I have been trying this for hours. Some say its possible to pick pocket the money back from trainers but I have had zero success. What is required to do this? I'm a sneak type char, level38.

Someone said that you need to either freeze them with the Ice form shout or paralyze them in order for the pickpocketing to succeed.

Yes, freeze them with Ice Form shout. Then when they start to thaw, pickpocket them. And the best thing is, they don't get aggro'd or anything.