Since over the next few days it appears very likely I will be exposing yet another get-rich-quick creative real estate guru as a fraud and a criminal, I thought it a fitting lesson to explore the rise and downfall of one of the most famous gurus of the last 25 years, Russ Whitney.He was a feature of late night television through his infomercials for many years. I doubt there are few Americans who have never seen him at least once. I remember one night flipping through my TV and he literally was on almost every channel SIMULTANEOUSLY pitching his rather conventional brand of "Make a Million Dollars in Real Estate" home study courses and seminars.
I never believed his claims of how, as a slaughterhouse worker in upstate New York earning $5.00 per hour, he turned $1,000 into $4.7 million in 18 months. It made no sense to me then, and years later real estate journalist John T. Reed actually visited Whitney's hometown and conclusively proved it wasn't true. You can read his exhaustive analysis by going here.
But much of Whitney actually taught was not wrong or bad. His books, like BUILDING WEALTH or MILLIONAIRE REAL ESTATE MENTOR, offer investors lots of good advice. If you can find them at your local public library by all means read them.
The problem with Whitney was simple. All get-rich-quick creative real estate gurus have the same message which is inherently flawed.
You can get rich quick in real estate.
Sorry to break the bad news to you but it just isn't true.
You can't lose twenty pounds a week eating nothing but pizza and ice cream and taking no exercise. Just the same way, you can't make a fortune in real estate starting with nothing in an instant either.
This get-rich-quick wealth message is just what the target market of mostly lower middle class paycheck-to-paycheck workers who buy from these gurus want to hear. So this is how the home study courses, seminars, mentoring programs, and all the rest of the products and services are sold.
Whitney made the boldest statement I have ever seen by any get-rich-quick guru. It was unbelievable then, and just plain absurd now.
On the rear cover of his book MILLIONAIRE REAL ESTATE MENTOR he proclaims:
"You can create a net worth of $1 million or more in a year or less---even if you have nothing now."
Think about this for a moment. If you started with $500,000 you would have to earn 100% on that capital in just one year to get to $1 million. If you had $250,000 you would have to earn 400%. But Whitney claimed you could get to $1 million (or more!) starting from nothing in just one year.
Believable? No, of course not.
For most of the years between 2000 and 2007 Whitney ran a public company called Whitney Information Network that traded under the ticker symbol RUSS. He had a terrible reputation, was sued repeatedly by people, law enforcement agencies, and eventually ran into serious trouble with its investors.
He got into trouble for selling overpriced real estate to "big fish" customers in Costa Rica and Florida.
There were many allegations of security law violations.
Eventually Whitney was forced out of the very company that he started and bore his name.
Today, the company, now associated with get-rich-quick guru Robert Kiyosaki, is called Tigrent and trades under the ticker symbol TIGE. Whitney and his wife are suing Tigrent hoping to get back in the door, or at least get some money to go away.
I hope Whitney chooses a better lawyer than he did when he sued author John T. Reed years back. Whitney used the old SLAPP suit technique to shut Reed up about the number of customer complaints Whitney was receiving and it backfired badly on him. Whitney's attorney in these suits was none other than Scott Rothstein, who has just been convicted of running a $1 billion Ponzi scheme in Florida and is facing 100 years in prison.
None of this comes as any surprise to me. As I said yesterday in this blog you can't write fiction this bizarre. I've seen dozens of creative real estate gurus, major and minor, come and go over my nearly 30 years in the real estate business and one simple lesson is true.
Nearly every get-rich-quick creative real estate guru since 1980 has either gone bankrupt, been sent to prison, or is shut down by regulators. Some have even been murdered by their own customers.
The reason is obvious, beyond the fact that you can only sell a worthless snake oil product for so long before people take notice of this fact.
It takes a certain type of low personality to become a get-rich-quick real estate guru, a defect in character that allows you to look desperate people in the eye and smile like you really care, and then take from them not only what little money they have but also their dreams about a better life. It is wrong to suggest that ultimately this flaw catches up with them, because it was always with them. It's the reason that these gurus are not criminals in just one aspect of their lives but all of them.
Russ Whitney has left the real estate scene for good. I suspect few people, other than the salesmen who made a fortune selling his products at hotel ballrooms all across America or the TV executives that sold him air time, will miss him much.
I know another get-rich-quick creative real estate guru who is facing a very similar fate this very day. He's on the edge of a cliff, hanging on by his fingernails, screaming for dear life, God, someone, to come rescue him from the fate which he himself created through hubris and contempt. I know my choices are clear. I can silently walk on by and ignore his peril knowing eventually his fight against gravity is futile, or I can step on his fingers and watch him fall.
Robert J. Abalos, Esq.
