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John T. Reed' main page about Russ Whitney 2 Three ways to defend a libel suit Before the lawsuit, Whitney was not a significant entry in my guru rating page. By suing me, he forces me to research him exhaustively. There are at least three ways to defend a libel suit: "¢ convince the court that the statements are opinion and therefore not libel by definition "¢ defeat plaintiff' attempt to prove that the allegedly libelous statements are false "¢ prove that the plaintiff already has such a bad reputation that it cannot be further harmed I have long wanted to put one of the gurus I do not recommend under a microscope and examine all the claims he has made and the stuff he has done that he has not told us about. I never could justify the time and effort required to do that"”until now. By suing me, Whitney gives me all the justification I can handle. To prepare for trial, I am looking for everything I can find about Whitney. Readers have been kind enough to send me some of his books and cassettes. The more stuff I put about Whitney at this Web site, the more people come out of the woodwork to tell me additional stuff about Whitney. Great! I have been astonished at the amount of work some readers have been willing to do. I receive 10 to 15 pages of original research at a time from some sources, as well as boxes of Whitney material from others. Why not rely on formal discovery? Several people have asked me why I am doing investigative research and asking others to help me. Why don"t I just have my lawyer ask Whitney for all the information I need in formal discovery"”depositions, interrogatories, demands for documents, etc.? There are a number of reasons: "¢ Formal discovery is limited. "¢ Lawyers generally fight discovery tooth and nail. "¢ Informal discovery enables you to make more efficient use of formal discovery. "¢ I do not have a lawyer. I am representing myself. "¢ Even when they seem to be cooperating with formal discovery, parties often lie, claim not to remember, claim they never knew, or omit things they were asked about. When you do both informal and formal discovery, you can better spot the lies and omissions. "¢ The more informal discovery you do, and the other side knows you are doing, the more they are afraid to lie in depositions, interrogatories, and at the trial. "¢ parties often request and sometimes get the court to seal (keep secret from the public) information revealed in discovery. No seal may apply to information I turn up on my own outside of discovery. Everything I can find I have been to various courts to read files of lawsuits against entities Whitney has associated himself with. I want to collect every word he has written or recorded, as well as everything that has been said about him. I want the names of his current and former organizations and associates. I want to talk to as many of his customers as possible. I want to know about any litigation he has been involved in as a plaintiff, defendant, witness, or whatever. Many of the posts I have seen on the Internet have expressed the hope that someone would take Whitney to court. If you are one, you got your wish"”only he is taking himself to court rather than the other way around. But whether he is the plaintiff or defendant makes little difference. When you sue a person for libel, you put your own reputation on trial. Whitney' complaint against me says, "Plaintiff Whitney is an individual who has had a good name, credit, reputation, and standing in the business community." According to many of the letters and Internet postings I have seen, there are a whole lot of people who disagree with that statement. I call on them to come forward now with their testimony and other evidence. I have two purposes: "¢ to defend myself against his lawsuit "¢ to share that evidence with the wider real estate investment information community Anonymous sources I have received information from a number of anonymous sources. Typically, they are associates or former associates of Whitney. Great stuff! There are a number of rules prospective anonymous sources should know. One is that I

cannot use information which is solely from anonymous sources either as admissible evidence in court or at my Web site or in my other publications. However, I can still use anonymous information. Mainly, anonymous sources should tell me what to look for and where to look. Tell me where "bones are buried" or which "closets have skeletons" in them. For example, one guy told me of a cease-and-desist order against Whitney regarding his MPAP. He told me the department of Florida government that took the action and the case number. Once I have "dug up the bone" or "opened the closet," the original source of my knowledge of where to look is moot. Anonymous sources can also help me decide whose depositions to take and what questions to ask. I assume that I will be taking Russ Whitney' deposition as well as submitting interrogatories (mandatory written questions) and demands for documents to Whitney. Anonymous sources can help me by suggesting questions to ask and documents to request. If you make such a suggestion, please be as specific as possible and tell me why I am asking that question or requesting that document. I need to know why to decide whether to use the question for one of my limited discovery opportunities and I may need to know why to overcome an objection from the other side. As far as preserving your anonymity is concerned, here' the deal. I will try to avoid disclosing information that might help identify you. I can use generic methods like objecting on the grounds of irrelevance or paying close attention to the question to see if it enables me to avoid saying what I know about how to identify you. Shield laws In many cases, I may be able to invoke shield laws. These laws protect the sources of reporters. Most states have them. Click here to read an article on California' shield laws. Here' another article on California' shield laws. And here is an article on Florida' shield law. If you live in a state other than California or Florida, your state' shield law may apply. Use a Google search to find it. If a judge orders me to tell what I know about you to identify you, I will. You occasionally see true or fictional stories about reporters going to jail for contempt of court rather than reveal sources. I will not do that. The bad journalists are not those who tell you up front that they will not go to jail to protect your anonymity. Rather the bad journalists are those who promise to protect your anonymity, then don"t. I like what Jean Jacques Rouseau said about promises. "He who is most reluctant to make a promise is most likely to keep it." That would also apply to evaluating the offerings of gurus like Russ Whitney. Compare how much he promises when he is trying to sell you something to how much I and other gurus I recommend promise. The best thing, if you wish to remain anonymous, is simply to not give me information that would help Whitney identify you. In that case, we need no shield or other law. I cannot reveal what I do not know. One hazard of anonymity There is one hazard to anonymity. Litigation is a sort of battle. At one point in this case, I was in the process of "aiming my guns" at a particular Whitney associate. But the more I investigated him, the more he sounded like one of my "Deep Throat" anonymous sources. So I called the anonymous source and asked if he was the guy I was aiming at. He was, and immediately asked how I got his name. I like some of what Whitney says I have already done extensive research on Whitney since he sued me. To my surprise, I like some of what he says. I agree with most of his advice on entrepreneurship and property management. I think he is first and foremost a salesman and knows what he is talking about on that score"”although I find him much too manipulative"”to the point of being creepy. However, I think what he calls "overfinancing" is so off base it' comical. You can literally go to jail for borrowing more than you need to buy or renovate a property if all the pertinent facts are not fully disclosed to the lenders. His depictions of the operating expenses and cash flow in his various properties are similarly comical because of their grotesque inaccuracy. Residential rental property is nowhere near as profitable as he depicts. That' not my opinion. It' well-established fact. There are a number of organizations that do annual surveys on rental property income and expenses. You can read about them in my positive cash flow article. He claims to have achieved great bargains from "motivated sellers," but the situations he tells of do not strike me as sufficiently extreme to generate such bargains. All sellers are motivated. Actually, most bargains stem from unmotivated sellers, like bankruptcy trustees and foreclosure auctioneers. I wrote a book on the subject based on over 166 actual case histories from investors who made one or more bargain purchases. (How to Buy Real Estate for at Least 20% Below Market Value, volumes 1 and 2) He also describes value increases from renovation that I believe are greatly exaggerated. In general, to make the fixer strategy work, you need to buy buildings that are in such disastrous bad condition that newlyweds won"t buy them, e.g., fire damaged, flood damaged, tilted foundation, condemned by the board of health. If you are outbidding newly weds to get fixer properties, you cannot make a profit renovating them. Get my book Fixers for more details on the how you really make money in that strategy. Whitney claims huge value increases from minor fix-up expenditures. I don"t believe it and there are industry studies showing costs and value increases that I believe back me up. Checking out Whitney' claims I am in the process of tracking down the actual documents and parties from the Whitney deals in question to see if my suspicions are confirmed. I can use help from readers around the nation because Whitney' deals were in places where I do not live. The movie Erin Brockovich tells of a single mom legal secretary who doggedly investigated environmental poisoning in a small California community. Her law firm won millions as a result of her research. I am not seeking any money from Whitney. (He is trying to get the court to order me to pay him large sums of money.) But Erin Brockovich sort of effort by me and my readers can produce the evidence I need to win the suit, as well as a vast body of Web site information that will enable future prospective Whitney customers to make a more informed decision regarding whether they should pay him thousands of dollars for his various services. This sort of research is actually fun. I did it regarding Robert Allen' San Francisco nothing-down deals and put the documents I found in my book How to Buy Real Estate for Little or No Money Down. As I found each document, I had the feeling of being a successful treasure hunter. I understand genealogical researchers and historians enjoy similar discovery triumphs. One professional name for this is private investigator"”a profession which has long been the subject of numerous novels, movies, and TV shows because it is so interesting. Be careful though. Some states have laws about unauthorized investigating. Misrepresenting who you are to get information, for example, could get you into trouble. I advocate an ethical code of 1. Tell the truth. 2. Keep your promises. 3. Treat others as you want to be treated. That applies to investigation of Whitney and I want anyone trying to help me to adhere to that standard. Leasecomm In October of 2002, I went to Woburn, MA, the home of Leasecomm Corp., a company that is linked to Whitney in many Internet complaints. He does not own the company and I was having difficulty nailing down the connection between the two. But after going through various court records, I found a complaining letter in which a woman in Ohio had signed up for some cockamamie merchant card machine and processing service. She was being sued by Leasecomm because she refused to pay for equipment and service she said she never got. Suddenly, I spotted the name "Russ Whitney" in her letter. Apparently, he or his agents had urged the woman to sign a Leasecomm lease at a seminar. Sadly, the woman lost the suit by default. Apparently, she could not afford to defend the Massachusetts suit from Ohio and was ordered to pay $3,200 to Leasecomm. I want to contact her and others like her to see if they have documents or can give testimony that will be helpful in my suit and/or at this Web site. The default judgments and other disappointments suffered by Whitney customers should not be the final word in their experience. Small claims court cases against Whitney An anonymous caller told me Whitney has been sued in small claims courts all around the U.S. and loses almost all of the suits. I asked how these plaintiffs were able to obtain jurisdiction. He said it was because Whitney' employees appear in almost every state putting on their "free training" and other seminars. Given that, he said you only need to send a certified letter to Whitney interplanetary headquarters at 4818 Coronado Parkway, Cape Coral, FL 33904 to serve the legal papers on him. I am a bit skeptical of this, but let' find out. I would appreciate any readers checking their local small claims court for litigation in which Whitney or one of his companies is a defendant. I thought you had to serve the summons on one of his employees while they were in your state, although that would not be so difficult considering that they appear in most cities multiple times each year. I am also interested in the details of how one would sue Whitney in states other than Florida where his headquarters is. Given that he has demonstrated a love of lawsuits by threatening them against me and others and filing one against me, and the many complaints I have read on the Internet where people offer to join class actions suits against Whitney, I think my Web site needs a "How to sue Russ Whitney" Web page. I would appreciate any help readers can give me with that. Case histories of actual suits against Whitney would be among the information I would like. Start your own property management firm? A reader says one Whitney idea is to start a property-management firm for extra income and great leads. That' a dumb idea. Running a property-management company is extremely time-consuming and not very lucrative. Property-management companies are also lawsuit magnets. You will spend your whole life giving depositions and you will lose most of the cases. I used to work for a property-management company. I never got any leads, let alone any "great" ones. Also property managers have a fiduciary relationship and duty to their clients. Profiting from the relationship above and beyond the agreed-upon property-management fee would be a questionable behavior pattern and might be illegal. On 3/9/01, a visitor to my site said I was on CRE online in a debate about Russ Whitney. For the record, I have not posted any message on CRE online in 2001. If there are message there purporting to be from me, they are written by imposters. Reader comments on Whitney Here is an email John T. Reed received on 11/12/01 "I saw this post at Creative Real Estate On-line and thought you might be interested: "Russ Whitney Discussion BANNED Here Under Threat of Lawsuit As a result of threats by Russ Whitney to sue CRE Online, Terry Vaughan, J.P. Vaughan and our employees, for allowing discussions about him here on our "Infomercial Guru Forum," we are forced to ban any and all further discussion about Russ Whitney, his seminars or his organization. Here is part of the actual verbatim email Russ Whitney sent to Terry Vaughan today (September 27, 2001): [The following is apparently an email from Whitney to Vaughn] Terry, I have been gentlemanly and patient with you. You obviously are not a man of your word. If that is not true then I will see ALL POSTS regarding me and my company immediately removed from your site AND YOUR ARCHIVES. Terry, if that is not done immediately, starting TODAY, prepare to spend some money. I will institute a lawsuit against Creonline, you and all Creonline employees. I will also sue every poster on your board that has slandered my good name, in FEDERAL COURT on Monday morning. Count on it! Monday morning. Federal Court. Win or lose, you WILL be spend money from here on out for the illegal and slanderous use of my name. [The following is apparently the Vaughn reaction to the Whitney threat] Our attorneys have advised us that truth is an "absolute" defense to a defamation lawsuit, the Courts are not very fond of "prior restraints," and that it is highly unlikely that a "public figure" like Russ Whitney would prevail in such a lawsuit. However, we are a small company, and we simply cannot afford a protracted legal battle with a big, powerful organization like the Russ Whitney Company. Please respect our wishes and refrain from discussing Russ Whitney here. Thank you. Sincerely, Terry and J.P. Vaughan You can still see some posts about Whitney in CRE online' archives: 1998 1999 2000 2001 And you can see all the CREonline posts that Whitney wanted removed at another Web site that simply archives old Web sites: http:/web.archive.org/web/*/https://www.creonline.com For another Web site that does allow discussions of Whitney, go to https://www.papersourceonline.com/discus/messages/1649/3159.html Copyright 2002, 2003 by John T. Reed Last update 4/23/03

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