Trump University

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Trump Entrepreneur Initiative
Privately held, unaccredited
Industry For Profit Education
Predecessor Trump University (name changed to The Trump Entrepreneur Initiative in June 2010)[1]
Founded 2004 (incorporated)
May 23, 2005; 11 years ago (2005-05-23) (launched)[2]
Founder Donald Trump
Headquarters New York City, United States
Website trumpinitiative.com
(registration required)

Trump University LLC (formerly the Trump Wealth Institute; later named Trump Entrepreneur Initiative LLC) was an American for-profit education company that ran a real estate training program from 2005 until 2010. (A separate organization, Trump Institute, was licensed by Trump University but not owned by the Trump Organization.) After multiple lawsuits, it is now defunct. It was founded by Donald Trump and his associates, Michael Sexton and Jonathan Spitalny, in 2004. The company offered courses in real estate, asset management, entrepreneurship, and wealth creation.[3]

The organization was not an accredited university or college. It did not confer college credit, grant degrees, or grade its students.[4] In 2011, the company became the subject of an inquiry by the New York Attorney General's office for illegal business practices that resulted in a lawsuit filed in 2013, which remains ongoing.[5][6][7][8]

Trump University is also subject to two ongoing class action lawsuits in federal court. The lawsuits center around allegations that Trump University defrauded its students by using misleading marketing practices and engaging in aggressive sales tactics. The company and the lawsuits against it have received renewed interest due to Trump's candidacy in the 2016 presidential election.

History[edit]

Michael Sexton created a business plan for a real-estate training program and presented it to Donald Trump looking to pay Trump a flat fee for the use of his name. Trump instead decided he wanted to be principal owner.[9]

Trump University was incorporated in 2004 by Trump, Sexton, and Spitalny, as a New York limited liability company.[10] Donald Trump owned 93% of the company.[11] On May 23, 2005, Trump University formally launched its education program.[2] At the opening presentation, Trump said: "If I had a choice of making lots of money or imparting lots of knowledge, I think I’d be as happy to impart knowledge as to make money".[12] The company's original business plan focused on online education, but quickly expanded to include live, in-person instruction as well. The focus of the instruction was real estate investing, with Trump claiming in advertisements, "I can turn anyone into a successful real estate investor, including you."[13] Typically the instruction began with an introductory seminar in rented space such as a hotel ballroom. At the introductory seminar, students were urged to sign up for additional classes, ranging from $1495 seminars to a $35,000 "Gold Elite" program.[13] Records produced indicate 7611 tickets in total were sold to customers attending courses.[14] Approximately 6000 of these tickets were for a $1,500 3-day course and 1000 tickets were for silver, gold or elite mentored courses ranging in price from $10,000 to $35,000.[5][14]

Trump claimed that students gave 98% favorable reviews to the program.[15] But according to some former students, Trump University employees pressured students to offer favorable reviews, told them they had to fill out the forms in order to obtain graduation certificates, and did not undertake procedures often used to ensure that surveys were filled out objectively.[16]

In an infomercial, Trump said he "handpicked" Trump University's instructors. He testified in a 2012 deposition, however, that he never selected the instructors for the program.[17] According to Michael Sexton, Trump signed off on the school's advertisements.[18]

For a time in 2008 it used the name Trump Wealth Institute.[19] In June 2010, "Trump University" changed its name to "The Trump Entrepreneur Initiative."[1] It largely ceased operations in 2010.[12]

The Trump Institute was a separate business. It was licensed by Trump University, but Trump University did not own any part of it.[20] It was owned and operated by Irene and Mike Milin of Boca Raton, Florida.[21] It offered real estate seminars from 2006 to 2009, at which point the licensing agreement expired and was not renewed.[20] Trump himself was not involved in the operation of the Trump Institute, but he recorded a broadcast infomercial promoting it.[22]

Allegations of impropriety and lawsuits[edit]

External video
Donald Trump by Gage Skidmore 2.jpg
Is Trump University a fraud?, 5:28, CNN, September 29, 2015
Trump faces lawsuits from former Trump University students, 5:47, CBS This Morning, September 24, 2015
Prosecutor: Trump lawsuit no stunt, 3:55, CNN, August 26, 2013
Trump, Rubio spar over lawsuit against Trump University, 4:53, Fox News Channel, Mar. 03, 2016

Three lawsuits have been filed and are pending that assert Trump University engaged in a variety of illegal business practices that range from false claims to racketeering. Two are federal class-action lawsuits: one against Trump University and its managers, including Donald Trump, and one against Donald Trump personally. A third case is in New York State court.[23]

New York v. Trump Entrepreneur Initiative LLC[edit]

In 2005, the New York State Department of Education sent Trump, Sexton, and Trump University a letter saying that they were violating state law by using the word "university" when in fact Trump University was not actually chartered as one and did not have the required license to offer live instruction or training.[10] Although Sexton promised that the organization would stop instructing students in New York State, the New York Attorney General alleged that such instruction continued.[10]

A March 2010 letter sent by the Deputy Commissioner for Higher Education, Joseph Frey, to Trump stated: "Use of the word 'university' by your corporation is misleading and violates New York Education Law and the Rules of the Board of Regents."[10][24] In June 2010, "Trump University" changed its name to "The Trump Entrepreneur Initiative."[1]

On August 24, 2013, the State of New York filed a $40 million civil suit against Trump University alleging illegal business practices and false claims made by the company.[25][26] Donald Trump denied the allegations, claiming the school had a 98% approval rating, and said New York Attorney General Eric Schneiderman was "a political hack looking to get publicity".[27] Trump filed a complaint alleging that the state Attorney General's investigation was accompanied by a campaign donation shakedown; the complaint was investigated by a New York ethics board and dismissed in August 2015.[28]

Schneiderman described Trump University as a bait-and-switch scheme and pointed to the fact that the organization was not a university.[29] He accused Trump of misleading more than 5,000 people to pay up to $35,000 to learn his real estate investment techniques.[30]

In October 2014, a New York judge found Trump personally liable for operating the company without the required business license.[30]

Lawsuits in federal court[edit]

Low v. Trump University, LLC[edit]

Tarla Makaeff, who paid nearly $60,000 to Trump University in 2008, brought a class action lawsuit against Trump University on April 30, 2010, in U.S. District Court for Southern California.[31][32] The suit, Makaeff v. Trump University, LLC, sought refunds for Makaeff and other former clients of Trump University, as well as punitive damages for breach of contract, fraud, negligent misrepresentation and bad faith. It did not originally name Donald Trump as a defendant,[33] but did so in a later amended complaint.[34] In February 2014, U.S. District Court Judge Gonzalo P. Curiel denied recognition to the nationwide class the plaintiffs had requested and recognized the suit as class-action on the part of Trump University clients in three states–California, Florida, and New York–based on specific alleged violations of the consumer protection laws of those states. He also narrowed the case to five of the plaintiffs' original fourteen charges.[35]

On May 26, 2010, Trump University filed a counterclaim alleging Makaeff had made defamatory statements about Trump University, "including many completely spurious accusations of actual crimes", that had caused Trump University losses of more than $1 million. On June 30, 2010, Makaeff countered that Trump University's defamation claim was an attempt to intimidate her, known as a SLAPP suit (a strategic lawsuit against public participation), and that because Trump University is a "public figure" the defamation claim required proof that she "acted with actual malice" when speaking and writing about Trump University. By invoking California's anti-SLAPP statute, Makaeff triggered procedures that speeded consideration of the defamation claim without further discovery.[36]

On August 23, 2010, U.S. District Judge Irma E. Gonzalez ruled that Trump University was not a public figure, did not need to show malice on Makaeff's part, and could proceed with its defamation claim. Makaeff appealed to the Ninth Circuit Court of Appeals, where a three-judge panel ruled unanimously decided on April 17, 2013, that Trump University is a "limited-purpose public figure" and that Trump University must demonstrate malice on Makaeff's part to establish defamation; it returned the case to the district court to consider the defamation claim against that standard.[37][a] After additional briefing, U.S. District Judge Gonzalo P. Curiel ruled in Makaeff's favor on June 16, 2014, and dismissed the defamation claim.[38] Makaeff then, at the court's invitation, presented evidence of her legal costs and fees in connection with the defamation litigation. She asked for $1.3 million and Judge Curiel on April 20, 2015, ordered Trump University to reimburse Makaeff $798,000 in legal fees and costs.[39]

On March 21, 2016, over objections from the attorneys for Trump University, Judge Curiel allowed Makaeff to withdraw as the lead plaintiff,[b] naming Sonny Low[c] in her stead, resulting in the case title Low v. Trump University, LLC.[41]

Cohen v. Trump[edit]

On October 18, 2013, California businessman Art Cohen filed a civil lawsuit, Cohen v. Trump, in U.S. District Court for Southern California, as a class action on behalf of consumers throughout the United States who purchased services known as "Live Events" from Trump University after January 1, 2007. It alleged violations of the RICO statute, essentially a scheme to defraud. The suit named Donald Trump as the sole defendant and sought restitution as well as damages, including punitive, and treble damages.[42] In an order dated October 24, 2014, U.S. District Judge Gonzalo P. Curiel certified the class proposed by the plaintiff and ruled that Cohen had presented enough evidence to allow the lawsuit to proceed.[43][44] Alan Garten, general counsel for the Trump Organization, said that Trump University would appeal Curiel's ruling, which he said showed a "manifest disregard for the law". In October 2015, Garten also said that Trump would ask Curiel to recuse himself because of his "animosity toward Mr. Trump and his views".[45] Trump's lawyers have not filed any motion to recuse, however, and according to legal experts, such a motion would lack legal merit and possibly be considered frivolous.[46][47]

On May 27, 2016, Curiel granted a request by the Washington Post for public release of certain documents that had been filed in the case. He noted they were "routine" and many already publicly available.[48][49] The released information included "playbooks" documenting instructions for employees to use a hard-sell approach, as well as depositions in which former employees said that Trump University had defrauded or lied to its students.[11][50][51][52] Curiel has scheduled a hearing in the case for July 22, 2016.[53]

Trump's comments about Curiel[edit]

During campaign speeches, Trump has repeatedly called the judge a "hater" and described him as "Spanish" or "Mexican"[54] (Curiel was born in Indiana to parents who had immigrated from Mexico).[55] Trump has said that Curiel should recuse himself, although his attorneys say they do not plan to ask for the judge to be removed from the case.[56][57][58] Curiel's only comment has been to write in a procedural ruling that Trump has "placed the integrity of these court proceedings at issue".[49][59] Trump's references to Curiel's ethnicity, as well as his comments that "someone ought to look into" the judge, have alarmed legal experts, who have expressed concern about the effects of the comments on judicial independence.[60][61]

On June 7, 2016 Trump issued a lengthy statement saying that his criticism of the judge had been "misconstrued" and that his concerns about Curiel's impartiality were not based upon ethnicity alone, but also upon rulings in the case.[62][63]

Other investigations[edit]

In 2010, the office of Texas Attorney General Greg Abbott investigated Trump University. No lawsuit was brought, but after exchanging communications with investigators that included requests from the investigators for customer lists and internal documents, Trump University closed its operations in the state. These had included newspaper advertising, free presentations, and three-day seminars.[64]

Issue in the 2016 presidential election campaign[edit]

During the Republican presidential primaries of 2016, opponents of Trump's candidacy used Trump University to attack him. Mitt Romney said in early March: "Donald Trump is a phony, a fraud. His promises are as worthless as a degree from Trump University."[65][66] Senators Ted Cruz and Marco Rubio raised the subject during televised debates in February and March.[67][68] One debate moderator, Megyn Kelly of Fox News, pursued the issue at length.[68][69] Trump responded that Trump University was "a small business" and student evaluations were overwhelmingly positive. He said lawsuits were a routine part of business and that he wins most of them. Of one of the class action suits he said: "It's something I could have settled many times. I could settle it right now for very little money, but I don't want to do it out of principle."[67] Hillary Clinton has used the Trump University allegations against Trump in speeches and campaign ads.[70]

In popular culture[edit]

Trump University was the subject of a week-long series in the comic strip Doonesbury in June 2005.[71][72]

See also[edit]

Notes[edit]

  1. ^ The Ninth Circuit noted: "As the recent Ponzi-scheme scandals involving onetime financial luminaries like Bernard Madoff and Allen Stanford demonstrate, victims of con artists often sing the praises of their victimizers until the moment they realize they have been fleeced."[8]
  2. ^ Makaeff sought to withdraw for financial and health reasons and her attorneys cited the emotional affect of public exposure: "She's now been derided and called out by name on the campaign trail, on Twitter and on the GOP stage." Attorneys for Trump University objected that Makaeff's deposition was central to their defense: "She is the centerpiece to this litigation."[40]
  3. ^ According a document filed in the case, as of September 26, 2012, Sonny Low was a "71-year old senior citizen ... [who] retired in 2005 as a U.S. Foreign Service Officer who served our country for 34 years".[34]

References[edit]

  1. ^ a b c "Trump University: No Longer a University?". The Huffington Post. April 19, 2010. 
  2. ^ a b Hindo, Brian (May 23, 2005). "Trump University: You're Wired!". Bloomberg Markets. Retrieved April 18, 2012. 
  3. ^ Lawler, David (March 1, 2016). "Trump University suit revived after ruling by New York court". The Daily Telegraph. 
  4. ^ Levine, Greg (May 23, 2005). "Trump University Founded For Student 'Customers'". Forbes. Retrieved April 18, 2012.
  5. ^ a b (registration required)Barbaro, Michael (May 19, 2011). "New York Attorney General Is Investigating Trump's For-Profit School". New York Times. Retrieved June 7, 2016. 
  6. ^ Howard, Caroline (August 27, 2013). "Donald Trump University Lawsuit Is Lesson For All For-Profit Colleges". Forbes. 
  7. ^ Freifeld, Karen (October 16, 2014). "New York judge finds Donald Trump liable for unlicensed school". Reuters. 
  8. ^ a b McCoy, Kevin (August 26, 2013). "Trump faces two-front legal fight over 'university'". USA Today. 
  9. ^ Horwitz, Jeff; BieSecker, Michael (June 2, 2016). "Trump University model: Sell hard, demand to see a warrant". Associated Press. Retrieved June 7, 2016. 
  10. ^ a b c d David Halperin, NY Court Refuses to Dismiss Trump University Case, Describes Fraud Allegations, Huffington Post (March 3, 2016).
  11. ^ a b Barbaro, Michael; Eder, Steve (May 31, 2016). "Former Trump University Workers Call the School a 'Lie' and a 'Scheme' in Testimony". New York Times. 
  12. ^ a b Hamburger, Tom; Helderman, Roslind S.; Bennett, Dalton (June 4, 2016). "Donald Trump said 'university' was all about education. Actually, its goal was: 'Sell, sell, sell!'". Washington Post. Retrieved June 7, 2016. 
  13. ^ a b Cohan, William D. "Big Hair on Campus: Did Donald Trump Defraud Thousands of Real-Estate Students?". Vanity Fair. Retrieved 2016-03-06. 
  14. ^ a b Brill, Steven (November 5, 2015). "What the Legal Battle Over Trump University Reveals About Its Founder". Time. Retrieved June 7, 2016. 
  15. ^ "Home page". 98percentapproval.com. Retrieved 5 June 2016. 
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  17. ^ Karen Freifeld (February 1, 2016). "Trump University swindled me, says Iowa retiree". American Media Institute. Retrieved February 1, 2016. 
  18. ^ Hamburger, Tom; Helderman, Rosalind S. (May 31, 2016). "Trump involved in crafting controversial Trump University ads, executive testified". Washington Post. Retrieved June 1, 2016. 
  19. ^ Gitell, Seth (March 8, 2016). "I Survived Trump University". Politico. Retrieved June 7, 2016. 
  20. ^ a b Joe Mullin, Jonathan Kaminsky (29 April 2016). "Trump University and the art of the get-rich seminar". Ars Technica. Retrieved 1 July 2016. 
  21. ^ Leary, Alex (June 30, 2016). "In Trump Institute, Donald Trump had Florida partners with a record of fraud". Tampa Bay Times. Retrieved 5 July 2016. 
  22. ^ Jonathan Martin (June 29, 2016). "Trump Institute Offered Get-Rich Schemes With Plagiarized Lessons". The New York Times. Retrieved June 30, 2016. 
  23. ^ Ye Hee Lee, Michelle (February 27, 2016). "Donald Trump’s misleading claim that he’s 'won most of' lawsuits over Trump University". Washington Post. Retrieved February 27, 2016. 
  24. ^ Douglas Feiden, State educrats give failing grade to Donald Trump's 'misleading' Trump University, Daily News (New York) (April 15, 2010).
  25. ^ "Trump University Made False Claims, Lawsuit Says". The New York Times. August 24, 2013. Retrieved August 24, 2013. 
  26. ^ http://online.wsj.com/public/resources/documents/trump.pdf, accessed July 13, 2016.
  27. ^ Gormley, Michael (August 26, 2013). "Donald Trump defends his university, launches Twitter war against 'dopey, stupid' AG behind $40M suit". National Post. Associated Press. Retrieved June 8, 2016. 
  28. ^ Virtanen, Michael (August 31, 2015). "NY ethics board drops Trump's complaint about attorney general during university investigation". U.S. News & World Report. Associated Press. Retrieved August 31, 2015. 
  29. ^ "Prosecutor: Trump lawsuit no stunt", CNN (August 26, 2013).
  30. ^ a b Curran, Eddie (October 16, 2014). "New York judge finds Donald Trump liable for unlicensed school". Reuters. Retrieved February 20, 2015. 
  31. ^ Hernandez, Sergio (May 4, 2010). "Donald Trump's Scam School Gets Sued". gawker.com. Retrieved June 2, 2016. 
  32. ^ Hernandez, Sergio (May 4, 2010). "Tarla Makaeff v. Trump University". gawker.com. Retrieved June 2, 2016.  Includes the text of the filing.
  33. ^ Dinzeo, Maria (May 4, 2010). "Class Claims It Was Rolled by Trump U". Courthouse News Service. Retrieved June 2, 2016. 
  34. ^ a b "Makaeff v. Trimp University Complaint" (PDF). Trump University Litigation. September 26, 2012. Retrieved June 3, 2016. 
  35. ^ Bauder, Don (March 1, 2014). "The Donald trumped in federal court here". San Diego Reader. Retrieved June 3, 2016. 
  36. ^ "of Civil Procedure – Section 425.16 California’s Anti-SLAPP Law (parts f and g)". California anti-SLAPP Project. 
  37. ^ Hull, Tim (April 17, 2013). "Trump University Trips With Defamation Claim". Courthouse News Service. Retrieved June 2, 2016. 
  38. ^ "Makaeff v. Trump University, LLC". California anti-SLAPP Project. U.S. District Court for the Southern District of California. June 17, 2014.  Section: II. Procedural History
  39. ^ Kearn, Rebekah (April 20, 2015). "$798,000 Award Against Trump University". Courthouse News Service. Retrieved June 2, 2016. 
  40. ^ Bruno, Bianca (March 11, 2016). "Trump U. Plaintiff Wants Out of Media Circus". Courthouse News Service. Retrieved June 7, 2016. 
  41. ^ "Judge grants woman's request to quit Trump University suit". Chicago Tribune. March 22, 2016. Retrieved June 3, 2016. 
  42. ^ "Cohen v. Trump, Complaint". United States District Court for the Southern District of California. October 18, 2013. 
  43. ^ Fuchs, Eric (October 29, 2014). "Judge Hands Down Potentially Crushing Ruling Against Donald Trump In Racketeering Lawsuit". Business Insider. Retrieved June 7, 2016. 
  44. ^ Warmerdam, Elizabeth (October 29, 2014). "Trump Must Answer Students in Fed Court". Courthouse News Service. Retrieved May 31, 2016. 
  45. ^ Berr, Jonathan (October 31, 2014). "Lawsuit accuses Donald Trump of deceiving students". CBS MoneyWatch. Retrieved June 7, 2016. 
  46. ^ Frankel, Alison (June 6, 2016). "Why Trump lawyers won’t ask Trump University judge to step aside". Reuters. 
  47. ^ Steven Lubet and Charles Gardner Geyh (June 6, 2016). "Why Isn't Trump Using the Law to Back Up His Mouth?". New Republic. 
  48. ^ "Cohen v. Trump, Order Granting Motion of Non-Party Press Organization for Limited Purpose Intervention and Order Unsealing Court Records". Scribd.com. United States District Court for the Southern District of California. May 27, 2016. 
  49. ^ a b Hamburger, Tom (May 28, 2016). "Judge bashed by Trump orders release of company records". Washington Post. Retrieved May 30, 2016. 
  50. ^ Montenaro, Domenico (June 1, 2016). "Hard Sell: The Potential Political Consequences Of The Trump University Documents". NPR. Retrieved June 2, 2016. 
  51. ^ "Judge Orders Documents Unsealed in Trump University Lawsuit". New York Times. Reuters. May 30, 2016. Retrieved June 2, 2016. 
  52. ^ Hamburger, Tom (May 28, 2016). "Judge bashed by Trump orders release of company records". Washington Post. Retrieved June 3, 2016. 
  53. ^ Gerstein, Josh (May 6, 2016). "Judge delays Trump University trial". Politico. Retrieved June 7, 2016. 
  54. ^ King, Robert (February 27, 2016). "Trump blames legal woes on 'Spanish' judge". Fox News. Retrieved February 27, 2016. 
  55. ^ Weiner, Tim. "New Web of Trust Topples a Mighty Mexican Cartel". New York Times (New York Times). Retrieved June 1, 2016. 
  56. ^ "Trial date set in Trump University lawsuit". CBS News. May 6, 2016. Retrieved May 28, 2016. 
  57. ^ East, Kristen (May 28, 2016). "Trump attacks 'Mexican' judge in Trump U lawsuit". Politico. Retrieved May 28, 2016. 
  58. ^ Finnegan, Michael (May 27, 2016). "Trumps trashes judge overseeing Trump University case, says it's fine that he's Mexican". Los Angeles Times. Retrieved May 29, 2016. 
  59. ^ Epstein, Reid J. (May 27, 2016). "Trump Attacks Federal Judge in Trump U Case". Wall Street Journal. Retrieved 5 June 2016. 
  60. ^ DelReal, Jose A.; Zezima, Katie (June 1, 2016). "Trump's personal, racially tinged attacks on federal judge alarm legal experts". Washington Post. 
  61. ^ Kendall, Brent (June 2, 2016). "Donald Trump Keeps Up Attacks on Judge in Trump University Case". Wall Street Journal. Retrieved June 3, 2016. In an interview, Mr. Trump said U.S. District Judge Gonzalo Curiel had 'an absolute conflict' in presiding over the litigation given that he was 'of Mexican heritage' and a member of a Latino lawyers' association. 
  62. ^ Jackson, David (June 7, 2016). "Trump says judge comments 'misconstrued' amid GOP uprising". USA Today. Retrieved June 8, 2016. I do not intend to comment on this matter any further 
  63. ^ "Donald Trump’s Statement on Trump University", New York Times (June 7, 2016). This includes the full text of the Trump statement.
  64. ^ Svitek, Patrick (June 2, 2016). "In Texas, Trump U Shut Down After State Scrutiny". Texas Tribune. Retrieved June 6, 2016. "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," responded Abbott spokesman Matt Hirsch. 
  65. ^ "Transcript of Mitt Romney's Speech on Donald Trump". New York Times. March 3, 2016. Retrieved June 3, 2016. 
  66. ^ Kessler, Glenn (February 29, 2016). "A trio of truthful attack ads about Trump University". Washington Post. Retrieved June 3, 2016. 
  67. ^ a b "Transcript of the Republican Presidential Debate in Houston". New York Times. February 25, 2016. Retrieved June 5, 2016. 
  68. ^ a b "Transcript of the Republican Presidential Debate in Detroit". New York Times. March 4, 2016. Retrieved June 5, 2016. Rubio: 'There are people that borrow $36,000 to go to Trump University, and they're suing him now. And you know what they got? They got to take a picture with a cardboard cutout of Donald Trump.' 
  69. ^ Farhi, Paul (March 4, 2016). "Megyn Kelly schools Trump on Trump U., and his flip-flops". Washington Post. Retrieved 5 June 2016. 
  70. ^ Bradner, Eric; Merica, Dan (June 1, 2016). "Clinton blasts Trump University, calls GOP rival a 'fraud'". CNN. Retrieved June 5, 2016. 
  71. ^ Eisenstat, Adam (February 10, 2016). "I was a Donald Trump ghostwriter. Here's what I learned about the Donald — and his fans". Vox. 
  72. ^ "GB Trudeau's Doonesbury". Washington Post Archive. June 7, 2005. Retrieved June 1, 2016. 

External links[edit]