04:11 - Source: CNN
Texas AG's office alleged Trump U. used 'deceptive' practices
Washington CNN —  

Revelations from a Texas investigation of Trump University have state leaders warring over whether Gov. Greg Abbott ran the allegedly fraudulent business out of the state or bowed to Donald Trump by avoiding a lawsuit.

Documents obtained by CNN and former state investigator, who went undercover at Trump University courses, told CNN that the state was prepared to force Trump University to pay $5.4 million for allegedly defrauding Texans who attended university workshops and seminars in 2009 and 2010.

But Abbott, then an ambitious attorney general with his eyes set on the governor’s office, killed the investigation because of a friendly relationship with Trump, former Texas investigator John Owens told CNN. He called Abbott’s decision not to sue Trump “absolutely political.”

“Trump claims attendees at his seminars where satisfied customers. Gov. Abbott says he ran Trump University out of Texas. Neither assertions are correct. Abbott paints himself as the consumers’ advocate and protector. The documents show those representations to be false,” Owens told CNN.

Abbott, a Republican, and his aides say they successfully forced a predatory business out of Texas, while leaving the door open for former Trump University students to successfully sue Trump individually.

“The Texas Attorney General’s office investigated Trump U and its demands were met – Trump U was forced out of Texas and consumers were protected,” Abbott spokesman Matt Hirsch told CNN.

Trump himself has an entirely different explanation, telling CNN on Sunday that he successfully dodged a bullet, after Abbott and other attorney generals declined to sue him.

“Do you know that these people went to every attorney general, practically, in the country that they could, and do you know this case was turned down by almost every attorney general, from Texas to Florida to many of these states?” Trump told CNN’s Jake Tapper on “State of the Union.”

The release of internal Trump University marketing and training materials in one lawsuit dominated the political discussion for more than a week after Trump’s accusation that he was not getting a fair trial because the judge presiding over the case is “Mexican.”

Trump’s allegation against the judge, who was actually born in Indiana, has led to an intense rift within the Republican Party, as leaders from House Speaker Paul Ryan to Senate Majority Leader Mitch McConnell blasted Trump’s comment.

The Houston Chronicle first reported on the Texas state investigation after obtaining a series of internal reports. Texas investigators, led by Owens, began their own in-depth investigation of Trump University shortly after it opened shop in Texas in 2009.

Owens and other investigators went undercover and attended free Trump University “workshops” and described intense sales tactics, including instructors urging attendees to call their credit card company, ask them to raise their credit limit in order to purchase the $35,000 “Gold Elite” package and standing beside them as the attendees made the calls.

In a series of reports obtained by CNN, Owens detail the Texas fraud laws that Trump University allegedly violated and made his case for suing Trump directly. Investigators said they were seeking restitution for 267 Texans who bought the three-day Trump University course, the 39 people who bought the “Gold Elite” package and roughly 150 other Texans who bought other Trump University goods.

Restitution, they determined, amounted to about $2.6 million for the entire group – with lawyers fees and damages, they proposed settling for $5.4 million.

But suddenly, in May 2010, Abbott killed the investigation, Owens said.

David Morales, who was overseeing civil suits for the attorney general at the time said Abbott was not involved in the decision not to seek restitution or take the case to court. He called Owens comments “conjecture” and the release of the reports has spurred a separate fight, with allegations from the state that Owens wrongly released the reports – a charge he denies.

Morales called the investigation – and Trump University’s decision to fold shop in Texas – a success.

“By May 2010, Trump University had agreed to permanently suspend of all operations in Texas. That agreement to permanently and immediately leave Texas was, in my opinion, the most important element of resolving this investigation. It ensured that no further Texas citizens would be exposed to the company,” Morales wrote in a letter to the editor. He added that the decision not to sue left open the door for individual Texans to sue Trump.

“It did not preclude those consumers who felt they wanted a refund to demand it from Trump University or in court,” Morales added.