The lawsuit claims many of the wannabe moguls were unable to land even one real estate deal and were left far worse off than before the lessons, facing thousands of dollars in debt for the seminar program once billed as a top quality university with Trump's "hand-picked" instructors. Trump did not pick the university's instructors and had not created the curriculums for any of its courses, the lawsuit alleges.
"He's totally wrong. I looked at every resume. I met with some people. I didn't meet with everybody. It's not my main business," Trump said. "We had a wonderful school with a fantastic approval rating. If you go to the Wharton School of Finance or if you got to Harvard, they don't have a 98 percent approval rating."
Trump also had a problem with the timing of the lawsuit.
"Who ever heard of a government agency bringing a lawsuit on a Saturday afternoon? He's been looking into this thing for two years," trump said. "He brings a lawsuit on Saturday afternoon right after he meets with President Obama. I think maybe it's a mini-IRS."
Schneiderman addressed the allegations as another diversion by Trump and pointed to the "overwhelming" evidence in this case.
"You can't run a bait-and-switch defraud 5,000 people out of $40 million and then distract things by saying things like, 'Oh, this is a conspiracy between me and President Obama,' or 'I was soliciting money from people who had some affiliation with him. The case speaks for itself. The documentary evidence is overwhelming," the attorney general said on CNBC.
"We're not going to sit down and let him make false accusations and let him lie about what the case is about. This is a classic bait -and switch scheme. You have to sent a message: no matter how powerful people are, aggressive they are about suing people who sue them -- which is something they does frequently -- they're not above the law. One set of rules for everyone. That's an important message to send."
Trump said he had the opportunity to settle the suit but decided against it despite the bad publicity.
"I don't mind the bad publicity. Who gets more bad publicity than me anyways? I'll take this. No, I don't want to settle this," he said.
The Associated Press contributed to this report.