Please read the case and discuss the implications for this case related to fraudulent misrepresentation and possible misrepresentation by words or conduct.

Schneiderman v. Trump Entrepreneur Initiative, LLC

New York Supreme Court. Appellate, First Department. 137 A.D. 3d 409, 26 N. Y. S. 3d 66 (2016).

Background and Facts Donald Trump and Michael Sexton formed Trump University, LLClater known as Trump Entrepreneur Initiative. LLC (TEI)to sell courses in real estate investing. To attract students, Trump made a promotional video. In it, he said, "We're going to have professors that are absolutely terrific-terrific people, terrific brains, successful, the best. . . All people that are hand-picked by me."

New York Attorney General Eric Schneiderman brought a proceeding in a New York state court against TEI, Trump, and Sexton, alleging that they had operated ar. illegal educational institution between 2005 and 2011 The attorney general sought an injunction, damages penalties, and restitution under a state statute that provided for these remedies in cases of "persistent fraud". TEI was charged with intentionally misleading more than 5,000 students, including over 600 New York residents, into paying as much as $35,000 each to participate in its programs. Among other things, according to the attorney general. Trump did not handpick the instructors as he claimed

The court dismissed the claim on the ground that it exceeded a three-year limit, statutory causes of action. The court also held that the specific statute did not provide the state with an independent cause of action for fraud. The attorney general appealed.

In the Language of the Court

MAZZARELLI, J.P. [Justice Presiding], RENWICK, SAXE, MOSKOWITZ, J. J [justices]

* * * *

* * * [New York] Executive Law Section 63(12) states, in relevant part:

Whenever any person shall engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conducting, or transaction of business the attorney general may apply * * * to the supreme court of the state of New York * * * for an order enjoining the continuance such business activity or of any fraudulent or illegal acts and directing restitution and damages * * * and the court may award [such] relief* * * as it may deem proper.

* * * *

[In its ruling- the lower court cited People v Charles Schwab & Co, Inc., 109 A.D.3d 445, 971 N. Y.S.2d 267 (1 Dept. 2013). ] In Charles Schwab the Attorney General had bought an enforcement action asserting claims under Section 63(12) * * *. The court dismissed the section 63(12) claim.

On appeal to this Court, * * * we found that the count had properly dismissed that the claim, stating that the selection does not create independent claims, but merry authorizes the Attorney general to seek injunctive and other relief * * * in cases involving persistent fraud.

Although the holding of Charles Schwab purported to be based on the [New York] Court of Appeals' ruling State v. Cortelle Corp., 38 N.Y.2d 83, 378 N Y S.2d 654, 341 N.E.2d 223 (I975), Cortelle does not, in fact, hold that the Attorney General cannot bring a standalone cause of action for fraud under Executive Law Section 63(12).

In Cortelle, the Court of Appeals [found] that * * * causes of action [under Section 63(12)] addressing * * * allegedly fraudulent practices did not rely on liabilities, penalties, or forfeitures created or imposed by statute. Specifically, Section 65(12) did not make unlawful the alleged fraudulent practices but only provided standing in the Attorney General to seek redrew and additional remedies for recognized wrongs which pre-existed the statute. [Emphasis added.]

* * * Other New York courts addressing that issue * * * have generally allowed for independent causes of action for fraud under Section 63(12).

Thus Charles Schwab does not comport with prevailing authority.

* * * Hence, we hold that the Attorney General is, in fact, authorized to bring a cause of action for fraud under Section 63(12).

Decision and Remedy A me intermediate appellate court reversed the lower court's claim, holding that the three-year limit on statutory causes of action did not happy. Because material issue of fact still existed as to that claim, however, the court remanded the case for further proceedings.

Critical Thinking

Legal Environment The statute at the center of this case provides for reminds that may not be available at common law. Why would those additional remedies be sought, when would they most likely be awarded?

What If the Facts Were Different? Suppose that Trump University or Trump Entrepreneur Initiative, had offered courses in real estate investing only online. Would the result in this case have been different? Explain.