NEW YORK — Six years ago, Donald Trump stood before 5,000 people in a hotel theater in downtown Miami and informed them he had a recovery plan for the recession-battered nation — and for them.
His remedy: Join the sales team of a business that sold, among other things, specially tailored vitamins based on a user’s urine analysis. Anyone with drive, and $497 to pay for a special “FastStart” marketing kit, could begin raking it in. They would profit not just from their own sales of Trump-branded products, but from persuading other go-getters to start selling. Anyone they recruited would have to pass on a cut of their sales to them, and those recruits, in turn, could get a cut from their own recruits.
It was a multi-level marketing company, like Avon, Amway and Mary Kay.
“We’re all going to be successful together,” Trump declared enthusiastically about the business that had just been rechristened The Trump Network after he struck a licensing deal with the three men running it.
“This is going to be something that’s really amazing,” he said.
Less than a year later, some of the company’s biggest salespeople stopped getting paid. By 2012, Trump’s licensing contract ended and the owners sold the business. The Trump Network was no more.
Trump is famous for having built a business empire on appealing to the affluent, using their love of luxury to get them to stay at his high-end hotels, play on his seaside golf courses and buy multimillion-dollar condominiums in his soaring glass towers. The sales pitch: If you’ve got money, I can help you enjoy it.
In recent years, he’s also appealed to a far less affluent group in three businesses, using a different pitch: If you don’t have much money, follow me. I can help you succeed.
While Trump says these business deals were successful for him, many who plunked down money hoping to catapult into the ranks of the wealthy fell far short, leaving anger, regret and finger pointing.
Long before Trump’s mix of optimism, hyperbole and grand pronouncements proved a success on the presidential campaign trail, it exerted a powerful tug on middle-class folks looking to make it big.
When questioned By The Associated Press, Trump’s attorney, Alan Garten, said the vitamin company and a real estate school called Trump University were successes and that Trump had no ties beyond speaking engagements with a third company, a phone business called ACN. He complained the media highlight only those deals they think are dubious when in reality, Trump has a long, successful career.
THE VITAMIN COMPANY
Though the Trump Network was a disappointment, former top salesman Lenny Izzo still recalls fondly the thrill at learning Trump was backing it.
“The company went south, but it wasn’t because of Donald Trump,” said Izzo, who supports Trump’s election bid.
Others who bought into Trump’s vision aren’t as charitable.
“What he said on stage that night and what actually happened are two different things,” said former saleswoman Jenna Knudsen. She said she lost her house and car after the paychecks dried up.
Trump’s lawyer, Garten, said plenty of salespeople did “very well” and that, anyway, Trump’s role was limited to licensing his name.
Indeed, on The Trump Network’s website, down below the Trump family crest, there is a link titled “Disclaimer.” Amid a lengthy paragraph is this: “The Trump Network is not owned nor are any products sold over ‘The Trump Network’ developed or manufactured by Donald J. Trump or any entity owned or controlled by Donald J. Trump.”
TRUMP THE TEACHER
Trump University, a school offering his insights into getting rich in real estate at seminars, was different. Trump was a founder and owner, and he portrayed himself as taking an active role.
‘’My father did it, I did it,” went one ad, referring to the fortunes they made in real estate, “and now I’m ready to teach you how to do it.”
The closest most students got to the mogul was a life-sized cardboard cutout. A 2013 lawsuit from the New York attorney general and two class actions in California claim the three days of instructions were largely useless, and that students paying $1,495 to attend were misled. Worse, students at the seminars were told to max out their credit cards to pay tens of thousands dollars for additional “Elite” training that, the lawsuits claim, was also largely unhelpful.
“I wasted my entire life savings on Trump,” said former student Nelly Cunningham in an affidavit for the New York case. She added, “I feel like such a fool.”
Garten, Trump’s lawyer, sent the AP sworn statements from other students — “great learning experience,” led by “fantastic” teachers, wrote one — and described the dissatisfied ones as an insignificant minority.
The New York lawsuit is pending. Under pressure from regulators, the school had to drop “university” from its name in 2010. It stopped taking new students the same year.
TRUMP TOUTS PHONE COMPANY
Trump has also endorsed ACN, a provider of telephone and other services that uses a Trump Network-like system of salespeople recruiting other salespeople, each paying an “initial fee” of $499 to join. The North Carolina company has come under fire from regulators in Canada and Australia and two U.S. states, Montana and Maryland, accused of making false promises. The company has succeeded in getting the cases dismissed, save for one in Maryland, which is pending.
In 2010, Montana’s securities regulator claimed ACN ran an “illegal pyramid promotional scheme” — relying too heavily on fees from new salespeople to generate income — and issued a cease-and-desist order. Regulators dropped the charge after ACN agreed to refund money lost by salespeople and to improve training.
The next year, 2011, Trump featured the company on his TV show, “The Celebrity Apprentice.” But he never licensed his name to the company. His role was limited to promoting it, which he did so repeatedly. And in the past two years, he gave at least three speeches at ACN events, earning $1.35 million in fees, according to figures at the Federal Election Commission.
On “The Celebrity Apprentice,” Trump said he knew ACN “very well” and, in a video ad said he had done “a lot of research” to gain insight into how it has “stayed ahead of the pack.” In a Wall Street Journal article in August, he was quoted saying he was “not familiar” with what the company did or how it did it.
