ORLANDO, Fla. – Sept. 16, 2013 – Kenneth Lafrate paid nearly $7,000 to learn real estate secrets marketed under the name of celebrity business mogul Donald Trump.
The Leesburg, Fla., pool tech said the “Trump Institute” talked up “The Donald” in persuading him to pay $1,700 for a seminar at an Orlando-area hotel, plus $5,000 for follow-up mentoring.
Lafrate complained to the state when he couldn’t get a refund five years ago. But it’s a recent New York state lawsuit against Trump that has gotten Florida authorities interested in his real estate seminars.
Lafrate’s complaint to the Florida Attorney General’s Office was among dozens filed in 2008 against the now-defunct Trump Institute of Boca Raton, Fla., according to records obtained by the Orlando Sentinel.
“After a lot of calls back and forth with them, one day they just vanished and I knew I’d been taken,” Lafrate said. “It (the seminar) was supposed to give you these insider secrets of how to invest in real estate like sophisticated investors do. I really did want that kind of knowledge. And it was the Trump Institute – I felt like he was a legit guy, so I’d take a chance. My mistake.”
The complaints filed in Florida were among those cited by New York Attorney General Eric Schneiderman last month when he sued Trump and real estate seminar operations such as Trump University and the Trump Entrepreneur Initiative, alleging civil fraud.
The New York suit accuses Trump and his seminar companies of making false and exaggerated claims to lure people into spending thousands of dollars on questionable courses and mentoring services. More than 5,000 people nationwide paid a combined $40 million, expecting to learn from Trump’s “handpicked instructors” through a legitimate school – though his “university” was never licensed in New York, according to the suit.
Trump has denied the allegations and described the suit as frivolous, citing surveys by his organization showing a 98 percent satisfaction rate with the courses. The outspoken business mogul, who considered running for the Republican presidential nomination in 2012, has also accused New York’s Democratic attorney general of colluding with President Barack Obama and of trying to make a politically motivated case against him.
But now Florida Attorney General Pam Bondi’s office is reviewing the New York lawsuit’s allegations, to determine whether Florida should join the multi-state case, a spokeswoman for the Republican attorney general said Wednesday. All but one of the complaints about Trump Institute in Florida were filed when Bill McCollum, another Republican, was Florida’s attorney general, records show.
Trump Institute, the Florida affiliate, collaborated with and paid franchise fees to Trump’s New York operation and used materials that prominently featured Trump’s image, according to unhappy investors and an Orlando lawyer familiar with the program. The Boca Raton-based business severed its ties to Trump in 2010 and changed its name to Business Strategies Group LLC, though the company has since been dissolved.
Frank Kruppenbacher, a prominent Orlando attorney, said he represented owners of the Boca Raton operation in several matters, including their agreement with Trump. The owners, Michael and Irene Milin, are friends who occasionally ask him for legal help, Kruppenbacher said.
“I met with them and with Trump himself a few years ago,” the lawyer recalled. “But when I did some research and found out the Trump group (in New York) was not legally authorized to be called a university, I advised the Milins to dissociate themselves from it completely, which they did. That’s probably why they’re not in this litigation now.”
From about 2006 to 2010, Orlando was a popular location for Trump Institute seminars, which took place in various hotel conference centers in the area, local investors said. The seminars played to mixed reviews – at best.
Orlando developer A. Tom Harb said he paid more than $24,000 to attend a Trump Institute seminar and to receive one-on-one mentoring from experts who were supposed to introduce him to potential investors. But Harb soon concluded the program didn’t work: His projects weren’t attracting investors, and the expert “mentors” he had met through the Trump Institute weren’t returning his calls.
Harb complained to the Florida Attorney General’s Office in October 2009 in an effort to get his money back. “You can see we are very displeased with the service,” he wrote in the complaint. “Since I can’t see any value received from this package, I requested a refund back in July and I’m requesting the same refund again.”
Harb now says the experience was worth the money – despite his 2009 complaint. He says he eventually was refunded about half of the $24,000 he had paid. He said he maintains business ties with some of the instructors he met, and they sometimes refer potential investors to him. Harb also said some of the concepts he learned, including time-saving spreadsheet techniques and negotiation strategies, have helped him in his business.
“Did I expect more from the course at first? Of course I did,” Harb said. “Anyone would expect more when you spend good money like that. But did I expect miracles? No, not in those days. It was just a very, very tough market in Central Florida a few years ago.”
Local financial experts warn that, because Orlando attracts so many investment seminars, it can be difficult to sort out those that are legitimate from those that are not.
“If you find yourself paying just for books and seminars, that may be legitimate education,” said Todd Budgen, an Orlando consumer-bankruptcy lawyer familiar with the seminar business. “But if there is always one more product to buy, a ‘network’ to be invited to join, and counselors and advisers to pay for the program, then they are selling services more than information.
“And those services may merely be built on hopes and dreams, not reality.”
Dealing with seminar pitches
• Beware of fast-talk or high-pressure sales tactics, especially unsolicited calls promoting surefire ways to get rich.
• Beware of programs with “upsell” tiers – levels of services that get more and more expensive.
• Get all names, terms and other information in writing. Make no decisions on the spot. Don’t give out personal financial information.
• Do your homework before going anywhere. Check out the people or organizations supposedly involved in the program. Search the Internet for complaints, endorsements, warnings, alerts.
• Check the Financial Industry Regulatory Authority’s website; click on “Brokercheck” to get background on securities brokers and firms.
• Beware if you can’t learn anything from your research. “A relative who went to a seminar asked me to check out the people who put it on. So I looked up all their names and I found nothing,” said Dennis Nolte, a Winter Park, Fla., financial adviser and president of the Financial Planning Association of Central Florida. “If they are not registered with anyone, odds are you want to stay away from it.”
Copyright © 2013 The Orlando Sentinel (Orlando, Fla.), Richard Burnett. Orlando Sentinel research contributed. Distributed by MCT Information Services.