The NYT exposé on a financial scammer
March 20th, 2007 - 20 Comments
The New York Times takes Russ Whitney, huckster extraordinare, to task in a blistering article about his seminars on “getting rich,” which seem to disproportionately target people who just don’t know any better.
The courses cost $4,995 each, but less if you bought more. Yarbrough chose four, including the Millionaire U Real Estate Training. She had $130,000 in debt, some of it on her seven credit cards, and the clerk helped her to add $18,000 to it.
The article doesn’t spare any details about Whitney:
He was tanned and moussed; at 51, he looked like a million bucks. “Good morning,” he greeted a secretary. “How are you?” When she began complaining of cold symptoms, Whitney cut her off: “You don’t have cancer, do you? You’re doing great!” After lunch, he played basketball in the lobby, pushing down one of his executives and driving to the hoop.
And, of course, the courses amount to little more than an elementary education in real estate:
The economy is divided, Taylor said, between the rich and the poor, “and you can choose which side you want to be on.”
Taylor knew early that her class of advanced students was strictly remedial. Assessing them, she found that only 8 of 40 had invested in real estate before. The infomercial had talked of buying and quickly selling houses, and those who enrolled seemed largely unaware of the real estate slump.
Taylor introduced a hard-charging mortgage broker who began moving rapid-fire through nonconforming NINAs and no docs, PITI reserves and the 28/36 rule. At last, she looked up: “Everyone’s shaking their heads like they know this,” she said. And she rolled right on.
Amusingly, Whitney is caught in a lie with the NYT reporter:
When I asked if he would have enrolled in his school when he was starting out, Whitney said no. Then he added, “I shouldn’t say that,” and began trying to take it back.
But of course, he has your best interests in mind:
He was soon strutting before them…warning them to be careful out there, because “people don’t always have your best interests in mind.” In fact, he said “in 9 out of 10 cases they don’t.” And that’s why they needed more education — to learn what they could expect.
“We’ve got a lot of classes,” he went on. “You probably think they’re expensive.”
“They are expensive!” Yarbrough called out from the front of the class.
Whitney turned to regard her. Yarbrough stared back at him. He began to insist that his profit margins were reasonable, that he wasn’t gouging anyone, but Yarbrough quickly stopped him. “Let me say,” she replied, “that if we didn’t want to be here, we wouldn’t be here. Nobody twisted our arms.”
If there’s one thing I really hate (actually, there are thousands), it’s people taking advantage of others’ inexperience with personal finances.
My unhappy conclusion from this article is that people don’t always know what’s best for them. That, and with young people’s outrageous expectations of getting wealthy–”more than 1 in 5 Americans believe the best way to get rich is to win the lottery“–people are likely to fall for these scams more than ever before.
Depressing, but if you take the time (like, 5 hours) to learn about the fundamentals of personal finance, at least you’re ahead of nearly everybody else.
Do me a favor and tell your friends about risk/reward, investing for the long term, and living below your means. I don’t care if you tell them about this site or Suze Orman’s books or The Bogleheads Guide to Investing. Just point them to some credible information.
Read the entire New York Times article (it’s incredible): Russ Whitney Wants You to Be Rich
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