Russ Whitney’s agreement with the PA attorney General by John T. Reed

On 7/9/99, the Pennsylvania Attorney General issued a news release about the results of an investigation by their Bureau of Consumer Protection of Russ Whitney. At that time, Whitney’s WIN Systems, Inc. was doing a free seminar called “How to Get Rich in a Year.” The Pennsylvania Attorney General said the seminar was misleading and violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.

Attorney General Mike Fisher said his “…investigators posed as consumers and attended the free seminars. We allege that the company not only failed to deliver what it had promised, but used the [seminars] as a way to promote its other products and services.”

The Pennsylvania Attorney general got Whitney to sign an “Assurance of Voluntary Compliance” agreement. Deputy Attorney General Jim Sysko handled the case. He is in the Scranton office (570-963-4913)

This particular free seminar was a come-on for Whitney’s Bird Dog Program. That is apparently one of these “You find the deals and we will put up the money and pay you a referral fee” schemes. I list such programs as one of the items on my Real Estate B.S. Artist Detection checklist.

Pennsylvania said the free seminars failed to explain or give detailed information about the Bird Dog Program. They further alleged that in order to obtain such information, students had to agree to become “facilitators” and attend a “wealth building seminar” that cost $1,590 [the same amount he and other gurus are charging six years later].

As is usual in such cases, WIN Systems, Inc. admitted no wrongdoing, but they agreed to stop their nonwrongdoing namely,

to fully disclose the content of the free seminars to consumers
to conduct seminars in a manner consistent with the advertisements
to resolve any future consumer complaint filed with the Bureau of Consumer Protection within 60 days
to comply with the Pennsylvania Consumer Protection Law
and to pay Pennsylvania $4,000 to cover the costs of the investigation.

I have a news flash for the Pennsylvania Attorney General: From reports I get, it appears that although Whitney has changed his company name and seminar name, he is still doing some of the same stuff described in this news release.

Here are some quotes from a 1997 Whitney ad that the Pennsylvania Attorney General’s office sent me. [My comments are in red.]

‘Millionaire swears under oath he can show any Wilkes Barre area resident how to get rich in a year’

The ad includes a photo of Whitney with the caption “Millionaire Russ Whitney.”

“Wilkes Barre—Self-made millionaire Russ Whitney of Florida has given several hundred thousand dollars to residents in Florida, Colorado, Vermont, and Texas to buy real estate.

"Incredible, but actually very smart"

“Whitney, a real estate millionaire since age 27, says anyone can cash in big right now because it is an incredibly smart time to buy income-producing real estate. [See my page about Whitney’s claims of success about whether he really was a self-made millionaire at age 27.]

"Bird Dog Program'

“Whitney has scheduled six short seminars in the Wilkes Barre area (among other cities) where he wants to buy properties. He will show interested area residents how and what to look for at the free workshops scheduled for April 22-24. [He said he wanted to buy properties in the Wilkes Barre, PA area. So did he? I would appreciate it if a reader in the Wilkes Barre area would check the local recorders office to see if Russ Whitney really did buy any real estate there in the post 1996 era.]

“He will then put up all the cash for qualifying properties and split the profits up to 50/50.

[This is simply not credible. Smart real estate investors do not pay such huge finders fees as 50% of the profit. A typical finders fee would be more like $500 to $10,000. Finders simply do not do enough work to warrant a 50/50 split. If this happened, which I think is really unlikely, it would probably just be so Whitney could claim it in ads like this and thereby make far more money from Bird Dog Program tuitions than he would ever make buying properties brought to him by bird dogs.]

"Proof that it works"

“‘It’s a dream-come-true,’ says Heidi Dickman of Colorado Springs, a young single mom. “I went to the seminar and joined the Bird Dog Network. I found a 24-unit building and Mr. Whitney gave me $33,000 to purchase it. Together we made $115,000 profit! People would have to be crazy not to at least go and see how this works.’”

[I would appreciate it if readers in the Colorado Springs area would check the recorders office to see if this deal really happened and what it’s details were.]

"Want to know more?"

Here’s how. There will be six free working seminars. At each you will learn:

How to get cash from the Bird Dog Network to buy properties. You find the deal. He shows you how. Split the profits with him up to 50/50.
How to start a part-time business and make up to thousands from home. Start immediately.
Create up to $1,500 in passive monthly income.
Buy your first house and pocket up to $3,000.
Buy properties with no credit.
Make serious money with only part-time effort.
Gain security and wealth.
Get start-up cash.
Turn debt into cash.
Own a computer? At the workshop, you’ll learn how to make a fortune with it.

[This is quite similar to the pitch in Whitney’s 2003 TV infomercial including the $1,500 amount. What this really is is a list of the unrealistic fantasies that financial unsuccessful people have. Whitney and other similar gurus pander to those expectations and claim to offer to tell how to turn those unrealistic expectations into reality. In fact, this is a list of achievements so difficult to accomplish in the time frame of the ad’s headline—“in a year”—that they border on the impossible]

"Free $100+ gift for you"

“Just for attending the event you will receive a free gift valued at over $100. In addition, throughout the workshop there will be drawings for valuable, money-making gifts and prizes.”

[The gift valued at over $100 is almost certainly for sale at eBay for $5 to $30. One attendee at a more recent Whitney seminar said he found the free gift he got on eBay for $30. That doesn’t mean anyone paid that much, only that a seller hoped to sell for that much.]

“Seating is limited…”

[How many people do you think have been turned away from a series of free seminars in the entire history of Russ Whitney? My guess is zero.]

The action of the Pennsylvania Attorney General against Whitney

Commonwealth of Pennsylvania
D. Michael Fisher
Attorney General
Plaintiff

Civil Action—Equity

In the matter of

WIN Systems, Inc.
4818 Coronado Parkway
Cape Coral, FL 44503

Defendant

No. 392 MD99

Assurance of Voluntary Compliance

Whereas the Commonwealth of Pennsylvania acting by Attorney General D. Michael Fisher, through the Bureau of Consumer Protection, has caused an investigation to be into the advertising practices of WIN Systems, Inc.…

Whereas, based upon its investigation the Commonwealth believes that [Whitney’s corporation] has engaged in conduct violative of the Unfair Trade Practices and Consumer Protection Law…

Commonwealth’s Allegations Regarding [Whitney’s corporation]’s Past Practices

[Whitney’s corporation] has advertised and conducted workshops regarding real estate investment throughout the Commonwealth of Pennsylvania.
[Whitney’s corporation]’s advertisements indicate that the workshops will show citizens of the Commonwealth “How to Get Rich in a Year.”
The advertisements refer to “Bird Dog Program” in which [Whitney’s corporation] will “put up all the cash for qualifying properties and split the profits up to 50/50.”
The workshops do not provide substantial information to participants regarding “How to Get Rich in a Year.”
The workshops do not provide detailed information regarding the “Bird Dog Program.”
The workshops serve as a forum in which [Whitney’s corporation] promotes other products and/or services.
Substantive information regarding “How to Get Rich” and the “Bird Dog Program” are only available if workshop participants agree to become “facilitators” and attend a wealth building seminar at additional cost.
[Whitney’s corporation] represents that “scholarships” in the amount of $2,200 are available to prospective participants in the seminar reducing the participant’s cost to $1,590. [Reed comment: Whitney’s real price has been $1,590 for many years. All the talk of “scholarships,” “discounts,” and other gimmicks that “reduce” higher prices to $1,590 is bull.]
The Commonwealth alleges that [Whitney’s corporation]’s activities noted above constitute violations of the following sub-paragraphs of §201-3(4) of the Consumer Protection Law:

v. Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has sponsorship, approval, status, affiliation or connection that he does not have;
vii. Representing that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model, if they are of another; and
ix. Advertising goods or services with intent not to sell them as advertised.

Acceptance of Assurance

Whereas the Commonwealth of Pennsylvania is agreeable in this matter to accept this Assurance of Voluntary Compliance pursuant to §201-5 of the Consumer Protection Law in lieu of commencing statutory proceedings pursuant to §201-4 of the Consumer Protection Law; and

Whereas [Whitney’s corporation] denies that it has violated the Consumer Protection Law, but, being desirous of avoiding confusion and misunderstanding with its customers, and in order to resolve the concerns of the Commonwealth, hereby agrees to enter into this Assurance of Voluntary Compliance.

A) [Whitney’s corporation] agrees to comply with all applicable requirements of the Consumer Protection Law.

B) [Whitney’s corporation] shall disclose the content and subject matter of any “free” workshop consumers are invited to attend

C) [Whitney’s corporation] shall conduct its free workshops in a manner consistent with the representations made in any advertisements

D) While there are no unresolved complaints currently on file at the Bureau of Consumer Protection, [Whitney’s corporation] agrees to address, attempt to resolve and/or submit to mediation any consumer complaints filed with the Bureau of Consumer Protection within 60 days after the filing of the Assurance of Voluntary Compliance.

E) [Whitney’s corporation] shall pay to the Commonwealth the sum of $4,000 as costs of investigation and/or for future public protection purposes.

NOW THEREFORE, [Whitney’s corporation] agrees by the signing of this Assurance of Voluntary Compliance that [Whitney’s corporation] shall henceforth abide by each of the aforementioned provisions of the acceptance of assurance, that breach of any or all of the terms of this acceptance shall be sufficient warrant for the Commonwealth to petition the Commonwealth Court of Pennsylvania to assess civil penalties and order any other relief which the Court deems necessary or proper, and that this Court shall maintain jurisdiction over the subject matter of this assurance of Voluntary Compliance and over the parties thereto in accordance with §201-8 of the Consumer Protection Law.

Signed by James Sysko for Pennsylvania and Richard Brevoort and his attorney for Whitney’s corporation. 6/9/99

[Reed comment: In general, I believe Whitney is still doing most of the stuff banned by this agreement, including in Pennsylvania. He has changed the name of his company, but it’s still the same corporation. The Bird Dog Program appears to be gone. There may no longer be a print ad that uses these words and phrases, but the practice of seeming to offer free education, then using the occasion primarily to push paid seminars, appears to continue. Same is true of the use of “scholarships” and such to reduce some phony price down to $1,590.]