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Is Russ Whitney violating the Texas Deceptive Trade Practices Act or Deceptive Business Practices law? by John T. Reed As a landlord in Texas from 1978 to 1992, I studied pertinent Texas laws, including the Texas Deceptive Trade Practices Act. (Texas Business and Commerce Code '§17.45 et seq.) and the Texas Deceptive Business Practices law (Texas Penal Code '§32.42). Russ Whitney' companies sell books, seminars, and mentoring services to Texans. Is he in violation of either or both of those statutes? Let' work through each statute and compare what it prohibits to known behavior by Whitney' companies. Deceptive Busines Practices Texas Penal Code '§'§32.42 (b)(9) and (10) say, "(b) A person commits an offense if in the course of business he intentionally, knowingly, recklessly, or with criminal negligence commits one or more of the following deceptive business practices: (9) representing the price of a"¦service falsely or in a way tending to mislead; (10) making a materially false or misleading statement of fact concerning the reason for, existence of, or amount of a price or price reduction;" I have been told repeatedly by attendees of Whitney' "free training" and former employees of his companies that they say that the price of the Real Estate Training Academy is well over $4,000, but that if you do something special, it will be $1,590 for you. The something special might be: "¢ signing up right now "¢ being one of the first nine people to the back of the room to sign up "¢ that the difference between the two prices is a "scholarship" "¢ that the difference between the two prices is a "special discount" In fact, the price has been $1,590 for at least six years and the employees refer to that seminar in-house as "The 1590." Few, if any persons have ever paid the $4,000+ price that is represented to

be the cost if you do not "jump through the hoop" of the moment. 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." Since the actual charge for that course is $1,590, this would appear to be a false representation, thereby violating the Texas Deceptive Business Practices law as well as federal law (18 USC 1001). Whitney' companies also offer various "free gifts or "buy one of these get one of those" deals where they represent that the gift or prize or add-on has a value of hundreds of dollars when there appears to be no basis for anywhere near such a valuation. False or misleading statements Subsection 32.42 (b)(12) of the law prohibits, "12) making a materially false or misleading statement: (A) in an advertisement for the"¦sale of"¦service; or (B) otherwise in connection with the"¦sale of"¦service." The Better Business Bureau report on Russ Whitney (Go to this site and simply type in the words Russ Whitney.) says Whitney has an "unsatisfactory record"¦due to unanswered complaints and that those complaints ""¦concern requests for refunds not received that were cancelled during 3-day right to cancel and misrepresentations during sales presentations at seminars." Saying you will pay refunds and then not doing it would be a false or misleading statement. Of course, misrepresenting also is false or misleading. Then there are all the discrepancies I pointed out in the following articles about various aspects of Whitney' claims: "¢ Texas Proprietary School Act "¢ Whitney' new book rank high on Amazon "¢ Whitney' current attempt to sell a million shares of his stock "¢ Reed' analysis of Whitney Information Network, Inc. stock "¢ Russ Whitney' various claims "¢ Whitney' "first fortune" "¢ What happens to you at Whitney' "free training" "¢ What happens at Whitney' paid seminars "¢ Whitney' troubles with the Tennessee attorney general "¢ Whitney' troubles with the Pennsylvania attorney general "¢ Whitney' troubles with the Michigan attorney general "¢ Whitney' TV infomercial "¢ Russ Whitney' book Building Wealth. Texas' anti-litter campaign has a slogan Russ Whitney ought to remember: "Don"t mess with Texas." John T. Reed Copyright 2003 by John T. Reed Last update 5/11/03 John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, www.johntreed.com

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