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Russ Whitney' agreement with the Michigan Attorney General analyzed by John T. Reed On June 2, 1998, the Michigan Attorney General filed a Notice of Intended Action and Opportunity to Cease and Desist against WIN Systems, Inc. WIN Systems, Inc. is the previous name of Whitney Information Network, Inc. AG File No. 98-10060. Here is some of what it said: Frank J. Kelley, Attorney General of the State of Michigan, pursuant to the provisions of the Michigan Consumer Protection Act"¦hereby gives ten days notice [to WIN Systems] as required by section 5(2) of the Michigan Consumer Protection Act prior to commencement of an action against [WIN Systems] to forthwith cease and desist from engaging in certain unfair, unconscionable, or deceptive methods, acts or practices in the conduct of trade or commerce or to confer with the Department of the Attorney General regarding the methods, acts or practices as hereinafter set forth: 1. [WIN Systems] are or have been conducting business in the State of Michigan from a location outside the state. 2. [WIN Systems] are engaged in the sale of a business opportunity which is defined in section 2(a) of the Michigan Consumer Protection Act"¦ 3. [WIN Systems] sold a business opportunity titled "Bird Dog Program" to a Michigan Resident, XXXXX XXXXX, March 19, 1998 for $1,590 [Reed comment: There' that magic price that Whitney and so many other gurus seem to love. He loves it so much he hasn"t changed it in five years. So when they tell you you have to sign up RIGHT NOW to get the $1,590 price, just remember they have been giving out that same price since at least 1998.] 4. [WIN Systems] represented in the offer to sell and sale that the buyer would receive training and materials that would prepare him to find properties, make a deal with the seller and [WIN Systems] would provide financing. 5. [WIN Systems] represented that the program would work anywhere in the United States and on all types of property. 6. [WIN Systems] failed to disclose in the pre-sale presentation that only multi-unit income producing properties would "possibly" be funded. 7. [WIN Systems] failed to disclose that buyer must try to find their own funding elsewhere before being considered for funding. 8. Prior to the sale of said business opportunity, [WIN Systems] failed to send notice to the Attorney General of the intent to sell business opportunities as set forth in section 3b of the Michigan Consumer Protection Act. 9. The aforementioned methods, acts or practices in the conduct of trade or commerce are in violation of section 3(1)(a), (c), (g), (h), (s), (bb), (cc), and 3b of the Michigan Consumer Protection Act"¦ Section 3 (1) Unfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce are unlawful and are defined as follows: (a) Causing a probability of confusion or misunderstanding as to the source, sponsorship, approval or certification of goods or services. (C.) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has sponsorship, approval, status, affiliation, or

connection which he does not have. (g) Advertising or representing goods or services with intent not to dispose of those goods or services as advertised or represented. (h) Advertising goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity in immediate conjunction with the advertised goods or services. (s) Failing to reveal a material fact, the omission of which tends to mislead or deceive the consumer, and which fact could not be reasonably be known by the consumer. (y) Gross discrepancies between the oral representations of the seller and the written agreement covering the same transaction or failure of the other party to the transaction to provide to promised benefits. (bb) Making a representation of fact or statement of fact material to the transaction such that a person reasonably believes the represented or suggested state of affairs to be other than it actually is. (cc) Failing to reveal facts which are material to the transaction in light of representations of fact made in a positive manner. Wherefore, pursuant to Section 5(2) of the Michigan Consumer Protection Act , you may advise the Attorney General that you have ceased and desisted from the methods, acts, or practices set forth above and may request an opportunity to confer with the Office of the Attorney General. If you elect to cease and desist, the Attorney General may accept an Assurance of Discontinuance in lieu of instituting an action in Circuit Court. The Assurance of Discontinuance may include among other things, costs of investigation, restitution to aggrieved persons and other corrective or remedial measures deemed appropriate by the Attorney General. If you fail to cease and desist within ten days after receiving this notice and to reach a voluntary disposition of this matter, the Attorney General is authorized to seek injunctive and other applicable relief to restrain you from continuing to violate the law. Frank J. Kelley Attorney General Paul Novak Consumer Protection Division P.O. Box 30213 Lansing, MI 48909 517-373-7117 On October 2, 1998, WIN Systems, Inc.' then president Richard Brevoort (who died in September, 2002) signed an "Assurance of Discontinuance." Here is what Whitney' commpany agreed to do: "A. They will not engage in the sale of business opportunities as defined by Section 2 of the Michigan Consumer Protection Act without first having complied with any and all registration requirements of the Act. B. They will offer complete restitution to any individuals who purchased a business opportunity and paid over $500 either initially or within the first six months during an unregistered period and who request such restitution withen 30 days from the signing of this assurance. They shall furnish copies to the Attorney General of the agreements, if any, regarding restitution within 60 days from the date the Assurance is signed. C. They will reimburse the Attorney General $250 which represents the cost of the investigation. 3. This Assurance of Discontinuance does not represent an admission of guilt by Respondents." I"m glad to see a government agency take action, but this sounds like only the slightest slap on the wrist"”one that could be shrugged off as a mere minor cost of doing business. Although I believe Whitney discontinued the Bird Dog Program that this action was about. Bird dog programs involve making you pay for training that supposedly enables you to find deals that the trainer provides the money to buy. This is a sort of nothing-down technique used to attract customers. Such bird dog programs are Item #8 on my Real Estate B.S. Artist Detection Checklist. A number of such programs have been exposed as frauds in which the guru in question never or almost never actually funds a purchase. Rather they just make money from the training, then reject all deals the graduates bring them as not good enough. The Attorney General of Pennsylvania also took similar action against Whitney for the bird dog program and another education program. Click here to read the details of that. Copyright 2003 by John T. Reed Last update 4/4/03 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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