artist, in the literal sense of the word.
The grift was pretty simple. It started off as an online operation that quickly morphed into one of those bait and switch operations where they entice you to come to listen to a free lecture from some “expert” to teach you the tricks of the trade (or tell you the secret of life) which turns out to be nothing more than a sales pitch to buy more expert lessons in the same subject — which also turn out to be sales pitches. It’s what a lot of multi-level marketing schemes and frankly, cults, do to bilk people out of their savings. A 2017 report from the Center for American Progress explains further:
Near the end, Trump University focused almost exclusively on the seminars, both running them and licensing the brand name out to an organization called Business Strategies Group. These seminars often began with a free session to get people in the door. Once individuals arrived, salespeople often tried to upsell them the “Trump Elite Packages,” ranging from the Bronze Elite Package for $9,995 up to the Gold Elite Package for $34,995.
Trump, of course, had a TV show in which he pretended to be a genius businessman and that was enough to get a lot of naive fans to sign on, apparently believing the lies in the brochures, which said that Trump had personally chosen the instructors and the so-called courses were credentialed by major universities like Stanford and Northwestern. The court case showed that none of that was true. And according to the Washington Post, Trump was personally involved in all the advertising that made those claims.
And despite pressure from the leaders of the seminars to write favorable reviews of the “course” there was an unusually high refund request rate from unsatisfied “students.” Time magazine reported that it was 32% for the three-day seminar and 16% for the Gold Elite package.
Trump eventually settled the fraud case for $25 million after the election, successfully shutting it down before it reached a courtroom. In the end, 6,000 customers were eligible for a piece of the $25 million settlement.
How in the world could an advanced democracy ever elect someone who was so blatantly a con man? It wasn’t as if it was far in the past or there was some serious dispute as to whether or not it was really a scam. It was obvious to anyone who looked at the case that there was no “university” and Donald Trump was running a grift. It wasn’t the first or the only one but it was being litigated right in the middle of the campaign.
I was reminded of that astonishing story this weekend when I read Shane Goldmacher’s shocking New York Times report on the Trump campaign’s fundraising practices. If anything, they were even more deceptive than the Trump University con.
Goldmacher reported that the campaign and its online fundraising platform WinRed hustled its most loyal supporters out of tens of millions of dollars with deceptive donation links on their emails and websites. It’s unknown to this day how many people unknowingly signed up for weekly recurring donations and “money bombs” (agreements to donate a lump sum on a future date), but there were so many requests for refunds that at one point, 1-3% of all credit card complaints in the U.S. were about WinRed charges.
The credit card companies told the Times that they were inundated with complaints and requests to cancel cards:
“It started to go absolutely wild,” said one fraud investigator with Wells Fargo. “It just became a pattern,” said another at Capital One. A consumer representative for USAA, which primarily serves military families, recalled an older veteran who discovered repeated WinRed charges from donating to Mr. Trump only after calling to have his balance read to him by phone.
The unintended payments busted credit card limits. Some donors canceled their cards to avoid recurring payments. Others paid overdraft fees to their bank. There is no way of knowing how many people just paid the bills, either thinking they had no recourse or failing to notice it.
The Times compared the GOP’s WinRed donation platform to the successful Democratic site ActBlue that it is modeled on and the GOP’s practices leading up to the 2020 election were much more unscrupulous. The refund request rate wasn’t even close. In fact, “the Trump/RNC operation issued more online refunds in *December 2020* than the Biden/DNC operation issued in all of 2019 and 2020.” But then WinRed itself is a product of Trump-affiliated henchmen who made their platform for profit, unlike the non-profit Act Blue, and even kept their fees when people demanded a refund which Act Blue does not. They made a lot of money on this scheme.
The sheer number of refunds to Trump donors amounted to a huge no-interest (and profitable for WinRed) loan to the campaign — a loan which required that the people loaning the money go to a great deal of trouble get money back which they didn’t consciously agree to “loan” in the first place. Trump’s post-election “Stop the Steal” fundraising at least partially went to pay off those “loans” from the campaign making the whole scheme very “Ponzi-esque.”
It wasn’t just the Trump campaign that did this. GOP candidates who used WinRed all used the same tactics including the Republicans in two Senate runoff campaigns in Georgia. There were many many requests for refunds of donations to both Kelly Loeffler and David Perdue, the Times reported.