Donald Trump is personally liable for operating a for-profit investment school without the required license, a New York judge ruled in a lawsuit brought by the New York Attorney General against the real estate entrepreneur.
New York state Supreme Court Justice Cynthia S. Kern said he was notified by the state in 2005 that his Trump Entrepreneur Initiative - known as Trump University until 2010 - was in violation of state education law.
"It is undisputed that Mr. Trump never complied with the licensing requirements," Kern wrote in a decision made public on Wednesday.
Damages will be determined later.
Jeffrey Goldman, an attorney for Trump, said the ruling was mistaken, but ultimately little if any damages would be awarded.
The decision came in an ongoing lawsuit filed last year by New York Attorney General Eric Schneiderman that accuses Trump of misleading more than 5,000 people who paid between $1,495 and $35,000 to learn Trump's real estate investment techniques.
A trial still must be held to determine whether Trump and the school defrauded students. The judge did toss out some claims and ruled that some evidence was beyond the statute of limitations.
Damien LaVera, a spokesman for Schneiderman, called the decision "an important victory" and said the office looks forward to proving the rest of the case at trial.
Goldman said "the heart of the attorney general's case has been eviscerated."
He said the judge ruled that the statute of limitations restricts claims to only the last six months the school was in existence.
The university ceased operation in late 2010, Goldman said.
The lawsuit sparked a bitter reaction from Trump, who called Schneiderman a publicity seeking "lightweight," attacked his "gross incompetence" and filed ethics complaints against him.
The case is People v. Trump Entrepreneur Initiative, New York state Supreme Court, New York County, No. 451463/2013.
(Reporting By Karen Freifeld. Editing by Andre Grenon)