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The main way Russ Whitney makes money is by persuading a group of people to go to a hotel meeting room. Once you are there, his extremely skilled, highly paid ($450,000 to $600,000 a year Whitney claims and others corroborate) salesmen, persuade you to sign up for an expensive seminar. There is an extreme danger that you will waste thousands of dollars of your money and dozens of hours of your time if you attend that “free training” unprepared. To avoid that fate, read on.

Closed doors

Normally, when you attend a meeting at a hotel, you register outside the meeting room then go in, pick a seat, and sit down to await the program. That is the way it was when I did seminars. No other approach occurred to me. Russ Whitney, however, is a whole different breed of guru.

When you arrive at Russ Whitney’s “free training,” you will be deliberately kept out in the hallway. I have heard that they often start an hour or more late. There is no excuse for that. Apparently it is some sort of manipulation tactic.

The meeting room doors will be closed. You will not be allowed into the meeting room.

Why is this, you may wonder. One Whitney attendee I spoke to said he suspected Whitney was trying to make it seem like Whitney’s programs were extremely popular by deliberately choosing a meeting room that was too small. He then wandered around the meeting-room area of the hotel in question to see if all the bigger meeting rooms were taken that evening. As he suspected, they were not. Whitney had indeed rented a smaller meeting room than the number of people trying to get into the “free training” warranted.

Would you like a full confession from Whitney himself that he was doing that? Not a problem. Turn to Step 9, page 3 of his Mortgage Payoff Acceleration Program. There you will read how to set up seminars to sell MPAP, and you will read how Whitney used a seminar to sell you. It says:

Seating area

One of the most important calls you will make is the number of chairs you set up. It has a major psychological impact. If you fully expect 75 people, set for 65 and have 15 extra chairs available in case. If your room looks like it’s only half occupied, it sends a subconscious signal that maybe what you are offering isn’t that good or important. Conversely, if your room appears packed, it sends the opposite message. People tend to be followers: “I told you this was an important seminar.”

At that point a fast head count is made. If it appears you are not going to attract as many participants as hoped for, then chairs can be taken out of the room without the attendees seeing it done.

I am going to add this to my Real Estate B.S. Artist Detection Checklist. What a phony! He can’t even let you sit down in a meeting room without trying to run some kind of con on you.

You may want to amuse yourself by opening the doors early and watching Whitney’s toadies freak out.

A guy who attended the Cherry Hill, NJ free training on 3/4/03 said they were still playing the game with the closed doors. Ditto a guy who attended in Salt Lake City on 3/13/03.

Fast talking

A number of people have complained that the speakers at the “free training” talk real fast and put up slides so fast that you cannot copy them. The Salt Lake attendee said the speaker claimed to have been a former NHL hockey player. Here’s what he said about it.

“When he started his presentation, I was shocked by his presentation style. It was like a Marine sergeant verbally battering new recruits at boot camp. He spoke very loud and fast and used an intimidating Marine sergeant style. He would use a high-pitched inflection at the end of his sentences like he was yelling at you. It was a very intimidating and threatening style. The presentation was basically a high-pressure coercion style presentation to get you to sign up for a $1,590 three day ‘training’ course.”

Another guy said this speaker talked so fast that it reminded him of the disclaimers and disclosures at the end of many radio commercials like “memberFDICcertainrestrictionsapply” or “voidwhereprohibitedyoumustbe18yearsoldtoenter.” The guy spoke so fast the attendee could not understand his last name.

What is the price really?

Whitney’s speakers and salespeople tell you that you have to pay $4,450 or some similar number normally, but if you buy right now, the price is just $1,590. In some cases, the price cut from $4,450 to $1,590 is called a “scholarship” and can only be obtained by the first X number of people who go to the back of the room and sign up—where X appears to be 20% of whatever number of people happen to be in the room. I remember reading somewhere that escapes my memory at present that Whitney was charging that same $1,590 years ago for seminars. Apparently he believes it to be the magic number that extracts the maximum amount of money out of the audience.

But is $4,450 a price that anyone pays or just a lie to make the $1,590 real price sound like a bargain? In other words, is it a misrepresentation, fraud?

On page 18 of the Form S-1 that Whitney Information Network, Inc. filed with the Securities and Exchange Commission on 2/12/03, they said, “Tuition ranges from approximately $3,000 to $32,000 per course of study.” They also say that 90% of their revenue comes from the three-day real estate course sold at the “free training.” So it would appear that the statement in the Form S-1 is false, which is illegal.

In the U.K., the fake price is 3,000 pounds and the tonight-only price is 1,200 pounds.

A former Whitney employee told me their Real Estate Training Academy has long been referred to by Whitney employees as “the 1590” as in, “I have to work back of the room at the 1590 in Miami this weekend.”

In late 2003 I heard that Whitney had finally raised this price. I have heard amounts of $1,690, $1,790, and $1,990. If these reports are true, I suspect that he is trying to get away from the price I said because I said it and/or he is experimenting with new prices to see if he can get more. Pricing get-rich-quick seminars is like what Jean Baptiste Colbert once said about taxing: “The art of taxation consists of so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.” In raising his prices, Whitney apparently thinks he can get more “feathers” without much more “hissing.”

‘Only room for seven more at the next paid seminar’

Another ploy that Whitney’s people apparently use is to tell the “free training” audience that they only have room for seven more at the next paid seminar. I have heard that number from several attendees. It probably is a percentage of the number of people in the room—apparently around 20%. Some other reports indicate that it is around seven to eleven no matter how big the crowd.

Indeed, the guy who told me about the 3/13/03 Salt Lake City “free training” said that they offered “scholarships” to the first eleven people to sign up, which was, indeed, 20% of that audience size. In that seminar, ten people did indeed sign up. (The “scholarships” were simply price cuts that lowered the fake $4,000+ price to the normal $1,590.)

I surmise that Whitney has figured out that his normal kill ratio is about 15% of an audience. So he sets a number that is around 20% of the “free training” audience size as the “limit” of how many can sign up for the next paid seminar in that area. This is a ploy to push wavering people into signing before they “lose out.” A guy who called me said he and his wife were told they were the last two being allowed to sign up, which they did. Later, the speaker announced that they had two more slots. The guy who called me could not figure out where the two more slots came from.

Think about this, folks. Each sign-up pays $1,590. If you were Whitney, would you turn away someone who was offering you $1,590 to sit in a room while one of your speakers made a speech? What possible reason could anyone have for doing that?

I used to do seminars. I had nine people at the smallest (Don’t schedule a seminar in Detroit) and 80+ at the biggest (San Francisco). Sometimes, the room I scheduled was too small. As the sign-ups came in, I would call the hotel and tell them the revised number. They would invariably find me a bigger meeting room to accommodate the larger-than-expected audience.

At the nine-person seminar, I acted as my own registration person. With larger audiences, I hired a temp. When the audience was larger still, I hired two temps. With small audiences, I allowed audience members to ask questions whenever they wanted. With larger audiences, I told them to write the questions down or to wait until a special question period.

If I were giving instruction on golf or weight lifting or something like that, I would have to limit the class size because of the need to give each student personal attention. But a lecture can be given to almost any size audience with minor changes in registration staffing, raising the projector screen, speaking from an elevated stage, and so forth. I spoke to 1,500 in the SuperDome in New Orleans at the National Apartment Association convention once.

In other words, I don’t believe there is only room for seven more at the next paid seminar. I think there’s room for as many as sign up. If more sign up than the fire marshal will allow in the room, they’ll schedule another session or a second hotel.

‘The first seven’

The number seven also comes up with regard to Whitney’s salespeople offering a special bonus for the first seven who go to the back of the room and sign up. I believe it was an MPAP course or some such that they claimed was “worth” $995. Nowadays, you can find out what it’s really worth by seeing what it is selling for on eBay. My Cherry Hill correspondent says it’s $30 bucks on eBay. He also said they did a special deal for the first nine to the back of the room. As I said above, I suspect the number they pick is a percentage of the number in the room. Furthermore, he said that later they offered the same deal to more than the first nine.

Pump-priming shills?

Another couple of attendees said they were suspicious of a couple of attendees who signed up for the paid seminar. He thought they might be shills planted by Whitney—not real students. What would the purpose of such folks be? I suspect many attendees might decide they want to sign up for the paid seminar, but are reluctant to be the first or, worse, the only, attendees who sign up. By planting shills in the room to sign up as if they were normal paying customers, you eliminate both the problem of being first and the problem of being the only sign up. I may be getting beyond reality here—although with all the other tricks that have been confirmed by multiple people or Whitney himself, who can blame me? This attendee was just suspicious. I really need an insider to confirm this.

The Cherry Hill guy saw no one who seemed to be a shill.

A person who said he was a former Whitney employee told me he and others were paid $50 cash to attend Whitney seminars in Tampa and other Florida locations to fill out the audience.

‘Peppy music’

Whitney’s lackeys are ordered to play “peppy music” during registration and prior to the speaker beginning. (Step 9, Page 3 of the MPAP manual) This corroborates the use of phrases like “pep rally” and “cheerleaders” used by many attendees to describe what happens at the “free training.”

Whitney is big on intellectual property rights. The attorney who signed the papers suing me has a masters in intellectual property law. Trademark infringement, one of the things he sued me over, is an intellectual-property matter.

So is copyright, as in the copyright to the “peppy music Whitney’s people are playing. Has he obtained the rights to play that music for that purpose? Is he paying royalties to the composers and recording artists who performed the music in question? Let’s find out. The fact that Whitney makes no mention of the copyright issue in his MPAP manual suggests that either he is oblivious to the intellectual-property rights of the music creators, or he feels that he and his subordinates are entitled to violate those rights.

Please note the tune(s) and performing artist(s) of the “peppy music” if you attend one of Whitney’s “free trainings” or paid seminars and send them to me. I will also ask about it in depositions of Whitney. And I will contact ASCAP to report Whitney’s use of the music in question. ASCAP is the American Society of Composers, Authors, and Publishers (They have many locations. One is in Miami at 420 Lincoln Road, Suite 385, Miami Beach, FL 33139 305-673-3446 fax 305-673-2446)

A man I have been doing publishing business with for years used to be the drummer for the band Norman Greenbaum. Their biggest hit was Spirit in the Sky. A few years back, Chrysler started using that song in their commercials. My friend contacted ASCAP to ask where his royalties were. They were in an ASCAP escrow account. Chrysler had been unable to find the band members, but being a reputable firm, they contacted ASCAP and paid into the escrow.

Did you ever wonder why chain restaurant waiters sing such sappy songs when celebrating a customer’s birthday? Why don’t they just sing the ubiquitous “Happy Birthday to You” song that everyone sings at private parties? Because it is copyrighted and they will get a bill from ASCAP if they use it. Even kids who put on plays in elementary, junior high, and high schools have to pay royalties on the music they use.

A woman who says she was fired by Whitney says the “peppy” song Whitney tells his speakers to use is called “I wanna be rich.” One of my best friends, Dick Steiner, is a professional magician as well as a music expert. I asked him about “I wanna be rich.” He says it was a #2 hit for the group Calloway in 1990. The group consists of brothers Reggie and Vincent Calloway. It’s on the Solar label and is Solar74005. Is Whitney really using this song? If so, is he paying them royalties? I’ll find out.

A number of people have told me Whitney is extremely cheap. If that’s true, the “peppy” music future “free training” attendees hear may be a recording of Russ Whitney playing Yankee Doodle Dandy on a kazoo.

A recent attendee told me they were now using a video of an infomercial in the hallway instead of peppy music. The Cherry Hill guy said they did nothing in the hall, but had the video going in the meeting room before they started.

A U.K. guy who took the “free training” there in 3/03 said the “peppy music” was a Beach Boys CD circa 1966.

In a public statement in July of 2003, Whitney said he made proper arrangements and paid all the royalties. I cannot confirm that. Also, he failed to mention the need to do that when he urged readers to play peppy music at their seminars to sell his bi-weekly mortgage program.

Email from skeptical hockey fan who attended

I thought you might appreciate (or be amused by?) some information about Whitney's latest free seminar in Oak Brook, IL. I was there this morning, and although Whitney himself did not conduct the session, I did get the supposed ex-NHL hockey star you mentioned on your site. Talked way too fast, never smiled, and basically left me with a feeling of distrust(Whitney's devil-like grin on the obnoxious posters in the background may also have had something to do with it).

Imagine my surprise when this "ex-NHL star" told us that he had played hockey while he attended Cornell University! He probably didn't suspect he had a current Cornell University student and rabid hockey fan in today's audience. Of course, I went up to him after the presentation to chat with this Cornell "alum." I told him that I am currently enrolled at Cornell and asked him what school he had attened. He blurted out, "Ashton." There is no such school at Cornell. He then went on to say, "You know...business, medical." I still had a blank stare on my face, so he went on..."Well, they probably changed it since I was there." Right.

I'm a university tour guide and was sure that of our seven colleges, none had ever carried a name. They were simply the "School of Industrial and Labor Relations" or the "College of Arts and Sciences," etc. I placed a quick call to a fellow tour guide who was working at the information desk at Cornell that day, and asked him to check up on that. No "Ashton" in Cornell history.

I must have made myself a nuisance. After the presentation, as I was talking to other seminar audience members, his creepy henchmen would repeatedly find excuses to pass by me or stand a few feet away from where I was(to listen in?).
[Reed Note: I have heard several comments of this nature—that Whitney employees eavesdrop on seminar attendees apparently looking for anyone who might be undermining their sales efforts. One guy said the Whitney employees actually separated him and another somewhat knowledgeable guy to whom he was speaking—as if they were misbehaving kindergartners.]


I later ran into lady who was at the seminar at the hotel's restaurant. She said that she had invited a gentleman who was in the audience to lunch after she had overheard him talking about how he had gone through the Whitney boot camps and had actual checks from his transactions. She wanted to treat him to lunch and see how he had done it (he agreed, and said he would join her after he ran off copies of the checks or something along those lines). I sat down at her table briefly, just to chat about what her impression of the whole thing was. A few seconds later, he approached the table and made a move as if to sit down, saw me, and suddenly got up as if he had "forgotten something" and muttered that he would be right back. Needless to say, that was the last we saw of him.
[Reed note: This sounds like one of those shills that others have suspected being in the audience.]


As a side note - the room temperature was normal during the presentation, but we were still kept waiting awkwardly outside the ballroom doors, and then endured a half hour of tesimonials (no pep music today) before the actual presentation began.
I hope this information helps somebody - I only wish that the people who were with me this morning could have stumbled across your website!
Please feel free to contact me if you have any questions about the specifics of today's presentation.

[name withhdrawn]

No recording

Whitney prohibits tape recording of his free seminar and his speakers issue dire threats of lawsuits if they catch you recording. I have heard reports that they search purses and such at some seminars. Prohibiting recording of free seminars is one of the items on my Real Estate B.S. Artist Detection Checklist. Attendees at th Concord, CA 7/17/03 “free training” said there was no searching of purses, but the speaker warned repeatedly that people must not record the seminar. Oddly, he also berated those who did not have pads for taking notes asking sarcastically, “What did you think—you were coming to a play?”

This is all the more annoying when you realize Whitney insists on recording the call to confirm your telephone purchase of a seminar and they sometimes encourage seminar attendees to say good things about the seminar and tape record the statements—without the knowledge of the speaker in states where the law only requires one person in the conversation to know it’s being recorded. One attendee discovered this when she heard Whitney employees discussing sound levels and spotted a machine the red lights on which flickered in concert with words spoken by audience members during a “Tell us how great this seminar has been” discussion.

Free mentor for life

One person told me that at the free training they verbally gave an 800-number for free mentoring for life. Later, they denied having said that and tried to get people to sign up for paid mentoring. I have received repeated reports that any time you contact the Whitney organization, you are mainly pressured to buy more seminars, even when the number you called is one you have paid for the right to call.

‘Ein voice’

Continuing in the seminar portion of the MPAP manual we read this.

“Every member of the team must speak with one voice and say the exact same thing. The remaining two staff members should appear to be paying complete attention to the speaker’s every word.”

This reminds me of a famous speech I often see on the All-Hitler-All-the-Time network (The History Channel). Hitler is beside himself extolling the virtues of “Ein Land. Ein Volk. Ein Fuehrer.” That means, “One nation. One people. One leader,” in German. “Ein” is pronounced “Ine” to rhyme with “mine.” Of course, what it really meant in Germany was one opinionhis.

Here’s another pertinent passage, this one from page 40 of Whitney’s book Overcoming the Hurdles and Pitfalls of Real Estate Investing.

“…a salesman has a presentation which his company has designed. They instruct the salesman to memorize this presentation and perform it verbatim. Well, instead of studying regularly to make sure he knows that presentation, the salesman forgets a little part…he injects a sentence or two of his own. When I was a sales trainer for the co-op and a salesman’s production was down, the first thing I would do is listen to his presentations.”

I find this downright creepy. It sounds like Russ Whitney speakers are human juke boxes who are trained to memorize a pitch, as well as answers to common questions, and to spout that script, and not a word different, on cue.

You may want to amuse yourself by asking the same question of each Whitney staff member at the “free training” and see how close their answers are.

There may be a tax issue here. As I understand it, Whitney’s “free training” speakers are straight commission independent contractors. But if an employer controls an independent contractor too much, he is not considered an independent contractor for federal income tax purposes. Rather, he is considered an employee. That means Whitney has to withhold taxes, pay social security, unemployment, etc. If his company has a pension plan, the employees all have to be included in it. If Whitney is paying these guys as independent contractors, and they are actually employees from a legal standpoint, because of the amount of control he exerts over them—control-freak levels if you believe his MPAP manual—he would possibly owe a lot of money to the IRS and/or to the speaker.

I do not know for sure if Whitney treats the speakers as independent contractors for tax purposes. I would like to hear from anyone who does know.

Dress warmly

If you attend a Whitney “free training” you’d better dress warmly. Several people have told me the room was freezing. Attendees were wearing winter coats and sweaters no matter the season. Why? Whitney apparently thinks that inducing mild hypothermia reduces sales resistance.

Think I’m exaggerating? I just got off the phone with a guy who took the free training last night. He had not read this page until tonight. He said at the seminar, he and his wife were wondering why the Whitney employees were dressed like they were going skiing—turtleneck sweaters and the like. When he got home and read this Web page, he figured it out.

One guy told me he finally went over to the thermostat to raise it. He felt it was about 64º in the room. When he tried to adjust it, Whitney staffers freaked out and came running insisting, “It has to be set HERE!” They returned it to the previous frigid setting. Apparently, Whitney sales staff are ordered to set the thermostat at some extremely low setting. I assume this is written in a manual for Whitney staff. If you have a copy, I would like to see it. I will ask for it during discovery prior to the trial of Whitney’s case against me, but they will likely resist that.

I would appreciate it if a reader would check the thermostat in a Whitney “free training” and tell me what they set it. Also, I would appreciate it if someone would take a thermometer to a Whitney “free training” and tell me what it reads. You’d better keep it hidden.

Am I imagining this or exaggerating? Once again, Whitney’s MPAP manual provides a confession at Step 9 page 3:

“Check the room’s air-conditioning, the room must remain chilly. Warm rooms mean droopy participants and few sales.”

I have had a lot of sales training in my day. I was sales training director of a real estate brokerage once. But I have never heard of the use of cold as a persuasion technique—with the possible exception of Communists interrogating American prisoners during the Korean War.

You may want to amuse yourself by adjusting the Whitney meeting room thermostat up to a setting that is required by law in apartment and office buildings—68º. Warning: this may get you thrown out of the “free training”—especially after Whitney and his employees see it on this Web page.

If, instead, you plan to stay for the whole session, take a warm coat, gloves, earmuffs, a scarf, and wear two pair of socks.

The Cherry Hill guy said the room was warm on 3/4/03. That may be because the Whitney crew there was relatively undisciplined or they’ve changed their policy now that the trick is being publicized.

A woman who used to work for Whitney told me in March of 2003 that they were indeed told to set the thermostat, but she said the temperature Whitney wanted was 69 degrees. I have no problem with that temperature, which is above the federal minimum for apartment buildings. But it may be that Whitney raised the temperature after I started revealing at this Web site that he was freezing attendees.

On 4/6/03, I got an email saying of a Whitney seminar, “It was SOOO COLD!!!!! About 3/4 of the people (18 altogether) were complaining about the temperature… So maybe it depends on which speaker you get. Be prepared for either.

Another person told me that Whitney literally tells you in writing to bring a sweater when you sign up for the three-day seminar. And this was in Arizona in the summer!

Leave home without it

After hearing many things about the astonishing selling skills of Whitney and his sales force, I came to the conclusion that one should not take a credit card, check book, or cash to a Whitney “free training” session. After I came to that conclusion, I read that a couple of other people had said the same thing in Internet postings. We’re not kidding. These guys are that good. I almost would not trust myself to escape from one of these sessions without signing up for some overpriced seminar.

I have seen at least two comments on the Net or in emails where former customers of Whitney’s said they felt as though they had been “hypnotized.” They apparently did not mean that literally, but they were saying that they believe they lost their free will at some point during the Whitney “free training” and felt compelled to do what the speaker told them to do.

A person who attended a 3/13/03 “free training” in Salt Lake City said, “You mentioned that others felt an almost ‘hypnotized’ effect. I had this same impression, there was this mesmerizing effect to the presentation. People not on their guard for these tactics could be drawn into something they might not really want in a calmer situation.”

That’s scary. If you insist on subjecting yourself to that, leave your credit cards, check book, and cash at home.

Siren song

In Greek mythology, Odysseus was able to hear the siren song of the daughters of the sea god Phorcys because he had his shipmates lash him to the mast and put wax in their ears. They could not hear the songs because of the wax. He could not steer toward the siren’s island because he was tied down. The sorceress Circe had given him that wise advice.

The advice of me and others that you leave your credit cards, checks, and cash at home is analogous to Circe’s advice to Odyseuss. We are not kidding or exaggerating. The salesmen who work at Whitney’s “free training” sessions are experts at persuading people like you to part with your money.

If you want to take the paid seminars, you can always sign up later, after you have had a chance to cool off and consider the matter soberly. Whitney’s people will strive mightily to eliminate that possibility by constantly telling you the price will go up if you don’t sign up RIGHT NOW. But that’s bull. The same circus will be back in town in a few months and they will lower their prices back down.

Mob psychology

I am told Whitney uses mob psychology to get you to sign up for paid seminars. One trick is to get everyone in the room to compete for a prize on who can raise their credit card limits the most. They literally have had attendees calling their credit card companies on a speaker phone in front of everyone. (You should not tell Whitney’s people what your credit-card limit is. It’s absolutely no one’s business but yours.) This is apparently aimed at getting you to take out your credit card and get used to doing something with it during the meeting. (A later writer said the calling of credit-card companies to raise limits was done from your hotel room between classes.)

Another trick involved telling the audience that only the first, say, seven people who get to the back of the room to sign up for a particular seminar will be allowed to do so. This sometimes causes a stampede. Sounds like a safety hazard—like yelling “Fire!” in a crowded theater. Even if no one gets physically hurt by the stampede, there is still the use of mob psychology to get you to spend thousands of dollars.

‘OPM’

Bad real estate gurus are fond of talking about OPM—Other People’s Money. That is, borrowed money. Listen to what the Salt Lake City 3/13/03 “free training” attendee says. It’s a good analysis of the concept.

“One particularly insidious tactic: To pay for the ‘training courses’ the instructor pitched people to put it on their credit cards because ‘until the payment on the credit card is due the next month this was OPM (Other People’s Money)’ (i.e. the credit card company). The implication here being that if you use OPM you are very smart and already acting like a ‘real estate investor.’ (OPM was talked about in the seminar as a means to finance projects.) To my amazement, quite a few people cheered at this. I thought and who do they think is going to be paying the credit card loan (OPM) off after one month? They are! I was amazed people bought this tactic.”

[Reed comment: As a general rule, you never use a credit card to buy real estate. The reasons are the interest rates are among the highest in the lending world, plus the loans are generally very short term so the annual constant (interest plus principal paid each month as a percentage of the loan balance) is even higher. For more information on this, see my book How to Buy Real Estate for Little or No Money Down. Using a credit card to buy anything is questionable and a common path to financial difficulty if you do not pay the balance off in full each month.]

Testimonial shills

I have also been told that some audiences include people who are ostensibly just seminar attendees like everyone else, but they appear in dress and demeanor suspiciously like members of Whitney’s staff. Once the sales pitch begins, they volunteer that they took this or that Whitney seminar and that it was just fabulous.

Paint job profit

A person who attended the Concord, CA 7/17/03 free training told me that the speaker—Rodney Hopkins or something like that—told of a large profit made from just painting the exterior of a house. This was an “actual case history” complete with before and after photos of the house.

The speaker said the house cost $75,000 and that after the exterior-only paint job, it was worth $130,000.

Is this true? Almost certainly not. I would have to have the address and dates to be sure, but here’s why I say it is almost certainly not true—or they are omitting material facts, like the amount of time between the two values.

An exterior paint job on a single-family house simply does not add anywhere near that much value. Whitney would proabably say it does if you know how and Reed simply never learned how. Bull!

Remodeling Magazine does an annual Cost Versus Value Report—a survey of how much various improvements add to property value as a percentage of their cost. In their 2003 survey, they found that the increase in value of the property for ten common improvement jobs was 60% to 90% of the cost of the improvement. In other words, the improvements were unprofitable—money-losing propositions. Furthermore, the ones that came closest to recouping their costs were structural in nature, like adding a bathroom, not cosmetic, like painting. And remember, this is Remodeling Magazine. They have a vested interest in putting the value of improvements in the best possible light. And even they would not claim a 100% recoupment of the cost of the improvement.

An exterior paint job on my house—a two-story colonial with all wood clapboard siding—cost about $1,200 a few years back. If Whitney or Hopkins spent that much, and got the $55,000 increase in value they claim, their recoupment rates is $55,000 ÷ $1,200 = 4,583%.

Funny Mr. Hopkins should choose $75,000 as the before value.

What group would most want to convince us that painting raises property values by large amounts?

Paint manufacturers.

Have any of them made any claims as to property value increases from using their product?

As a matter of fact, one did—Dutch Boy. A few years back, they ran an ad with before and after photos of a house that they painted. The headline of the ad was, “When Dutch Boy goes on, the value goes up.” I wrote about it on page 8 of my book, Fixers. The body of the ad said that they had the property appraised by three appraisers before and after the paint job. What was the average value found by the three appraisers before the paint job?

Would you believe $75,400? Almost identical to the Whitney “actual case history.” And the value Dutch Boy claimed after the paint job? $86,100. I guess Dutch Boy needs to take Whitney’s seminars to learn how to jack the value $55,000 instead of a mere $10,700.

Oh, and the Dutch Boy paint job was “inside and out,” not just the exterior as claimed by Whitney.

I wanted to write an article about the Dutch Boy commercial. But I was missing some crucial facts needed to evaluate whether the application of Dutch Boy paint was profitable by real-estate-investor standards. So I wrote to the company headquarters and asked:

How did Dutch Boy respond to my offer of free publicity? They did not. Why not? Almost certainly because the answers to my questions would reveal that the paint job cost nearly as much, or more than, the value increase. It may also have been that the house in question was in a booming market and the values of all properties in the neighborhood were going up during the period in question, regardless of paints or other improvements.

Bottom line on Whitney’s “actual case history:” Either it did not happen at all or they are omitting material facts like other improvements, bargain purchase because of distress sale, long time between the two values, etc. The after photo showed a new roof which Rodney did not mention.

Exterior paint alone will generally not pay back its cost or will pay back only slightly more than its cost. The claim that you can raise the value of a $75,000 home to $130,000 merely by painting the exterior is absurd.

‘You must buy tonight!’

I am told that Whitney’s salespeople are shameless about repeatedly warning you that all the prices will skyrocket if you do not buy TONIGHT! In fact, it appears that they will charge you a little more if you wait until after the “free training” is over and sign up for a seminar several days later. But, as I said, it also appears to be true that this circus will be back in town in a few months and you will be able to sign up at the lower price again.

I urge everyone to wait until at least the second “free training” session you attend to sign up for any paid seminars. My advice is never sign up for any of them, but if you are unwilling to trust me that much, at least let yourself cool off between “free trainings” and consult some other people whose opinions you respect.

The admonition to buy before higher prices is not unheard of among reputable businesses. But the constant use of this tactic is an indication of a high-pressure sales organization. Think about it. Why are they so concerned that you may not buy while you are attending the “free training?” Because as long as you are there, they have you under their spell and they can control your behavior. As soon as you leave, you are out of their control and they can no longer use their various pressure tactics against you. They are afraid you will think about it, that you may consult others. They fear that the probability that they will get your credit card number, expiration date, and signature will greatly diminish if you leave the “free training” site without having signed up. And they are right.

Compare this behavior to other purveyors of education. You can learn about real estate at your local community college or university. Do they constantly threaten you with higher prices if you do not sign up tonight? You can buy how-to information from your local book store or video store. Do they constantly threaten you with higher prices if you don’t buy RIGHT NOW?!

In fact, it appears that Whitney is in the business of getting people into a room on the end of a phone call where they can be manipulated to do something they really do not want to do, then pressured to agree to an overpriced seminar. The payments are nonrefundable after three days because far too many people would “cool off” and change their mind if given the opportunity.

‘Free gift’

One attendee of the “free training” said he was under the impression that everyone who attended the “free training” would get a $500 free gift. What it really was was an MPAP looseleaf binder book which Whitney claims is a $500 value.” That’s the book I quoted above where you learn about the freezing meeting room, “peppy music,” and all that. Furthermore, in the case I heard about, you did not get it for merely attending the “free training.” You only got it if you signed up for a paid seminar at a cost of about $3,000.

Others have reported that you do get a free credit management and repair CD which Whitney says has a value of $500. However, since he gives it away for free to tens of thousands of “free training” attendees each year, it seems likely that no one in the history of the universe has ever paid $500 for it. Anyone who did would be crazy.

Refunds

Reportedly, you are told can get refunds after signing up for the paid seminars, but as a practical matter, getting refunds seems to be very difficult. The Better Business Bureau gave Whitney an unsatisfactory rating, in part for not responding to complaints about refunds that were not paid.

One attendee was told you have to attend the first day of the paid seminar in question to get the refund. But that sounds dangerous in that they could cite your presence as evidence that you partook of the seminar and therefore should not be able to get a refund. Also, that participant learned that the refund was not 100% as he had believed. Rather, it is less than a full refund.

A couple of people told me they did get refunds from Whitney. One had to rant and rave and contact all sorts of government agencies to get it. A former employee also told me they had meetings where they decided which refunds to pay—but that they were looking for justification like a death in the family or terminal-cancer diagnosis. But my general impression is still that they pay far fewer refunds than the costumers request. I am not sure of the percentage, but it sounds like the vast majority of refund requests are denied and that you may have to demand the refund rather strenuously to be one of the few to get it.

According to Whitney’s filings with the Securities and Exchange Commission, which you can see at the EDGAR Web site, Whitney pays no refunds whatsoever. Here’s a quote from one such filing.

“Revenue from educational seminars is recorded (1) when the non-refundable deposit is received for the seminars…”

A bunch of people on the Internet complain that they were given three days to apply for a refund, but that the payment that started the three-day clock started was many days before the seminar they had paid for so they had no basis for seeking a refund. They feel they should be able to get a refund after or at least during the seminar, after they have had a chance to evaluate the quality of the seminar.

‘We never give any money back’

Here is another comment from the Salt Lake City attendee:

“One comment by the trainer that particularly caught my attention: The trainer was talking about borrowing money from a bank (a non-secured loan) and buying a property and then fixing up the property and reselling it for a profit. (Not so bad of a suggestion.) [Reed comment: I agree, but it’s much easier said than done.] Then he asked what we thought we should do with that money (the proceeds of the sale) after we had sold the property. One attendee said to pay back the bank for the original non-secured loan. The trainer comment, in a forceful marine sergeant type of voice, was, ‘No, we never give the money back.’ I thought this was probably more a statement about the Russ Whitney Company than about real estate investing.”

Appearance of salesmen

Reportedly, the salesmen and highly enthusiastic attendees (“cheerleaders”) at Whitney “free trainings” have a remarkably similar appearance: 30ish white guys chewing gum and wearing shiny suits, fake tans, slicked back hair, and showy jewelry. Or at least they did until I posted this description in January of 2003.

Ridicule for not signing up

If you refuse to sign up for a paid seminar at the “free training,” you may be ridiculed as a loser. Persons who do not sign up are depicted as losers as a group by the speaker, and you may receive that or a similar accusation personally from one of the Whitney employees as well. All free with your “free training.”

The Cherry Hill guy said,

“…they did indeed try to make you feel like you’re a loser if you didn’t register for the seminar. They used wise-cracks and put-downs so that you rushed to the back of the room to sign-up at the end of the meeting, obviously thinking that you are now NOT a loser. I had no respect for that tactic.”

A Canadian attendee said those who left early were ridiculed afterward for having blown the best opportunity of their lives. “They couldn’t handle it. They left to go to a beer store and buy some cigarettes. No wonder they’re broke.” A Texas attendee said that when a few people left, the speaker started bashing the area of Texas where the seminar was saying the people there have “low mentalities and don’t understand the meaning of being rich” according to a posting on CREonline. Apparently, people leaving the “free training” during the break really outrages many of Whitney’s “free training” speakers.

Here are some of the words I have seen used to describe the behavior of Whitney’s “free training” speakers in posts on the Internet.

Here’s an email I got from a reader on 6/23/03:

“I recently attended one of Russ Whitney’s seminars in St. Louis expecting to hear the ‘how I did it speech’ and was surprised to see that his son was acting as the headliner - on his father’s behalf. Everything that you described in your analysis of the pitch came to pass. I walked into the room with the song ‘I want to be rich’ playing in the background. It was like religious revival meets streaming infomercial meets used car salesman. The room was cold, the hosts were dressed warmly, and the speaker (not Russ jr.) reminded me more of a drill sergeant than a knowledgeable investor. At the end of the presentation, although no questions were ever allowed, people were literally fighting over who was going to get the few remaining slots available for his training camp. If I remember correctly, there were seven slots available and nine people vying to get their credit cards accepted across the table. Oddly enough, they were all accepted. I left prior to the second half of the seminar and was verbally accosted before being allowed to leave.”

Regards, J.D. Bearden

Here’s another email I got on 6/24/03:

“i just visited your russ whitney website. i thought i'd write cuz my spouse and i just went to a russ whitney "free" seminar. it was disgusting.

“the "trainer", Kevin somthing or other, was said to be an ex-Canadian hockey player was introduced by Russ Whitney Jr. Kevin was comical, rude, arrogant, and politically incorrect.

“thank God i have a level head. Kevin contradicted himself several times, treated the audience members in a condescending manner (even as he professed that it wasn't his intent to do so), he bashed his "ex-wife" for leaving him broke, and after acknowledging that his audiences were always comprised of folks from all walks of life and diverse backgrounds, he made an insensitive remark about not asking us to buy homes in "the ghetto", where we would have to hang a shotgun on the wall to feel safe.

“his manner reminded me of a fire-and-brimstone preacher, subtly intimidating the audience by stating that people who did not sign up for the $1590 classes were not mentally, physically or financially ready to become financially independent.

“we sat thru most of the presentation with the intent of garnering small kernels of information that we could expand upon thru independent research.

“i feel sorry for the brainwashed who rushed out to the desk to sign up for the 9 (yeah right!) scholarships available for the 3 days of "real estate training". i strongly believe that some of them were ringers, and i hope the ones who weren't at least had the common sense to pay with credit cards.”

‘Work something out’

Cherry Hill guy also said they said,

“…if you still could not afford it, that you could go and talk to the Whitney associates and work something out.”

The shamelessness of these guys astonishes me. Here is a person or couple who are so poor they cannot afford a $1,590 seminar and Whitney’s people are still trying to squeeze money out of them. Now that he claims to be Mr. Moneybags, why doesn’t Whitney offer real scholarships or grants for the most downtrodden rather than try to push them further into debt?

‘Free gift’

Cherry Hill picked up his ‘free gift’ which was a Credit Management CD and flyer and left without speaking to anyone.

Seating assignments

One attendee told me he was ordered to change seats after a Whitney employee got close enough to listen to his conversation and discovered he and another guy were expressing skepticism about the accuracy of what the speaker had been saying.

An Arizona attendee in 2003 said the same ting. Attendees were ordered not to exchange names, addresses, and phone numbers. Groups gathering to talk were broken up by Whitney employees. Sounds like conditions in some Third World dictatorship.

This is reminiscent of cult recruiting where target recruits are isolated from outside influences. Many business-oriented cults like pyramid sales schemes denounce outsiders who criticize them as “dream stealers.” At his Web site, Whitney once told a customer, regarding me, “Don’t let that person steal your dreams.”

You do need to be on the lookout for people who would “steal” your dreams. When I started in real estate, all my friends and relatives told me it was not the right time. I ignored them. I have since concluded that some were jealous and trying to hold me back for fear I would succeed and leave them behind. So do watch out for “dream stealers,” but also watch out for people who want to “steal” your money by high-pressuring you into buying overpriced or worthless products or information.

Allen seminar

Another reader told me he just attended the Robert Allen Seminar and said it was almost identical to what I have described above. That would not surprise me. All of these guys used to work for other gurus. Whitney used to work for Dave Del Dotto. It is a very incestuous business. I am told that many of Whitney’s instructors came over to Whitney from Charles Givens when he got into trouble with the law (and died).

The speakers at real estate get-rich-quick seminars are like pro athletes. They get paid hundreds of thousands of dollars a year and move around like free agents. If they are unhappy with guru A they switch to guru B. The gurus are just celebrity figureheads whose only skill is filling seats at the “free training.” The guys who really generate the money are the speakers. For example, one Whitney speaker, Lorenzo Spencer, moved to Ron Legrand last I heard. In promotional material, the gurus slug it out. “Take my seminars,” says Whitney. “Take mine,” says LeGrand. But you could have taken both and gotten Spencer as your speaker in each case.

There now seems to be a sort of generic get-rich-quick seminar put on by interchangeable speakers. Whether Whitney pockets your money or Sheets or Legrand does not seem to matter except to Whitney, Sheets, and Legrand. You may be getting the same information and even the exact same speaker no matter who you sign up with.

Pennsylvania attorney general told Whitney to clean up his act

According to a 7/9/99 news release, the Pennsylvania attorney general told Whitney to clean up his act regarding his free seminars back in 1999. In that incident, PA sent investigators posing as consumers to Whitney’s free seminars. They found that the free seminars were misrepresented in advertising as teaching certain things, but that when you got there, you had to sign up for a paid seminar to get the promised information.

From what I have heard, he is still doing what he promised the Commonwealth of Pennsylvania that he would stop, including at recent free seminars in Pennsylvania. Whitney’s WIN Systems, Inc., which is the same corporation as the current Whitney Information Network, Inc. (they just changed their corporate name), signed an “Assurance of Voluntary Compliance” agreement with the Pennsylvania Bureau of Consumer Protection in 1999. Deputy Attorney General Jim Sysko of the Bureau of Consumer Protection in Scranton, PA filed the agreement with the Commonwealth Court back in 1999.

For details, see what I said about this at http://www.johntreed.com/WhitneyPA.html. If you have attended a recent Pennsylvania Whitney “free training” and believe he is still doing what he promised Pennsylvania’s Bureau of Consumer Protection that he would no longer do, contact that agency and tell them.

So did the Michigan and Tennessee attorneys general

See my article on MI and TN.

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