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What happens to you at Russ Whitney’s ‘free training’ by John T. Reed 3

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 much did the paint job cost?
• What were the dates of the before and after appraisals?
• What were the qualifications of the apprasiers?
• Where was the property?
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.
• rude (used by many, many people)
• abusive
• bully
• crude
• manipulative
• drill sergeant
• slick (used by many, many people)
• very high pressure
• scam (used by many people)
• snapped my head off when I asked a question
• glared at him when he left
• did not want anyone asking questions
• humiliating
• acted superior
• demeaning
• put downs
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.
Copyright 2002, 2003 by John T. Reed
Last update 7/3/03
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John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, Email: johnreed@johntreed.com

CONSUMER WARNING NOTICE: I recently saw Russ Whitney on a late night TV infomercial and then attended one of his "free" seminars. Unfortunately I believed all of their LIES and FRAUDULENT CLAIMS and I paid thousands of dollars to go to his "training camps". Needless to say I was clearly ripped off, cheated and lied to by Russ Whitney and his employees (band of thieves). My mistake was not searching the Internet to find out more about Russ Whitney and his company's HORRIBLE reputation for fraud, deception and illegal activities. Had I searched online I would have found out about THOUSANDS of customers being cheated, HUNDREDS of investigations by the Attorney General into the fraud of Russ Whitney and his company's, and that Russ Whitney himself is a CONVICTED VIOLENT FELON and spent years in PRISON. I saved the cached pages from the major search engines of the John Reed lawsuit with Russell Whitney and the TRUTH and FACTS that Reed discovered during his investigation of Whitney. I am posting this information on real estate discussion boards so other people do NOT get cheated and ripped off like I did.