Coach Robs Real Estate Corner

Robert Paisola's Real Estate Success System 2008

2008-04-15T19:18:00.000-07:00

Welcome to Robert Paisola's Real Estate Investing Success System. This is now FREE of Charge and we welcome you!

Hello and welcome to the Real Estate Investing Section Success System! By purchasing this information, you have decided that you want to make a change in your life and improve your financial situation. Because you want more out of life, you have taken action, purchased this course, and are now reading through the books and listening to the audio materials. Most people fail to make any effort at all at making a change in their life for the better, so you should be commended for taking that all important first step.

Right now, you probably have a ton of questions about what real estate investing is all about and if the stories you've heard about regular people making money are true. Most of all, you're probably wondering if you can do it too.

As you go through this system, you'll begin to not only see how easy real estate investing can be, but you'll also learn how virtually anyone, including yourself, can make money in real estate using no money or credit.

You may be studying this course because you want to be your own boss and become rich and financially free. Or you could be simply looking to supplement your income or provide for your retirement by buying one or two properties a year working as a real estate investor in your spare time. Or, you may find real estate investing interesting and want to do it as a profitable hobby.

In any case, the resources to turn your dreams into a reality are in this course.

This course is designed to teach you everything you need to know to get started as a real estate investor or how to buy your home with little or no money down and using no credit. The techniques in this course are fresh and they work. While this course is not a get rich quick scheme, if you put a little time each day into the system it will truly change your life and your financial future.

Can This Really Be Done?

The first thing on your mind right now is probably whether or not you can actually buy real estate using little or no money or credit, and you may be wondering if this business is for real. Almost everyone has heard about creative real estate investing and buying real estate with no money down. Realizing that there is so much of this talk:, some part of it must be true.

Many people think that there is a catch to this business of real estate investing. However, it is important that you not draw conclusions as to what can and cannot be done in real estate.

There are conventional ways of buying and selling real estate and then there are unconventional "creative" ways. It's these creative ways of buying real estate using none of your own money or credit that are most popular among today's small real estate investors. The creative techniques such as those taught in this course can be done by virtually anyone regardless of their credit or current income situation. You can even buy and sell properties regardless of the economy and it will work in your area regardless of what city you live in.

What level of success you achieve is mainly determined by your personal goals and how dedicated you are at achieving success. Yes, some investors do make tens-of thousands of dollars within a short period of time or gain financial freedom. And yes, you can make some quick cash or start earning extra income right away. However, for the average person, it will usually take at least a couple of years to achieve consistent results so they can declare financial freedom. Just remember, anyone can make money in real estate investing, but only if they take action and stick with it.

The greatest thing about this business is that you don't have to become a savvy real estate investor to acquire two or three rental properties, so you can live more comfortable now and provide for your retirement later. If you manage a few investment properties correctly and invest your cash flow wisely, you can easily become financially free in only a few years.

By taking action, following the steps in this course and completing the tasks in the action guides, you can't help but make money and achieve success. However, if you just let this course just sit on your shelf, you obviously will not achieve anything.

You Don't Need Money Or Credit

It does not take money or credit for this business. Sure, you've heard this before, but how? How can anyone buy real estate using none of his or her own money or credit?

Again, don't draw conclusions as to what can or can not be done in real estate. Going down to a bank, having the bank pull your credit and then putting five or ten percent down, is the conventional way of buying houses.

In this instruction you'll learn why you never have to deal with banks if you don't want to. You'll also learn how you can start investing in real estate without any money or credit and you don't have to use partners if you don't want to either. If you do happen to have money or credit, then great! Things will be even easier and there will be more doors open to you.

Buying Your Own Home

Most people think that they can't buy a home to live in because they have bad credit, or they feel they can't afford the down payment. While these things may stop you from qualifying for a bank loan, they will not stop you from buying a home using unconventional methods.

There are several different ways to buy a home other than the conventional way of going down to the bank, qualifying for a loan and putting up a down payment. You'll learn everything you need to know to buy your own home, as you go through this course. You won't have to save up for a down payment or worry about being turned down for a loan.

Your Current Job And Becoming Financially Free

Becoming financially free can be great, but we are not going to tell you in this course that you should abandon your current career to become a full-time real estate entrepreneur. In fact, we recommend against it unless that is truly what you want and you have the personal ability to succeed.

For some of you, this course will allow you to get started in real estate investing part-time and then eventually become a full-time investor. Others of you may never want to quit your job at all. Your goals may be simply to supplement the current income you get from your career while at the same time using real estate to help provide for your financial needs or retirement. You may also want to keep your job for income stability, satisfaction and the company benefits that come with it. However, real estate investing can still be a very fulfilling and profitable hobby for you.

What This System Covers

Before we get into exactly what the Section system is and how it works, let's go over what this course will and will not cover.

This course covers everything you need to know to get started from A to Z and is written from the standpoint of "you" the beginning investor. The techniques and strategies within this course are what real people just like yourself are doing to make money in real estate and to achieve financial freedom.

Everything is down-to-earth investing techniques and strategies. You'll get an honest 1clok at creative real estate investing without any off-the-wall techniques that don't work in the real world or any far-fetched ideas that few people can ever do. Even if you are already investing in real estate, this course will give you new ideas and strategies that will open up new doors, and get you looking at real estate investing in a whole new way.

You'll learn what the four most popular investments there are among small real estate investors. We'll be referring to these four ways as the "Deal Sections" and you'll learn more about them in just a few minutes.

You'll also learn the components that make up a real estate investment deal, from the financing techniques and financing sources, to the paperwork and people involved; and of course, finding the real estate and putting deals together. You'll learn how to get your ducks in a row before you go out and look for houses, which not only dramatically increases your chances for success but also gives you a boost of confidence that if you do find a deal, you'll be able to execute the investment and make money.

What This Course Doesn't Cover

There are several things we won't be covering in this course.

Worthless Or Rarely Used Techniques

As we just said a minute ago, this course does not cover rarely used techniques or far-

fetched ideas or scenarios. While some rare situations do happen and some rarely used techniques can be used to make money, there are just so many different situations that you can come across as a real estate investor and no course could ever cover all of them. Also, it is important as a beginner not to get distracted by such miniscule techniques that are seldom used by investors. Such techniques would be like .

offering to purchase an item for a seller rather than giving them cash at closing, or .

asking a real estate agent to take back their commission in the form of a note.

The biggest misnomer you may have heard from other authors is that you should look for "assumable", "non-qualify" VA & FHA loans. These types of loans are almost none existent today and if you did happen to find one, the balance would be so low that you probably wouldn't be able to take over the house for just the loan balance and still be able to make the deal work. That's why we'll be sticking to the most popular techniques and strategies used by today's investors, which can be done by the average person like yourself on a consistent basis.

Everything Is Legal & Moral

Every technique in this system is legal and nothing you'll learn is immoral. Always

remember, you don't have to do anything unethical or immoral in this business to make money. Nor do you have to lie, cheat or steal. And if you do, you won't be in

this business very long.

You Don't Need A License

You also will never need a real estate license to do the investment techniques in this course, because you will always be an involved principle in the deal. You will either be a buyer or seller, lessor or lessee, optionor or optionee. You only need a real estate license when you are selling a property for a commission and you do not have an equitable interest in the property.

Being a principal in the transaction is where the real money is at anyways, not standing on the sidelines as a real estate agent watching investors walk away from closing with the big checks while you get roughly a quarter of a commission check. That's right, a quarter of the commission check. Usually there is a listing agent as well as a selling agent. Each agent usually splits their part of the commission with their head Broker. That makes four people dividing up one commission check of only a few percent of the sales price.

Having a real estate license does have its advantages as well as disadvantages. One of the advantages is that you can gain access to the Multiple Listing Service, commonly referred to as the MLS. (This is basically a database system of property listings.) You can also make an extra fee when purchasing a property. But again, that might not be very much.

Some of the drawbacks of having a license are that you are held to a higher standard if you have to go to court for any reason. You also must disclose to sellers and buyers that you are a licensed agent even if you are not taking a fee and if you are going to take a fee as a real estate agent, you must disclose that as well.

Just remember, you want to be on the side of the closing table where the big bucks are, and that is on the side where the buyers and sellers sit; not on the side where the people doing the closing are. That is why many real estate agents are taking a hard look at what the real estate investors out there are doing. By the way, if you happen to be a real estate agent study this system, you'll need to throw all the conventional things you have learned out the window.

No Commercial Property or Vacant Land

There are three main types of real estate that you can invest in. They are vacant land, commercial property and residential property.

We won't be covering commercial investments or investing in raw land.

Commercial properties are retail centers, shopping centers, office buildings and strip malls. These types of commercial investments tend to be large investments requiring a lot of expertise and money. For this reason, this type of investment is not popular among small investors.

Raw land tends not to be a good investment because it requires buying a property and holding onto it for a long time in the hopes that it will appreciate. In the mean time, you have to pay taxes and make mortgage payments on the property, which most likely would eat up any profit you may have in the future anyways. Vacant land also usually does not produce any income that can be used to offset the expenses of ownership such as the mortgage payments and taxes. Another way to make money in raw land is to subdivide it into smaller pieces. However, this is beyond the realm of this course.

The old saying "they are not making any more real estate" causes many people to go out and buy vacant land thinking it is a good investment. However, raw land is usually not a good investment. It just isn't the right investment vehicle for an individual to build wealth with when starting out with little or no money, and possibly limited credit.

As a beginning investor you will mainly want to focus on residential properties. Single-family houses and small multi unit properties are the best investments for beginning investors. They are more easily financed, have lower overall purchase prices and they are very plentiful. That's why this course focuses on residential property and multi-unit apartment buildings of four units or smaller.

Understanding The 4 Section System

Creative real estate investing has been around for many years and has been taught by many different people. Other courses usually teach you how to invest in real estate with a start to finish approach and then quit.

This start to finish approach usually begins with finding property. The problem with this approach to teaching is that the student feels insecure about being able to execute the deal if they actually do find the right property, at the right price, and the right terms. The reason why the student usually feels insecure and lost is because they have not gotten their ducks in a row ahead of time because the course that they were reading did not teach them that they must do certain things before they go out and look for real estate. You may even already own one of these courses that has left you confused and feeling that you need more information. If so, don't worry any longer. This system will take the fear out of moving forward and taking action by giving you an action plan designed to prepare you for finding that all important first deal (or next deal).

What Is The Section Success System?

The concept behind the Section System is to first break real estate investing down into four main types of investment strategies, then to further break these strategies down into their four main components.

Learning and understanding the two sets of Sections is essential to being a creative real estate investor.

The Deal Sections

The first set of Sections is what we'll be referring to as the "Deal Sections", because they are the types of deals you can do as an investor.

The four Sections are "Wholesaling", "Retailing", "Seller Financing" and "Rentals". These are the four most popular ways to make money in real estate. We'll go into them in more detail in just a minute. But first, each of these four types of investments can further be broken down into four main components, which we will be calling the

"Action Sections".

The Action Sections

Action Sections are the four major parts that make up an investment.

They are "Money", "Agreements", "Contacts" and "Real Estate".

These four Sections will be the main focus in this system because every creative real estate deal involving residential property is composed of these four main elements.

But why are they called "Action Sections"?

Because the key to success is getting all your ducks in a row and to do this, you must take action in all four "Action Sections". It is this plan of action that the Section Success System is all about.

The Deal Sections represent the four main types of deals you can do when investing in residential properties using little or no money, and no credit. These include "wholesaling" properties for quick cash, fixing up properties and "retailing" them, doing deals based on getting "seller financing", and building a portfolio of "rentals".

Each of the Deal Sections above can be broken down into the four main components you must take action to assemble when doing an investment deal. Those components are the "money" or financing, the "agreements" used to put the deal in writing, the "contacts" you work with; and lastly, the "real estate" property itself.

How The System Works

This system works by breaking real estate investing down into Sections so that you as the student are able to see every aspect of the real estate investment deal from the inside out. This will give you a clearer understanding of the types of investments you can do and of the components that make up a real estate deal, so you can better see how everything fits together. You'll also have a clear plan of action so that when you locate a deal, you'll recognize it and be prepared to take advantage of it.

Why The Section System Is Important

There are two parts to actually "becoming" a real estate investor. First you must learn the business and second, you must actually go out and take action to do it. Seems simple enough, right?

We have done a lot of research into the questions beginning investors have and the mistakes they make when getting started. We have also taken a look at how students are able to retain the information they study, as well as what they do to take action on what they have learned. What we found was that most beginners who read other books or courses, weren't getting a clear picture on how everything is put together, nor did they have a clear understanding of how to take action and get started.

A System Of Learning

The very first step to getting started is to learn. But there are virtually no books or courses out there on real estate investing that have an actual system of learning. The material usually leaves the reader with a blurred vision of how everything works and the reader is left with a feeling that something is missing. That is why this system is designed to break real estate investing down into pieces you can learn, understand, and remember.

A System Of Action

Once you've learned all the aspects of real estate investing, you must get out and take action. Of course, the key to taking action is to have a plan. This plan must prepare you to take advantage of investment opportunities first, then have you locate the investments.

The Section Success System is that plan and you'll find an "Action Guide" outlining the steps you need to take, in the back of each module in this system.

So Let's Get Started!

In this first module, "Getting Started", we'll go over the Deal Sections so that you understand what types of deals can be done and you can better decide what areas of investing you want to focus on most. We'll also give a brief overview of the Action Sections and their importance.

Later in this system, we'll then go to the heart of the Section Success System by covering each of these Action Sections in detail, as well as create a plan of action so that you to can become successful as a real estate investor.

Now that you have a basic understanding of what the Section Success System is, let's take a closer look at the first set of Sections called the "Deal Sections".

The Deal Sections

In this chapter, we will go over the Deal Sections, which are the four main types of investments which we will cover in this course. Again, they are Wholesaling, Retailing, Seller Financing, and Rentals.

Seller Financing is subcategorized.

Types Of Seller Financing

They are,

· "Subject To",

· "Seller Held Mortgages",

· "Agreement For Deeds",

· "Lease Options", and

· “Straight Options".

These are the types of investments individual people are doing all over the country.

There are spin-offs from these ways to invest but for the most part, these spin-offs will still fit into these four Sections and we will try to cover those various twists as well.

When going over each of the four types of investments, we'll discuss the objectives for doing the deal, what types of properties you would most likely be investing in, and the advantages and disadvantages to that type of investment.

Know Your Exit Strategy

The first thing you do in any investment is to decide what type of investment it will be and what you're going to do with the property.

· Will you turn the deal over to another investor for a quick finder's fee?

· Or will you fix the property up and sell it retail to a homebuyer who will live in it?

· Maybe you'll want to keep the property as an income-producing rental, or maybe you'll create a no money down deal for yourself to live in.

How you plan to complete the deal is commonly referred to as knowing your "Exit Strategy" and is a term used by real estate investors to describe how they plan to sell a property and make a profit.

Know Your Exit Strategy Going Into The Deal

You should always know exactly what you are going to do with a property before you buy it. You'll also never want to make an offer on a property unless you know exactly what you are going to do with it if the offer is accepted; nor will you ever buy a property and then figure out what to do with it after the fact.

How you go into a deal many times will affect your exit strategy or how you go out of the deal.

In other words, if you pay all cash for a property, you may not be able to keep that cash tied up for a long period of time.

Therefore, you would either need to…..

· flip the property to another investor for a fee,

· fix the property up and retail it to a home buyer, or

· refinance the property to get your cash back.

Choosing The Right Exit Strategy

Your exit strategy is based on three main factors.

These factors are:

· your personal goals,

· the seller's needs, and

· the property itself.

Your Goals

First of all, your goals are very important when deciding what types of investments to

do. For instance, is your immediate goal to make some quick cash or to build a retirement nest-egg? If your goal is to build a monthly residual income, you'll have to consider the exit strategies that produce a monthly income, such as Lease Options or rentals. If your goal is to make some quick cash, you'll have to consider doing some wholesale or retail deals.

The Seller's Needs

You'll also need to consider what the seller's needs are. Is the seller a bank needing all cash or is the seller a private individual simply looking for debt relief.

For instance, if you are looking to lease a property with an option to buy, bank owned properties are not good prospects because most banks are looking to sell for cash, especially when the property needs work.

The Property

Finally, you must analyze what type of investment a property is most suited for.

· Is the property in a resalable area suitable for selling to a homebuyer, or is the property located in an area that is more suitable for a tenant?

o You don't want to be rehabbing and retailing a house that is in a war zone, for example.

· Does the property need repairs and are you prepared to have them done?

Don't worry if you think that deciding on an exit strategy is complicated. Once you know and understand the choices involved, deciding what to do will be pretty easy.

After Initial Training

Review

Let's review what we have covered in this unit and take a look at the big picture of how each of the Deal Sections are similar and how each of them differ.

We went over the four Deal Sections which are ...

· the Wholesaling Section,

· the Retailing Section,

· the Seller Financing Section

o Sub2

o Contract For Deed

o Seller Carry Equity

o Lease Option

o Straight Option (Flip)

· Landlording Section.

In the Wholesaling and Retailing Sections, the deal is in the price, while in the Seller Financing Section, the deal is in the finance terms. All three of these Sections offer big paydays.

In the Wholesaling Section, you are able to flip properties for a quick profit without needing credit, money or doing any repairs.

While Retailing is the most difficult Section, you can make the biggest paydays by buying properties, fixing them up, and then selling the property to a homebuyer.

In the Seller Financing Section you have the ability to control beautiful houses in beautiful neighborhoods using little or no money, or credit. And, the nicer and more expensive houses can offer the larger spreads and profits.

And lastly, the Landlording Section and the Seller Financing Section provide residual cash flow that you can't get in the Wholesaling and Retailing Sections.

The Action Sections

Up until now we have gone over the Deal Sections and the various ways to invest in real estate creatively. The second set of Sections we are going to cover are the "Action Sections". The Action Sections are the main focus of this course and Modules 2, 3, 4, and 5, are dedicated to each of them.

What Are The Action Sections?

Every investment deal can be broken down into four main components or what we will call "Action Sections".

They are

· Money,

· Agreements,

· REI Contacts and

· Real Estate Investing as a Business

It is not only important to take action, but to take action in the right order.

Every deal requires some form of money, whether it is your own money, money from a private lender, money from a bank, or money from your buyer.

Secondly, every real estate investment involves written agreements.

Furthermore, to do a real estate investment requires Contacts. These contacts are not only limited to real estate agents, Mortgage Brokers and Closing Attorneys, but also include your list of buyers, motivated sellers, and many other types of contacts that you'll be dealing with when putting a real estate investment transaction together.

And lastly, that brings us to the real estate investing as a business.

After all, what would a real estate investment be without the actual real estate investing tasks to do?

Why Are They Called" Action Sections"

We call these four components "Action Sections" because you must take action to put these four Sections together so that you have a real estate investment deal.

The only way you'll ever get anything done is by taking action. In order to be successful, it is vital that you have a complete understanding of each of these components and have a plan for taking action. That is why the Action Sections are the main focus of this educational material.

Taking Action In The Right Order

Many REI students study other courses that don't have a system of taking action.

One of the first things most of the students do after completing one of these other courses is go out and start looking for deals. In reality, this is the last thing you should do.

Let's say, the first thing you did was go find a house that is priced very cheap.

· Where are you going to get the money to buy it?

· What closing agent would you use?

· If you had to repair it, who would do the repair work?

· If you planned to wholesale it, what investors would you send by to look at the deal?

The reason why most beginning investors fail is because they take action in the wrong order. They go out hoping to find a deal and think that all the pieces will somehow just fall into place.

The Order Of The Action Sections

The Action Sections are structured in the following order ...

1. The Money Section

2. The Agreements Section

3. The Contacts Section

4. The Real Estate Investing as a Business Section

Getting Your Ducks In A Row

There is a very special reason why the Real Estate Investing as a Business Section is last and it is one of the key aspects of this system ...

1. You must understand money, when you need it, how to get it, and how to get around needing it.

2. You must understand the Agreements that are involved and ...

3. You must have the proper contacts in place before you go out looking at real estate, otherwise you are wasting your time.

There are a lot of courses out there on real estate investing and at REISkills.com, we have researched what many beginners usually do after reading one of these other courses. Almost all of them went straight out looking for houses.

They barely understood the techniques and they had no foundation on which to work if they found a deal.

This is one of the key reasons why the Section Success System was developed and why the Real Estate Section is the last Action Section.

Identify Your Weaknesses

Another purpose of the Action Sections is to break real estate investing down so that you can see the major components of doing real estate deals.

By being able to see the big picture, you are able to identify areas in which you are weak & correct them.

For instance, take a brief look into the Money Section and ask yourself ...

· How many sources do I have for borrowing money if I need it?

· Do I understand the different loan programs that are out there and how to get a loan for myself or my buyer?

After going through this educational material and learning each Action Section in detail, you will be able to continually keep looking at all four Sections to identify and eliminate any weaknesses.

Implementing The Section Success System

There are three main steps to implementing the system in this course.

1. The first step is to learn the actual system.

2. The second step is to decide what types of investment strategies appeal to you most and decide what your investing goals are going to be.

3. And third, the most important step you will ever make, is to go out and take action.

Let's take a closer look at each of these three steps ...

Step 1 - Learning The System

The first step to becoming a successful real estate investor is to study this course and learn the system. You must learn what it means to break real estate investing down and how to analyze deals, as well as how to analyze yourself, your goals, your weaknesses, and your personal abilities.

Studying This Course

When studying this course, it is important that you go through each module as they are numbered. This is because each module builds on the previous one. If you study them out of order, you may find it more difficult to comprehend everything as a whole and your comprehension of this system will be the key to your success as a real estate investor.

Study Completely Before Doing Workbooks

It is best if you read this course or listen to the audio materials at least once all the way through, before doing the workbooks. This way, you will have a better idea of how you will be progressing to the point where you have all your ducks in a row and can execute a real estate deal like a pro.

Don't just go through this course and then run out doing things from memory. The workbooks in this course are not there for you to just look at. The workbooks are there to make sure you get all your bases covered properly. Otherwise, you may find yourself looking at a real estate deal and being unprepared to take advantage of it. And don't worry, the tasks in this course are not too hard for the average person to do.

Go Through The Materials At Least Twice

Once you've gone through all the course materials and have begun doing the workbooks, continue studying by going through the materials a second time. By doing this you will pick up bits of information that didn't quite sink in the first time and you will have a better understanding of the "big picture" the second time through.

After two to four weeks, consider listening to the course and going through the course materials a third time. You should get to the point that you fully understand the material and can repeat the strategies and techniques from memory.

Step 2 - Decide What You Want To Do And Set Goals

The second step to implementing the Section Success System is to decide what you want to do. This may be a little hard to do right now because you are just starting to study this course. You may have to complete this entire course so that you have all the information about the types of investments that can be done, so you can make an informed decision. Then, making the decision on what types of investments fit your goals should be much easier.

Deciding What Types Of Investments You Want To Do

You must first decide what type of investments you want to do. In other words, what Deal Section (or Sections), do you want to focus on most? Do you want to do a few Wholesale deals and make some quick cash, or do you want to buy a property, fix it up and then Retail it? Do you want to buy a property for yourself with no money down and without qualifying, or do you want to build a rental portfolio?

Being A Diversified Investor

It is important that you not limit yourself to just doing one investment strategy.

When you start advertising and finding deals, you will have all types of situations thrown at you. As a real estate investor, you don't want to go around with blinders on looking for one specific type of investment. If you do, you are missing out on well over half of your investing potential. To make the most of what real estate investing has to offer, you will want to be a diversified investor so you can make money on every deal type, size, and shape, that comes your way.

No Cookie Cutter Approaches

If you are trying to approach real estate investing with a cookie cutter approach, you are limiting yourself with only one exit strategy. Thus, if you come across a deal that does not fit your cookie cutter exit strategy, you'll most likely pass it up, which means you are passing up income and profit.

Setting Goals

Right now, you probably have several goals in mind that you want to achieve. You may want to quit your day job and become financially free, or you may simply want to build a small portfolio of investments properties that can provide for your retirement. This is all great, but for now you should simply focus on the goal of completing this course and one other goal that we're going to refer to as "Goal #1".

GOAL #1 - Your First Deal

It is great to set goals to be financially free or to be able to quit your job and not have to worry about money. However, there is one goal in real estate that comes before all others. You must do your first deal! For now, this will be your #1 goal.

If you have already done your first deal, that is great. You can now set your sights on becoming more financially free. However, if you haven't yet done a deal, you must set the goal of doing one deal first. Before you can achieve goals of buying four or five rental properties you must buy the first one. At this point, do not focus on becoming rich, buying a bunch of rental properties, or making enough money to quit your job. Just focus on that first deal.

Getting that first deal and achieving success can be somewhat scary at first, but don't worry. To achieve this first deal you must have a plan and that plan will be laid out for you in this course. Start by learning what to do and then take action one-step at a time. If you can line your ducks up in a row so that you accomplish your first deal, then you can do it for your second deal, third deal and so on. Each time, things will become easier-and-easier for you and your confidence will grow deal-by-deal as well.

If you have what it takes to do just one deal, then you have what it takes to become financially free and change your life forever.

Step 3 - Taking Action

The third step to implementing the Section Success System is to actually get out there and take action .

* You are not going to make any money reading this course. You're only going to make money by taking action and there is only so much you can learn from books and tapes.

Eventually, you have to put the books and tapes aside and get out into the real world and start learning what works best for you.

To Succeed You Must Have A Plan

In order to take action properly you must have a plan and that plan is covered

throughout this course.

The main focus of this system is to break real estate investing down so that you can see each aspect of an investment. The purpose of this, is so you can take the appropriate and thorough action in every area that makes up an investment deal.

After reading and studying this course, you can then do the Action Guide Workbooks. These workbooks layout a clear plan of action you must take to get started.

Remember, in this course is everything you'll need to get started, but none of the information will do you any good unless you take action.

Why People Fail To Take Action

Even having such a clear plan of action as set out in this course, you have to ask the question of why some people still fail to take action or do something to take control of their financial future.

There are several reasons why people don't take action even when they know what needs to be done. If you fail to take action, you ultimately will never achieve success. Therefore, it is important that you understand the reasons why some people don't take action, so that you don't make the same mistakes.

Being Simply Lazy

The biggest reason some people don't take action has to be that some people are just

simply lazy. This may sound like a very simple problem, but the results of being lazy can be devastating on your financial future. There are some things you can do to help motivate yourself, which brings us to our next reason why people fail to take action.

Focused On The Wrong Pains

So many people do not take action because they associate pain to doing the task itself,

rather than focusing on the pain caused by the consequences of not taking action, such as living paycheck-to-paycheck or working in a dead end job.

Think about how you are letting your financial future slip by because you are not taking action. You are selling your life away hour-by-hour for a few dollars, worried about losing your job and your paycheck.

Realize how much you will miss out on and how hard life can be if you don't take action. When you focus hard enough on the pain of not taking action, it suddenly becomes a lot easier (and you have a lot more motivation), to go out and do something to change your life.

Failing To Take Action Because Of Fear

Another reason why some people don't take action is because they fear the results that taking action may bring, such as change and more responsibility.

Fear fills you with doubt and insecurity. It can cause you to procrastinate or to sabotage your own success. You can begin to make excuses for yourself. You mayor may not be one of those people who suffers from fear and allows your fear to prevent you from taking action. If you are, you must learn to identify and control your fears.

Fear Of Taking Risks

Some people don't take action because they have a fear of taking risks, even if the risk is minimal. Sometimes, people will make excuses and say there is a risk when there really isn't, just so they can justify not taking action.

What do you think is risky? Is it safer to do nothing about your financial future? Many successful real estate investors would say that clinging to job security and working to make someone else rich all your life, is extremely risky. There is usually some level of risk in every venture. However, knowing how to minimize and control the risk, is the key.

Fear Of Failure

Many people fail to take action because they have a fear of disappointment or failure. It is normal to be a little afraid or nervous as a beginner. But don't let that stop you. Your winning strategy must include failure. No one can expect to win one hundred percent of the time.

Learn From Your Mistakes

The difference between people who are successful and those who aren't is that successful people learn from their failures and mistakes, and they don't give up when they fall down. If they fall down, they get back up and try again.

You must be mentally prepared to make mistakes and to have failures. "Failing" is not bad, "Quitting" is bad.

Look at the mistakes you make in a positive way. Learn from your mistakes and ask yourself what you could have done differently. Look at what is working and what is not working, and constantly change your approach until you achieve the results you want.

Make Time

The next important part of taking action is to find time if you have a busy schedule.

If you work a full time job and have a family like most people, you have very limited

spare time if any at all.

Be sure to identify any spare time you do have that can be dedicated towards changing your financial future. Next, try to find things in your current schedule that are not important such as watching TV, and refrain from doing them so you have even more additional time freed up. Then use this time as productively as possible.

Take Consistent Action

You must also get yourself to take consistent action. Don't just take action on a short-

term basis. The actions you take must be consistent and relentless now and in the future. So don't allow yourself to backslide into going about your normal daily routines and not focusing on your financial future.

Visualize Yourself Taking Action

It also helps to visualize yourself taking action and doing things that are in this course.

Visualize yourself looking at properties and making phone calls to sellers. By visualizing, you make it more comfortable to take action because it is almost as if you have already done it.

Surround Yourself With Like-Minded Individuals

Try to surround yourself with like minded individuals by visiting your local investor association (if there is one near you). You can get a list of associations by visiting the

Avoid Negative Thinkers

Try to avoid negative thinkers. It is important to understand that if you listen to negative thinkers, they can steal away your motivation to take action and ultimately your dreams. So be very careful from whom you take advice or suggestions and avoid negative thinkers and criticism, especially from other people or even your own relatives who can barely scrape together a living for themselves. Don't let broke people who know little or nothing about real estate investing, steal away your motivation and your dreams, and keep you from doing this business.

When taking advice or suggestions, ask yourself. .. Is this person qualified to teach me how to become rich or wealthy? What is that person doing in their life and what have they achieved?

When at a meeting, ask people about the deals they have done and how they did it. . Realize there are two types of people at those investors associations; people who are taking action and doing deals, and people who are procrastinating and watching everyone else make money. You have to decide which one of these two types of people you are going to be.

Lastly, contact us at Team@REIMENTORING.com for more information on the coaching programs we offer.

The action plans within our coaching programs are even more intense than the action guides in this course. While the core of the information is in this course, it is our coaching plans that take you to the next level by leading you by the hand. Being held accountable for action you do or don't take can be a tremendous boost to your success.

Get Organized And Setting Up Shop

As a beginning investor, there are things you need to do to get yourself organized.

Making A Space To Work

Start by setting aside a space in your home for working, for doing deals, and conducting your business. It is important if possible that your work space be secluded enough that you will not be disturbed by other family members while working, studying, or on the telephone with important contacts and sellers.

Your workspace should at least consist of a table to write on and a telephone. The phone should also have call waiting and either an answering machine or voice mail

system.

By setting up a space in your home for doing business you will feel more professional and dedicated.

Tools Of The Trade

As a real estate investor, there are certain "tools of the trade" you must have.

Get A Daily Planner

First, get a daily planner and use it. The most important tool you can have as a real

estate investor is a daily planner so you can keep track of who you need to call, along with people's phone numbers. You can also put a to-do list in your planner.

Cell Phone

The next most important thing an investor needs is a cell phone. A cell phone can

instantly put you in contact with real estate agents and sellers while you are at a property. It will also allow agents, sellers, other investors, and also homebuyers to easily contact you no matter where you are. You don't want to miss that million-dollar phone call from a seller with the deal of a lifetime.

A Fax Machine Is A Must

You are also going to need a fax machine because you will be faxing things back and fourth to your title company and real estate agents and maybe even other investors.

If you have a computer you can get fax software to use with a scanner. However, we highly recommend that you get a dedicated fax machine on a dedicated phone line that does not require you to flip a switch or turn it on for it to receive faxes while you are out. A dedicated phone line will only cost you about $10 or $15 a month or you can get a phone line switch that will automatically switch the phone line over to your fax machine when the switch detects an incoming fax.

A Filing Cabinet

You should also have a filing cabinet to store important documents and files that is dedicated to your investing endeavors. You may not need one right away but once you start looking for deals, you'll find yourself needing a way to keep all your papers organized.

Digital Cameras

A digital camera can also be very handy.

If you are tracking down vacant houses or dealing with "for sale buy owners", a digital camera is a necessity. One of the most effective ways to get deals is by following up with a seller two or three months down the road. You are going to need that picture so you can remember the property and the physical condition it was in.

These cameras have really come down in price in recent years and you can get a cheap one for as little as $50 dollars or so. You could use a 35 mm camera; however, it will tend to get expensive developing film and you won't want to use a Polaroid camera because the picture quality is so low.

Street Map

A street map is also a must for any real estate investor. It is best to have one that is a book rather than a large foldout sheet. The book style maps are much easier to handle when you are in your car.

Personal Computer

Finally, if you do not have a personal computer, you should seriously consider getting one. They can be very handy for drawing up agreements and tracking your leads. There are also a ton of resources online for real estate investors including the www.RobertPaisola.com website.

Setting Goals

Which Deal Sections did you find most appealing to you and why?

What is the ultimate goal you want to achieve by studying this course?

Set a goal as to how much time you will dedicate to real estate investing each day or each week.

Take your main goal and come up with short-term goals that you must achieve first:

· 30 days:

· 90 days:

· 6 Months:

· 1 Year:

List as many consequences you can if you fail to take action to change your financial future.

(i.e. Will be stuck in a dead-end job, won't be able to spend as much time with family, etc.)

Coach Robert Paisola Success Reading Series

2008-03-27T22:59:00.000-07:00

If you want to be successful in business or in life, you must have mentors. I have had many, and one thing that I learned very quickly is the importance of continuing the learning process.

As a result, here are some of the most essential books that you must read to obtain that goal that you are driving for.

If you spent just one hour a day reading books in your field and related fields, you would finish reading at least one book a week. Over 10 years’ time, you would have read 520 books about your area of expertise—enough to put you in the top 1% of your field!

If you were access information from masters in related areas in addition to reading books in your field, you’d have an edge that others simply don’t have.

Take a look at the subject areas listed below.

Reading books in these areas will help you achieve mastery in those areas of life that are central to your happiness and fulfillment. Of course, most of these
titles are the books that have helped me attain personal, professional, and financial success. Many of them are considered classics and should make up
the core of anybody’s personal success library.

If you read more slowly than you’d like, consider taking a course to increase not only your reading speed—but how fast you absorb and use the valuable
information contained in these books.

It’s been said that success in life is a lot like a connect-the-dots game. So many people have gone before us — leaving maps and guidebooks about how to replicate their success — that all we have to do is connect the dots.

In fact, the books you’ll discover below contain some of the best-known and most proven wisdom, information, methodologies, systems, techniques and “secrets” of success that have ever been recorded.

Read over the list and pick 10 books to start with.

Commit to reading one book a week as the minimum.

Read for an hour a day. Turn off the TV and read in the evening. If you have young children, you’ll be modeling for them the habit of life-long reading for pleasure and information.

If you prefer, set your alarm for an hour earlier and read before getting ready for work each morning.

It will set a positive, can-do, tone for the rest of your day.

As you read these powerful books, keep a list of the ones you read over the next year. Commit to reading one book a week and applying the principles
you discover to your own life. The results will be nothing less than miraculous.

The Science of Success
The Power of Focus: How to Hit Your Business, Personal
and Financial Targets with Absolute Certainty by Jack
Canfield, Mark Victor Hansen and Les Hewitt. Deerfield Beach,
FL: Health Communications, Inc., 2000.
The Aladdin Factor: How to Ask for and Get Anything You
Want in Life by Jack Canfield and Mark Victor Hansen. New
York: Berkley, 1995.
The Art of Possibility: Transforming Personal and
Professional Life by Rosamund Stone Zander and Benjamin
Zander. New York, Penguin, 2000.
The DNA of Success: Know What You Want...To Get What
You Want by Jack M. Zufelt. New York: Regan Books, 2002.
The Science of Success: How to Attract Prosperity and
Create Life Balance through Proven Principles by James A.
Ray. La Jolla, CA: SunArk Press, 1999.
The Success System that Never Fails by W. Clement Stone.
Englewood Clifffs, NJ: Prentice-Hall, Inc., 1962.
Success through a Positive Mental Attitude by Napoleon Hill
and W. Clement Stone. Englewood Cliffs, NJ: Prentice-Hall, Inc.,
1977.

Think and Grow Rich by Napoleon Hill. New York: Fawcett Crest,
1960.
Napoleon HillÕs Keys to Success: The 17 Principles of
Personal Achievement edited by Matthew Sartwell. New York:
Plume, 1997.
Think and Grow Rich: A Black Choice by Dennis P. Kimbro,
Ph.D.
What Makes the Great Great: Strategies for Extraordinary
Achievement by Dennis P. Kmbrow, Ph.D. New York: Doubleday,
1997.
The 7 Habits of Highly Effective People by Stephen R. Covey.
New York: Fireside/Simon & Schuster, 1989.
The 100 Absolutely Unbreakable Laws of Business Success
by Brian Tracy. San Francisco: Berret-Koehler, 2000.
Master Success: Create A Life of Purpose, Passion, Peace
and Prosperity by Bill Fitzpatrick . Natick, MA: American Success
Institute, 2000.
The Traits of Champions: The Secrets of Championship
Performance in Business, Life and Golf by Andrew Wood and
Brian Tracy. Provo, UT; Executive Excellence Publishing, 2000.
The Great Crossover: Personal Confidence in the Age of the
Microchip by Dan Sullivan, Babs Smith and Michel Negry.
Chicago and Toronto: The Strategic Coach, 1994.
The Seven Spiritual Laws of Success by Deepak Chopra. San
Rafael: Amber-Allen, 1994.
Extreme Success by Richard Fettke. New York: Fireside, 2002.
The Power of Positive Habits by Dan Robey. Miami: Abritt
Publishing Group, 2003.
Unlimited Power by Anthony Robbins. New York: Simon &
Schuster, 1986.
Peak Performance: Mental Training Techniques of the WorldÕs
Greatest Athletes by Charles A. Garfield with Hal Z. Bennett. Los
Angeles: Jeremy P. Tarcher, 1984.
Peak Performers: The New Heroes of American Business by
Charles Garfield. New York: William Morrow and Company, 1986,
Financial Success
The Dynamic Laws of Prosperity by Catherine Ponder. New
York: DeVorss.
The One Minute Millionaire by Mark Victor Hansen and Robert
G. Allen. New York: Harmony Books, 2002.
The Millionaire Next Door by Thomas J. Stanley and William D.
Danko. New York: Pocket Books, 1996.
The Courage To Be Rich: Creating A Life of Material and
Spiritual Abundance by Suze Orman. New York: Riverhead
Books, 1999.
Rich Dad, Poor Dad by Robert Kiyosaki with Sharon L. Lecter.
Paradise Valley, AZ: Tech Press, Inc., 1997.
The Wealthy Barber by David Chilton. Rocklin, CA: Prima
Publishing, 1991.
Multiple Streams of Income by Robert G. Allen. New York: John
Wiley & Sons, 2000.
The Miracle of Tithing by Mark Victor Hansen. Newport Beach,
CA: Mark Victor Hansen & Associates, 2003. (800) 433-2314.
Time Management and Getting Things Done
First Things First by Stephen Covey, A. Roger Merrill and
Rebecca R. Merrill. New York,: Simon & Schuster.
Getting Things Done: The ABCs of Time Management by
Edwin C. Bliss. New York: Charles ScribnerÕs Sons, 1991.
Doing It Now by Edwin C. Bliss. New York: Macmillan Publishing
Company, 1983
The 10 Natural Laws of Successful Time and Life
Management: Proven Strategies for Increased Productivity
and Inner Peace by Hyrum W. Smith. New York: Warner Books,
1994.
The ProcrastinatorÕs Handbook: Mastering the Art of Doing It
Now by Rita Emmett. New York: Walker Publishing Co., 2000.
Getting Things Done: The Art of Stress-Free Productivity by
David Allen. New York: Viking, 2001.
Entrepreneurial Success
The E-Myth Revisited by Michael Gerber. New York: Harper
Business, 1995.
1001 Ways to Reward Employees by Bob Nelson. New York:
Workman Publishing, 1994.
The One Minute Manager by Kenneth Blanchard and Spencer
Johnson. New York: Berkley Books, 1983.
Inspiration and Motivation
Dare to Win by Jack Canfield and Mark Victor Hansen. New York:
Berkley, 1994.
Chicken Soup for the Soul by Jack Canfield and Mark Victor
Hansen. Deefield Beach, FL: Health Communications, Inc., 1993.
Chicken Soup for the Soul at Work by Jack Canfield, Mark
Victor Hansen, Martin Rutte, Maida Rogerson and Tim Clauss.
Deerfield Beach, FL, Health Communications Inc. 1996.
ItÕs Not Over Until You Win by Les Brown. New York: Simon &
Schuster, 1997.

Health and Fitness
The 24-Hour Turnaround : The Formula for Permanent Weight
Loss, Anti-aging, and Optimal HealthÑStarting Today! by Jay
Williams, Ph.D. New York: Regan Books, 2002.
Ultimate Fit or Fat by Covert Bailey. Boston: Houghton Mifflin
Company, 2000
Body for Life: 12 Weeks to Mental and Spiritual Strength by
Bill Phillips. New York: HarperCollins, 1999
The Mars and Venus Diet and Exercise Solution by John Gray,
Ph.D. New York: St. Martins Press, 2003
Chicken Soup for the Healthy Soul by Jack Canfield and Mark
Victor Hansen. Santa Barbara, CA: Chicken Soup for the Soul
Enterprises, 2003. Available only on-line from Chicken Soup for the
Soul Enterprises at www.chickensoup.com. Available April 2003.
Communication, Family Success and
Relationships
Conscious Loving: The Journey to Co-Commitment by Gay
Hendricks and Kathlyn Hendricks. New York: Bantam Books, 1992
Men Are From Mars, Women Are from Venus: A Practical
Guide for Improving Communication and Getting What You
Want in Your Relationships by John Gray, Ph.D. New York:
HarperCollins, 1993
How to Talk So Kids Will Listen & Listen So Kids Will Talk by
Adele Faber and Elaine Mazlish. New York: Avon Books, 1980.
Communicate with Confidence by Dianna Booher.
How to Say It at Work: Putting Yourself Across with Power
Words, Phrases, Body Language and Communication Secrets
by Jack Griffin.
Boundaries: When to Say Yes, When to Say No to Take
Control of Your Life by Dr. Henry Cloud and Dr. John Townsend.
Grand Rapids: Zondervan, 1992.
Personal Awareness, Human Potential,
Inner Peace and Spirituality
Loving What Is: Four Questions that Can Change Your Life by
Byron Katie. New York: Harmony Books, 2002.
The Power of Now: A Guide to Spiritual Enlightenment by
Eckhart Tolle. Novato, CA: New World Library, 1999
The Four Agreements: A Practical Guide to Personal Freedom
by Don Miguel Ruiz. San Rafael: Amber-Allen, 1999.
DonÕt Sweat the Small Stuff...and itÕs all small stuff: Simple
Ways to Keep the Little Things From Taking Over Your Life by
Richard Carlson. New York: Hyperion, 1997
The Six Pillars of Self-Esteem by Nathaniel Branden. New York:
Bantam, 1994.
Life After Life by Raymond A. Moody, Jr., M.D. New York:
Bantam, 1975.
Life Strategies: Doing What Works, Doing What Matters by
Phillip C. McGraw, Ph.D., New York: Hyperion, 1999.
Power vs. Force: The Hidden Determinants of Human
Behavior by David R. Hawkins, M.D., Ph.D. Carlsbad, CA: Hay
House, 2002.
Additional Resources
For a more extensive list of books in all of these areas, go to
www.jackcanfield.com.
To enroll in the educational edge book of the month club service
mentioned on the audio porogram, go online to www.ededge.com.
Audio Learning
Three companies have produced the best collections of audio albums
you will ever find:
Nightingale-Conant (www.nightingale.com) has programs by
success gurus Tony Robbins, Zig Ziglar, Brian Tracy, Jim Rohn,
Napoleon Hill, Les Brown, Robert Allen, Wayne Dyer, Lee Pulos,
Mark Victor Hansen, myself and many others. Listen to these
programs in the car to keep yourself informed, inspired and motivated.
Fred Pryor Seminars/CareerTrack (www.pryor.com) produces
courses that run the full range from personal development to business
development. They have a broad and extensive catalog.
Learning Strategies Corporation (www.learningstrategies.com)
produces in-depth audio home study courses that go beyond merely
presenting information. Because of the interactive experiential design
of their programs, I highly recommend their work for producing
immediate and profound results in your life. Their programs are
generally better listened to in a focused learning environment at home
than in your car.
Some of JackÕs own programs that we highly recommend are:
The Success Principles: Your 30-Day Journey From Where
You Are to Where You Want to Be by Jack Canfield and Janet
Switzer. Available on-line at www.jackcanfield.com.
Maximum Confidence: 10 Steps to Extreme Self-Esteem by
Jack Canfield. (Produced by Nightingale-Conant) Available on-line
at www.jackcanfield.com.
Self-Esteem and Peak Performance by Jack Canfield.
(Produced by CareerTrack) Available on-line at
www.jackcanfield.com.
The Aladdin Factor: How to Ask for and Get What You Want in
Every Area of Your Life by Jack Canfield and Mark Victor
Hansen. (Produced by Nightingale Conant) Available on-line from
www.jackcanfield.com.
Chicken Soup for the Soul-Live! by Jack Canfield and Mark
Victor Hansen. (Produced by CareerTrack) Available on-line at
www.pryor.com.

The Whitney Education Class Action Lawsuit - By Rodney Durham

2008-02-06T22:09:00.000-08:00

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FT. MEYERS DIVISION
__________________________________________
)
RODNEY DURHAM on behalf of himself )
and all others similarly situated, )
)
Plaintiff, )
)
v. )
)
WHITNEY INFORMATION NETWORK INC., )
RUSSELL A. WHITNEY and NICHOLAS S. )
MATURO )
Defendants. )
_________________________________________ )
Plaintiff makes the following allegations, except as to allegations specifically pertaining
to plaintiff and plaintiff's counsel, based upon the investigation undertaken by plaintiff's counsel,
which investigation included analysis of publicly-available news articles and reports, public
filings, press releases and other matters of public record.
NATURE OF THE ACTION
1) This is a class action on behalf of all purchasers of the common stock of Whitney
Incorporated ("Whitney " or the "Company") between November 18, 2003, and December 15,
2006 inclusive, (the "Class Period"), seeking to pursue remedies under the Securities Exchange
Act of 1934 (the "Exchange Act").
2) Throughout the Class Period, defendants issued highly positive statements
regarding the success and prospects of Whitney, a post secondary education company which
offers financial and real estate investing courses. In particular, defendants regularly emphasized
the success and increasing student enrollment resulting from the Company’s marketing efforts.
In response to what appeared to be quarter after quarter of seemingly unstoppable growth,
including numerous acquisitions of related companies, the stock reached over $11 per share.
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 1 of 37
- 2 -
Capitalizing on the rapid increase in the Company’s stock price, defendants finalized a private
placement in December 2005 in which defendant Whitney sold 1.25 million of his own Whitney
securities for over $5.6 million.
3) Between November 21, 2006 and December 15, 2006, the truth concerning the
Company and its fraudulent business practices came to light. On November 21, 2006,
defendants revealed that the SEC had begun an investigation into the Company, specifically, to
determine whether the Company has violated any securities laws in connection with (i) the
efficacy or trading success of the Company's stock market education programs, and, (ii) the
Company's acquisition of certain other companies. Then, on December 15, 2006, defendants
revealed that the U.S. Attorney for the Eastern District of Virginia has launched a grand jury
investigation into the marketing activities of the company, stretching back to 2002 . A few days
later, it was announced that defendant Maturo as well as Whitney’s Vice President of sales had
been fired. In response to the news, Whitney stock plunged from $8.20 per share to less than $4
per share on December 18, 2006, on unusually heavy trading volumes.
JURISDICTION AND VENUE
4) This Court has jurisdiction over the subject matter of this action pursuant to 28
U.S.C. §§1331, 1337 and 1367 and Section 27 of the Exchange Act (15 U.S.C. § 78aa).
5) This action arises under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C.
§ § 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder (17 C.F.R. § 240.10b-5).
6) Venue is proper in this District pursuant to Section 27 of the Exchange Act (15
U.S.C. § 78aa) and 28 U.S.C. § 1391(b) and (c). Substantial acts in furtherance of the alleged
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 2 of 37
- 3 -
fraud and/or its effects have occurred within this District and Whitney maintains its corporate
headquarters in this District at 1612 Cape Coral Parkway, Suite A Cape Coral, FL 33904.
7) In connection with the acts and omissions alleged in this complaint, defendants,
directly or indirectly, used the means and instrumentalities of interstate commerce, including, but
not limited to, the mails, interstate telephone communications, and the facilities of the national
securities markets.
PARTIES
8) Plaintiff purchased Whitney stock during the Class Period, and was damaged
thereby.
9) Defendant Whitney, by its own description:
Whitney Information Network, Inc. provides post-secondary education and
training courses in the United States, Canada, and the United Kingdom. Its
courses provide instruction in real estate investing, business strategies, stock
market investment techniques, cash management, asset protection, and other
financially-oriented subjects. The company also develops and sells educational
resource materials, as well as offers various software products for the real estate
and small business industries, and the stock trading industry. It has a joint venture
agreement with Rich Dad Company. Whitney Information Network was founded
in 1992. It was formerly known as WIN Systems International, Inc. and changed
its name to Whitney Information Network, Inc. in 1999.
10) The individual defendants, at all times relevant to this action, served in the
capacities listed below and received substantial compensation:
Name Position
RUSSELL WHITNEY Chairman and CEO
NICHOLAS S. MATURO President and COO
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 3 of 37
- 4 -
11) The Individual Defendants, as senior officers and/or directors of Whitney were
controlling persons of the Company. Each exercised their power and influence to cause Whitney
to engage in the fraudulent practices complained of herein.
12) Each of the defendants is liable as a participant in a fraudulent scheme and course
of business that operated as a fraud or deceit on purchasers of Whitney common stock, by
disseminating materially false and misleading statements and/or concealing material adverse
facts.
MOTIVE, OPPORTUNITY AND KNOWLEDGE
13) Because of their Board memberships and/or executive and managerial positions
with Whitney, each of the Individual Defendants had access to the adverse non-public
information about the business, finances, markets and present and future business prospects of
Whitney particularized herein via access to internal corporate documents, conversations or
connections with corporate officers or employees, attendance at management and/or Board of
Directors' meetings and committees thereof and/or via reports and other information provided to
them in connection therewith.
14) Defendants had a duty to promptly disseminate accurate and truthful information
with respect to Whitney’s operations and financial condition or to cause and direct that such
information be disseminated and to promptly correct any previously disseminated information
that was misleading to the market. As a result of their failure to do so, the price of Whitney
securities was artificially inflated during the Class Period, damaging plaintiff and the Class.
15) The Individual Defendants, because of their positions with Whitney, controlled
the contents of quarterly and annual reports, press releases and presentations to securities
analysts. Each Individual Defendant was provided with copies of the reports and press releases
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 4 of 37
- 5 -
alleged herein to be misleading prior to or shortly after their issuance and had the ability and
opportunity to prevent their issuance or cause them to be corrected. Because of their positions
and access to material non-public information available to them but not the public, each of these
defendants knew that the adverse facts specified herein had not been disclosed to and were being
concealed from the public and that the positive representations which were being made were then
false and misleading. As a result, each of the Individual Defendants is responsible for the
accuracy of Whitney’s corporate releases detailed herein as "group-published" information and is
therefore responsible and liable for the representations contained therein.
16) Each of the defendants is liable as a primary violator in making false and
misleading statements, and for participating in a fraudulent scheme and course of business that
operated as a fraud or deceit on purchasers of Whitney stock during the Class Period. All of the
defendants had motives to pursue a fraudulent scheme in furtherance of their common goal, i.e.,
inflating the reported profits of Whitney and the trading price of Whitney stock by making false
and misleading statements and concealing material adverse information. The fraudulent scheme
and course of business was designed to and did: (i) deceive the investing public, including
plaintiffs and other Class members; (ii) artificially inflate the price of Whitney stock during the
Class Period; (iii) cause plaintiff and other members of the Class to purchase Whitney stock at
inflated prices; (iv) allow Whitney insiders to sell their own shares of Whitney stock at
artificially inflated prices while privy to material, adverse knowledge regarding the Company's
soon to be reported financial status and (v) conceal and cover-up the true financial condition of
Whitney.
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 5 of 37
- 6 -
CLASS ACTION ALLEGATIONS
17) Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who purchased or
otherwise acquired Whitney common stock between November 18, 2003 and December 15,
2006, inclusive (the "Class Period"), and who were damaged thereby. Excluded from the Class
are defendants, members of the immediate family of each of the Individual Defendants, any
subsidiary or affiliate of Whitney and the directors, officers and employees of Whitney or its
subsidiaries or affiliates, or any entity in which any excluded person has a controlling interest,
and the legal representatives, heirs, successors and assigns of any excluded person.
18) The members of the Class are so numerous that joinder of all members is
impracticable. While the exact number of Class members is unknown to plaintiff at this time and
can only be ascertained through appropriate discovery, plaintiff believes that there are thousands
of members of the Class located throughout the United States.
19) Throughout the Class Period, Whitney common stock was actively traded on the
OTC Bulletin Board (an open and efficient market) under the symbol “RUSS:OB”. Record
owners and other members of the Class may be identified from records maintained by Whitney
and/or its transfer agents and may be notified of the pendency of this action by mail, using a
form of notice similar to that customarily used in securities class actions.
20) Plaintiff's claims are typical of the claims of the other members of the Class as all
members of the Class were similarly affected by defendants' wrongful conduct in violation of
federal law that is complained of herein.
21) Plaintiff will fairly and adequately protect the interests of the members of the
Class and have retained counsel competent and experienced in class and securities litigation.
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22) Common questions of law and fact exist as to all members of the Class and
predominate over any questions solely affecting individual members of the Class. Among the
questions of law and fact common to the Class are:
a) whether the federal securities laws were violated by defendants' acts and
omissions as alleged herein;
b) whether defendants participated in and pursued the common course of
conduct complained of herein;
c) whether documents, press releases, and other statements disseminated to
the investing public and the Company's shareholders during the Class Period misrepresented
material facts about the business, finances, financial condition and prospects of Whitney ;
d) whether statements made by defendants to the investing public during the
Class Period misrepresented and/or omitted to disclose material facts about the business,
finances, value, performance and prospects of Parlux;
e) whether the market price of Whitney common stock during the Class
Period was artificially inflated due to the material misrepresentations and failures to correct
the material misrepresentations complained of herein; and
f) the extent to which the members of the Class have sustained damages and
the proper measure of damages.
23) A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as
the damages suffered by individual Class members may be relatively small, the expense and
burden of individual litigation make it impossible for members of the Class to individually
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redress the wrongs done to them. There will be no difficulty in the management of this suit as a
class action.
FALSE AND MISLEADING STATEMENTS
DURING THE CLASS PERIOD
24) The Class Period begins on November 18, 2003. On that date, defendants issued
a press release announcing third quarter 2003 results, which stated:
Whitney Information Network, Inc.(OTCBB:RUSS), a provider of postsecondary
career training programs designed to educate students in the
areas of real estate investing, business development, asset protection and
financial management, reported continued increased revenue for the third
quarter 2003 and nine months ended September 30, 2003.
Revenue for the nine months ended September 30, 2003 was $54,292,606,
an increase of $7,429,251 or 15.9 % compared to $46,863,355 in the same
period in 2002. Revenue for the third quarter 2003 was $23,567,782, an
increase of $9,692,525 or 41 percent over the quarter ending September
30, 2002.
Net loss for the nine months ended September 30, 2003 was $6,528,381 as
compared with a net income of $6,807,151 for the nine months ending
September 30, 2002. Net loss for the third quarter was $1,567,738. Cash
increased by $3,749,696 to $15,830,249 at September 30, 2003.
Revenue increased as more courses were attended by students in the
current period compared to the previous period. The net loss is primarily
attributable to the amount of new revenue in 2003 that the Company was
not able to recognize and is shown on the balance sheet as deferred
revenue. The amount of deferred revenue at September 30, 2003 was
$44,807,919. Deferred revenue represents cash that has been received by
the Company from students for courses they have yet to attend. Also
contributing to the loss were increased overhead and advertising expenses.
CEO and Chairman Russ Whitney said "We believe that the first three
quarters of 2003 are a continuing trend and expect revenue growth to
remain at these levels. The approximate $20 million increase in deferred
revenue so far in 2003 will ultimately become revenue in the subsequent
year, as students attend the trainings."
"I'm pleased with the accomplishments of the Company during the past
nine months," Whitney said. "We have a large cash reserve, have made a
$2 million equity investment in an office building in Orlando, and
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managed operations for Success Development, Inc. which produced better
than planned revenue. We've also acquired SpeakTek, Inc. with immediate
revenue growth, and grew our stock investment training area, Teach Me
To Trade."
"We believe the SpeakTek and Success Development operating units
combined will generate approximately $22 million of additional revenue
during fiscal 2004. These units, coupled with the growth of our real estate
and stock investment training units are expected to push our sales over the
$100 million mark next year," Whitney continued.
Whitney Information Network, Inc. is a fully integrated training and
education company that creates, produces and markets a wide variety of
training programs designed to educate students in the areas of real estate
investing, business development, asset protection and financial
management. The Company was recently listed at #148 in Florida Trends
magazine's annual listing of Florida's Top 250 Public Companies. It
maintains its international corporate headquarters in Cape Coral, Florida
with its consulting group based in Salt Lake City, Utah. Its Canadian
subsidiary, Whitney Canada, Inc., conducts its operations from
Mississauga, Ontario and its United Kingdom subsidiary, Whitney UK,
Ltd. is located in Chiswick, England. The Company is listed on the
Internet at http://www.russwhitney.com and its shares trade under the
ticker symbol RUSS on the Electronic Bulletin Board.
25) On November 25, 2003, defendants issued a press release announcing that it had
acquired the assets of Success Development Inc. The press release stated:
CAPE CORAL, Fla.--(BUSINESS WIRE)--Nov. 25, 2003--Whitney
Information Network, Inc. (OTCBB:RUSS), a provider of post-secondary
career training programs, announced today that it had purchased the assets
of Success Development, Inc. (SDI) including The Cash Flow
Generator(TM) brand. The Cash Flow Generator is a series of real estate
training courses offered on a post-secondary education basis to students
throughout the United States. The purchase included SDI's database of
more than 200,000 active students, the division's web site, and its
customer service center in Jacksonville, FL.
The total purchase price for the assets was approximately $1 million,
comprised of 200,000 shares of Whitney's common stock.
Whitney has been managing SDI's operations since June 2003, pursuant to
a management agreement. Since that time, more than 60,000 students have
registered for The Cash Flow Generator trainings, generating more than
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$6.8 million in additional revenue. Whitney expects to register more than
10,000 students a month in this division in 2004.
26) On April 4, 2004, defendants issued a press release which stated:
Whitney Information Network, Inc. Reports Record Revenue for 2003
-- 2003 Performance Highlights
-- Total 2003 revenue of $95 million, an increase of 53 percent over 2002
-- Acquired the Cash Flow Generator and STAR Trader brands
-- International operations contribute significantly to 2003 revenue
-- Significant investment in proven management and operating talent
Whitney Information Network, Inc. (OTCBB:RUSS), a provider of postsecondary
career training programs, today reported record revenue for the
year ended December 31, 2003.
Total revenue for the year ended December 31, 2003 was $95 million, an
increase of $33 million or 53 percent, compared to $62.1 million for 2002.
The increase in revenue is due to continued growth of the core businesses
in real estate and stock market investment training, and new revenue
realized from acquisitions and strategic alliances.
The Company reported a net loss of $1.6 million for the year ended
December 31, 2003 as compared with net income of $6.2 million for the
year ended December 31, 2002, or a loss of $.19 a share as compared to a
profit of $.78 per share for the prior year. The decrease in earnings is
directly attributable to significantly increased sales and the resulting
deferral of revenues associated with those sales.
Year end revenue on a cash flow basis was $109 million compared to the
$95 million GAAP revenue. The difference of $14 million is an increase
in deferred revenue on the Company's balance sheet (from $24.5 million
to $38.6 million), which will be recognized in 2004. Free cash flow
generated by the Company was $7.9 million in 2003, compared to $9.7
million in the prior year. The decrease in 2003 was due to increased
investments in media and additional costs in connection with the two 2003
acquisitions.
The Company's growth has created an increasingly diverse educational
operation. Approximately 85 percent of revenue in 2003 was generated
from US sales and 15 percent was generated from the Company's growing
international business. Overall real estate programs continue to grow and
totaled 75 percent of 2003 revenue, while the stock investing training
programs represented approximately 25 percent of revenue.
In 2003, the Company acquired two new brands -- Cash Flow Generator,
to drive growth in the real estate sector; and STAR Trader, an exciting
new brand in the Company's investment training business.
Management continues to focus on the growth of the core business and
acquired brands, building upon the proven talent of its management team,
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and capitalizing on its business model. The Company is also investing
significantly to restructure its educational delivery process.
Management believes the Company is strategically positioned to further
expand its business both in the US and internationally, and is seeking
further acquisitions, and increasing course offerings and student
enrollment.
27) On May 18, 2004, defendants issued a press release reporting first quarter revenue
which stated:
-- Revenue for the first quarter 2004 increased 189 % to a record $38.5
million
-- Income rises to $207,612 from a $1.4 million loss in the same quarter
of 2003
-- Cash increases 43 % to a record $22.6 million
Whitney Information Network, Inc.(OTCBB:RUSS), a provider of postsecondary
career training programs, today reported a return to profitability
and record revenue for the first quarter, ended March 31, 2004.
Revenue for the first quarter 2004 was $38.5 million, an increase of $25.2
million or 189 % over the quarter ending March 31, 2003, which was
$13.3 million.
Income for the three months ended March 31, 2004 rose to $207,612 as
compared with a net loss of $1.4 million for the three months ending
March 31, 2003, a positive change of $1.6 million. Net income per share
was $.02 as compared to a net loss of ($.17) per share in the same period
in 2003.
Cash available increased by $6.8 million to $22.6 million for the three
months ending March 31, 2004 from the previous quarter.
"The first quarter 2004 business results indicate a solid start for the new
year," said CEO Russ Whitney. "We are seeing a substantial increase in
the numbers of student registrations across all our brands. Attendance in
the first quarter is up significantly, and course expansion plans and results
from acquisitions realized last year are ahead of expectations. Our new
management team is producing great results, and our international
expansion is ahead of the growth plan."
The first quarter 2004 revenue gain was primarily attributable to increased
student attendance in the current period compared to the same period last
year. The increase in reported income is directly attributable to the
increased delivery of basic and advanced training courses, the realization
of efficient advertising, and by containing general and administrative
costs. This increase in net income recognition is a trend management
expects will continue.
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Deferred revenue, which is the net backlog of training courses purchased
and not yet delivered, increased by $7.9 million during the first three
months of 2004, compared to an increase of $5.9 million for the same
comparable period in 2003, while sales for the three months ended March
31, 2004 increased by $25.2 million over the same period in 2003.
About Whitney Information Network, Inc.
Whitney Information Network, Inc. is a fully integrated training and
education company that creates, produces and markets a wide variety of
training programs designed to educate students in the areas of real estate
investing, business development, asset protection and financial
management.
28) On August 18, 2004, defendants issued a press release stating:
CAPE CORAL, Fla.--(BUSINESS WIRE)--Aug. 18, 2004--Whitney
Information Network, Inc. (OTCBB:RUSS), a leading provider of postsecondary
education programs focused on individual wealth creation and
personal success, today reported strong revenue growth for the second
quarter, ended June 30, 2004.
Revenue for the second quarter 2004 was $38.6 million, an increase of
122% over the quarter ending June 30, 2003, which was $17.4 million.
Total revenue for the six months ending June 30, 2004 was $77.1 million,
an increase of $46.4 million or 151% over the same period in 2003.
Deferred revenue, which is the net backlog of training courses purchased
and not yet delivered, increased by $11.3 million during the first six
months of 2004, compared to an increase of $12.7 million for the same
period in 2003, while sales for the six months ended June 30, 2004
increased by $46.4 million over the same period in 2003. This positive
result is due to increased education delivery through expanded capacity
and course offerings in this period of significant revenue growth. Positive
cash flow from business operations of $7.5 million was realized in the first
half of this year.
As a result of revenue growth and significant marketing investments in the
second quarter, the net loss for the three months ended June 30, 2004 was
$4.3 million, as compared with a net loss of $3.5 million for the three
months ending June 30, 2003. Income per share was a net loss of $.51 as
compared to a net loss of $.44 per share in the same period in 2003.
Net loss for the six months ended June 30, 2004 was $4.1 million, as
compared to a net loss of $5 million for the same period in 2003. This
positive change is directly attributable to an increase in the delivery of
training courses and the containment of general and administrative costs.
As part of its long-term growth plan, the company incurred $4 million in
higher direct expenses related to establishing additional advanced training
facilities for students, along with increased training for instructors and
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sales staff, during the three months ended June 30, 2004. In this same
period, the company incurred $2 million in additional marketing costs due
to increased costs passed on by media providers, continued testing of new
acquisition channels, and sustained advertising investment in media
spending.
Student attendance increased 189% in the second quarter of 2004 over the
same period in 2003, driving the period's impressive revenue gain.
Management expects that the company will achieve continued growth in
student attendance and increased delivery of advanced training courses in
the third and fourth quarters with accompanying strong financial results,
which includes continued positive cash flow.
"The second quarter 2004 business results demonstrate our continued
commitment to growth, both in terms of course offerings and student
registrations," said CEO Russ Whitney. "Students continue to register for
our basic and advanced training courses at a record pace. The number of
attendees for the second quarter 2004 nearly doubled from the same period
in 2003. The company continues to build its management team, its
expansion plans are on schedule and our strategy for maintaining and
strengthening our position as a leading provider of post-secondary
education is clearly on track."
29) Between October 2004, and early 2006, defendants issued numerous additional
statements touting the success of the Company and its marketing efforts:
Whitney Information Network, Inc. (OTCBB:RUSS), a leading provider
of post-secondary education programs focused on individual wealth
creation and personal success, today announced the reorganization of its
corporate structure and product offerings with the launch of Wealth
Intelligence Academy, (WIA). Whitney Information Network, Inc. will
remain the parent company for Wealth Intelligence Academy.
Wealth Intelligence Academy will serve as the entity under which all
advanced-training education-related products and services will reside.
WIA will house a number of academic departments, including the
Department of Investment Strategy, the Department of Real Estate
Management and Investment and the Department of Entrepreneurship.
Existing programs including STAR Trader(TM), Building Wealth(TM),
Cash Flow Generator(TM) and Teach Me to Trade(TM) will form the
curriculum of the WIA departments, with new programs and departments
added as they are developed or acquired.
"From 1987, when I founded the company, through today, the company
has changed dramatically," said Russ Whitney, founder of Whitney
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Information Network, Inc. "Our company's incredible growth, coupled
with the recognition of what drives our students' success, prompted us to
evaluate our resources, business objectives and approach. We put in place
a strategy to move us beyond being a real estate seminar company. We
have become one of the premiere post-secondary education providers in
the marketplace both here in the U.S. and abroad.
"Our education programs focus on individual success and wealth creation
in the areas of real estate management and investment, public market
investment strategies and general business development. With the launch
of Wealth Intelligence Academy, those programs will fall into a more
traditional institutional format, and be coupled with one of the most
innovative professional mentorship programs available to students
anywhere. This structure will create numerous and diverse learning
opportunities for our students and enable increased long-term stability for
our company.
"We've put together a top-notch management team to execute our business
strategy and manage our evolution. We're attracting some of the best
educators and brightest students in the company's history. Demand for our
programs is growing around the world and opportunities to expand our
offerings are surfacing daily. I am very proud of what this company has
accomplished to date, as well as the great success our students are finding,
and am truly excited by the opportunities that lie ahead."
Currently, with more than 38,000 paid students enrolled for basic and
advanced trainings in 2004, Whitney Information Network, Inc. is one of
the leading organizations in the post-secondary education space. Whitney
Information Network, Inc. is tracked as a member of the Education and
Training Services sector by Hoover's. Whitney's peer group, according to
the Reuters Industry Index includes ITT Educational Services, Apollo
Group, Career Education Corporation and Princeton Review, among
others.
30) Defendants subsequently issued a press release reporting revenue growth for the
third quarter of 2004:
Whitney Information Network, Inc. (OTCBB:RUSS), a leading provider
of post-secondary education programs focused on individual wealth
creation and personal success, today reported continued revenue growth
for the third quarter, ended September 30, 2004. Revenue for the third
quarter 2004 was $32.2 million, an increase of 36% over the quarter ended
September 30, 2003, which was $23.6 million. Total revenue for the nine
months ended September 30, 2004 was $109.3 million, an increase of
$55.0 million or 101% over the same period in 2003.
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In the judgment of the Company, cash flow, rather than profit or loss, is
the primary indicator of its financial results. The reason for this is that
revenue from student purchases of courses must be deferred until the
course is taken or the student fails to take the course within the required
time period. However, all of the costs associated with obtaining the course
sales must be realized in the period they are incurred. Thus, the faster the
Company grows its revenues, the higher its losses will be under Generally
Accepted Accounting Principles, as it cannot report the sales as revenues
but must report substantially all of the expenses associated with the sale as
an expense. On the other hand, since the Company is entitled to recognize
the cash from course sales on its balance sheet when the money is
received, cash flow figures provide a more realistic indicator of the
Company's performance during any given reporting period.
Deferred revenue, which is the net backlog of training courses purchased
by students and not yet delivered, increased by $16.9 million during the
first nine months of 2004, compared to $20.3 million for the same period
in 2003. This was fueled by a 134% increase in student attendance in the
third quarter of 2004 over the same period in 2003, and an increase in
students taking classes at or near the time of purchase.
Cash flow for the three months ended September 30, 2004 was a negative
$2.1 million for the reasons mentioned below; however, cash flow for the
nine months ended September 30, 2004 was a positive $2.6 million. The
Company expects continuing positive cash flow in the fourth quarter and
near term as its revenue continues to increase as a result of the measures
described below.
Net loss for the three months ended September 30, 2004 was $12.0
million, as compared with a net loss of $1.5 million for the three months
ended September 30, 2003. Income per share was a net loss of $1.40 as
compared to a net loss of $.19 per share in the same period in 2003. Net
loss for the nine months ended September 30, 2004 was $16.2 million, as
compared to a net loss of $6.5 million for the same period in 2003. Per
share loss was $1.89 for the nine months ended September 30, 2003 as
compared with $.80 for the same period in 2003.
As previously reported, a third quarter management review of operations
indicated that the Company's overstaffing in anticipation of growth and
underperformance in certain new marketing initiatives contributed to
reductions in its cash position and the current operating loss. In addition,
the Company's corporate facilities suffered substantial damage from
Hurricane Charley, generating unexpected expenses related to disaster
recovery and employee relocation. Management promptly addressed these
issues with actions that included important expense reduction initiatives
and the elimination of redundant positions throughout its workforce. Prior
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to making this swift but calculated response, it was determined that these
cuts would have a positive impact on the Company's operations and
profitability on a going forward basis.
In a statement released on October 22, 2004, Nick Maturo, president of
Whitney Information Network, said, "In streamlining the company's
employment structure and reducing overlap and waste, we will
immediately add to the Company's bottom line performance in the coming
quarters." He also noted that the company has operated without a price
increase for the past two years. "We have made some upward adjustments
to our pricing structure which will bring it more in line with other
providers in the market," Maturo said. "Thanks to the overwhelming
demand for our training products, we expect that these changes will have a
significant and favorable impact on our profit margins as we continue to
deliver high quality financial education to our students."
31) On April 15, 2005, defendants issued a press release announcing results for fiscal
year 20004. The press release stated:
CAPE CORAL, Fla.--(BUSINESS WIRE)--April 15, 2005--Whitney
Information Network, Inc. (OTCBB:RUSS):
2004 Performance Highlights:
-- Total 2004 revenue hit a record $140 million, an increase of 47% over
2003.
-- Plans to streamline operations implemented in fourth quarter proved
successful.
-- Designed and implemented effective programs to reduce deferred
revenue.
-- Expanded training opportunities by increasing the frequency and
location of classroom courses and adding on-line and on-demand
programs.
Whitney Information Network, Inc. (OTCBB:RUSS), a provider of postsecondary
career training programs, today reported record revenue for the
year ended December 31, 2004. Total revenue for the year ended
December 31, 2004 was $139.9 million, an increase of $45 million or
47%, compared to $95 million for 2003. The increase in revenue is due to
continued growth of the core businesses in real estate and stock market
investment training, and new revenue realized from strategic alliances.
The Company reported a net loss of $29 million for the year ended
December 31, 2004 as compared with a net loss of $1.6 million for the
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year ended December 31, 2003, or a loss of $3.48 a share as compared to a
loss of $.19 per share for the prior year. Cash flow from operating
activities decreased by 72 percent to $2.2 million in 2004 from $7.9
million in 2003.
"The Company's strong revenue growth is a clear indicator of our position
as a market leader," said Russ Whitney, founder and Chief Executive
Officer. "We faced some challenges in 2004 and have implemented
strategies that are already producing results." In spite of continued record
growth, profits have been impacted by deferred revenue, which is income
received from students for training delivered in the following year. While
the revenue is not booked, the related expenses must be recorded at the
time they are incurred. In a growing organization as Whitney Information
Network is, recognizing expenses related to deferred revenue creates a
negative impact on operations results.
The Company has implemented strategies to reduce the deferred revenue
by expanding traditional classroom courses as well as delivering training
through innovative options that include on-line and on-demand programs.
Student (customer) response to these new programs has been positive.
The Company also met challenges in 2004 resulting from the recordbreaking
hurricane season. In August, the corporate office building
sustained an estimated $2 million in damage from Hurricane Charley and
resulted in the temporary relocation of approximately 200 employees. As
three more major hurricanes struck Florida in the following seven weeks,
the Company responded to disrupted training and travel schedules,
increased expenses, and a necessary reallocation of human and financial
resources to repair the physical damage. Though the Company is
adequately insured, deductibles and other related expenses were absorbed.
In October, the Company successfully implemented a reorganization plan
designed to streamline its workforce, reduce expenses, and realize
economies of scale throughout the organization. "The Company's
improved performance is a direct result of the programs we put in place in
late 2004 to accelerate the delivery of our programs and to streamline our
operations," said Whitney.
The Company's continued growth and expansion have created an
increasingly diverse educational operation. Approximately 86% of
revenue in 2004 was generated from US sales and 14% was generated
from the Company's international business. Overall real estate programs
continue to grow and totaled 68% of 2004 gross revenue, while the stock
investing training programs were approximately 32% of revenue.
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"We have long been a market leader in post-secondary wealth-building
education," said Whitney. "In spite of our rapid growth, we estimate that
we have penetrated just a small percent of the potential markets for the
education products we currently offer. We will continue to reach those
markets as well as continue our plans to identify and penetrate new
markets with additional training products."
32) On May 16, 2005, defendants issued a press release reporting first quarter 2005
financial results, which stated:
CAPE CORAL, Fla.--(BUSINESS WIRE)--May 16, 2005--Whitney
Information Network, Inc. (OTCBB:RUSS), a provider of post-secondary
career training programs, today reported net income of $4.1 million for the
first quarter ending March 31, 2005, or $0.48 per share (basic) and $0.43
(fully diluted) compared to net income of $208,000 in the first quarter of
2004 or $0.02 per share (basic and fully diluted). Sales revenue for the
period was $40.2 million, an increase of $1.7 million over the comparable
period in 2004.
Earnings of $4.1 million in the first quarter were reduced by the net
increase of $6 million in deferred revenue for the quarter, which will be
recognized as income in future periods.
At March 31, 2005, the Company's operating cash position increased to
$13.3 million. The Company's long term debt of $11.7 million at March
31, 2005 pertains exclusively to its real estate holdings, property and
equipment which total $25.7 million, net, at March 31, 2005. "The
significant increase in our profitability is the direct result of our
concentrated focus on our core brands, coupled with an overall
improvement in marketing efficiency and productivity that resulted from
our business restructuring in the latter half of last year," said Russ
Whitney, Company founder and CEO. "Clearly, these efforts have
positioned Whitney Information Network for a sustained period of growth
and profitability."
The Company's strong performance is attributed to a combination of
factors, including:
-- Implementation of new marketing strategies that focused on
those geographic markets which historically have been the most
responsive to the Company's product offerings.
-- Optimization of pricing that resulted in increased attendance at
the Company's 3-Day Basic Training Courses for real estate and
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stock investing, as well as greater interest in advanced training
curriculum.
-- Increased concentration on alternative methods of delivering
advanced training, including on-line education delivery.
-- A comprehensive business restructuring and implementation of
new cost reduction measures.
The Company expanded its implementation of online and on-demand
training to students over the Internet in order to meet the increased
demand for its advanced training. The success of this effort will have a
continuing positive impact on the Company's revenues and earnings.
Improved market-by-market execution of media investments and price
point optimization resulted in attendance at the Company's 3-Day Basic
Trainings more than tripling during the three month period ending March
31, 2005, reaching 17,007 students compared with 5,467 students during
the same period in 2004. Increases were also realized in the number of
students attending advanced trainings. This trend is expected to continue.
33) On August 11, 2005, defendants issued a press release reporting financial results
for the second quarter of 2005, which stated:
CAPE CORAL, Fla.--(BUSINESS WIRE)--Aug. 11, 2005--Whitney
Information Network, Inc. (OTCBB:RUSS), an international provider of
post secondary career education programs, today reported record results
for the second quarter ended June 30, 2005. Major achievements for the
quarter include:
-- Record Sales of $46.5 Million for the quarter
-- Operating Cash Flow of $8.9 Million
-- Net Income of $3.1 Million for the quarter
-- Cash and equivalents of $16.0 Million at June 30
-- Strong sales, earnings and cash flow continuing throughout
2005
Sales revenue for the second quarter showed an increase of $7.9 million,
or 20.5%, over the comparable period in 2004 while total revenue for the
first six months of the year increased $9.6 million, or 12%, over the
previous year. The strong showing for the second quarter resulted in net
income of $3.1 million or $0.36 per share (basic) and $0.35 (fully diluted).
Year-to-date net income totaled $7.3 million or $0.84 per share and $0.83
per share (fully diluted). Operating cash flow was $8.9 million for the six
months or $1.02 per share (basic) and $0.99 per share (fully diluted).
A key dynamic driving the Company's sales growth was an optimization
of its pricing strategy that resulted in a 105% increase in attendance at the
Company's 3-Day Basic Training Courses and an increase of 33% in
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 19 of 37
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Advanced Trainings attendance as compared to the corresponding period
in 2004.
Among the successful second quarter initiatives deployed by the Company
was an aggressive campaign to test new marketing vehicles and messages.
This effort led to significantly improved response rates for all of the
Company's core brands, particularly in major markets where these brands
have been well established. In the last six months the company's
marketing research identified which market segments were most
responsive to the Company's message, resulting in more efficient use of its
advertising dollars.
As the leading provider of advanced course offerings in its market
segment, the Company continued to capitalize on its unique position by
expanding both the number and diversity of Advanced Trainings offered
to students via alternate delivery methods. In particular, the Company
cited its expansion of on-demand and real-time Advanced Training
delivered over the Internet as a key factor favorably impacting the
Company's bottom line.
The company's business outlook for the remainder of the year is positive
and is in line with first half performance.
34) On September 15, 2005, defendants announced their intention to spin off
Whitney’s wholly owned subsidiary, EduTrades, in an IPO:
CAPE CORAL, Fla.--(BUSINESS WIRE)--Sept. 15, 2005--Whitney
Information Network, Inc. (OTCBB:RUSS) announced today that one of
its wholly owned subsidiaries, EduTrades, Inc. ("EduTrades"), has entered
into a non-binding letter of intent with an NASD licensed broker-dealer to
conduct an initial public offering for EduTrades. Under the terms of the
letter of intent, EduTrades will offer approximately 33% of its common
stock to the public for approximately $20 million. The remaining
approximately 67% of EduTrades will be retained by Whitney Information
Network, Inc. EduTrades provides course training programs covering
stock market investing and trading. Whitney Information Network, Inc.
will continue to focus on real estate training programs.
This notice does not constitute an offer to sell the securities mentioned.
The offering will be made only by a prospectus filed with the Securities
and Exchange Commission and only in such states in which the offering
may be legally conducted.
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35) On November 9, 2005, defendants issued a press release reporting third quarter
2005 results, which stated:
CAPE CORAL, Fla.--(BUSINESS WIRE)--Nov. 9, 2005--Whitney
Information Network, Inc. (OTC BB: RUSS):
-- Pro Forma Operating Cash Flow of $ 8.6 Million, or $0.92
per share (fully diluted),
-- Record Sales of $47.7 Million, Net Income of $2.5 Million
before tax benefit of $6.7 Million
Whitney Information Network, Inc. (OTC BB: RUSS), an international
provider of post secondary career education programs, today reported
record results for the third quarter ended September 30, 2005.
Other Highlights include:
-- Pro Forma Operating Cash Flow of $28.3 million for Nine
Months ended September 30
-- Record Sales of $134.3 million for Nine Month ended September
30
-- Cash and equivalents of $28.2 million at September 30 (includes
restricted cash)
-- Sales, earnings and cash flow growth expected to continue
throughout 2005
The dramatic increase in revenue in the third quarter of 2005 was a result
of new pricing strategies, increased focus on marketing to geographic
markets that have responded strongly to the Company's sales efforts, and
an increase in delivery of the Company's Advanced Training courses.
The various marketing initiatives that have been implemented as well as
many of the planned projects that are being introduced over the course of
the rest of the year could successfully expand the market and result in
further sales gains. Increased sales coupled with cost savings from more
efficient advertising expenditures including efficient media buys and
scheduling and tighter control of general and administrative expenses,
which are expected to grow at a slower pace than sales, should result in a
continuation of the trend of improving margins.
Pro Forma Operating Cash flow (a non-GAAP calculation) was $8.6
million for the three months ended September 30, 2005 or $0.99 per share
(basic) and $0.92 per share fully dilutive and $28.3 million for the nine
months or $3.25 per share (basic) and $3.13 per share (fully diluted). Pro
Forma Operating Cash flow measures the impact of accounting for
deferred revenue and the costs associated with deferred revenue and other
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cash items and may better portray the operating performance of the
Company than the usual method of calculating operating cash flow.
Sales for the third quarter were $47.7 million, an increase of $15.5 million,
or 48.4%, compared to the same period a year earlier of $32.2 million.
Sales for the first nine months of 2005 were $135.4 million, an increase of
$26.1 million, or 23.9%, over the $109.3 million reported for the first nine
months of 2004.
Net income (before tax benefit of $6.7 million) from the third quarter
ended September 30, 2005 was $2.5 million, or $0.30 per share (basic) and
$0.24 (fully diluted) compared to a net (loss) of $12.0 million, or $(1.40)
per share (basic and fully diluted) for the same period in 2004. Net income
(before tax benefit of $6.7 million) for the nine months ended September
30, 2005 totaled $9.9 million, or $1.14 per share (basic) and fully diluted
of $1.09 as compared to a net loss of $16.2 million, or $(1.89) per share
(basic and fully diluted) for the comparable period in 2004.
Total net income, which includes an income tax benefit from tax loss carry
forward of $6.7 million was $9.1 million, or $1.06 per share (basic) and
$0.99 per share (fully diluted) for the three months ended September 30,
2005 and was $16.5 million, or $1.90 per share (basic) and $1.82 per share
(fully diluted) for the nine months ended September 30, 2005. No income
tax benefit for tax loss carry forwards was recorded in 2004.
Whitney's brand recognition is strong and it is anticipated that both events
and attendee growth will remain robust. The Company remains optimistic
about its performance over the balance of the year and the future.
36) On December 13, 2005, defendants announced the completion of a private
placement:
Whitney Information Network, Inc. Announces $13.5 Million Private
Placement of Common Stock and Warrants
CAPE CORAL, Fla.--(BUSINESS WIRE)--Dec. 13, 2005--Whitney
Information Network, Inc. (OTCBB:RUSS) announced today that it had
completed the sale of 3,000,000 units of its securities to a group of 16
institutional investors for $13.5 million or $4.50 per unit. Each unit
consisted of one share of the Company's common stock and 1/2 warrant to
purchase an additional share at $6.00 per share. 1.25 million of the units
were sold by the Company's Chief Executive Officer. Prides Capital
Partners, LLC of Boston, MA was the lead investor and was granted a seat
on the Company's Board of Directors. The Company has agreed to file a
registration in statement covering the securities within thirty days.
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37) During 2006, defendants continued to disseminate false statements:
CAPE CORAL, Fla.--(BUSINESS WIRE)--March 31, 2006--Whitney
Information Network, Inc. (OTCBB:RUSS), an international leader in the
postsecondary education industry focused on educating individual
investors in real estate and financial markets, reported full year 2005
revenue of $178.6 million, up 28% over the prior year, net earnings of
$17.4 million vs. a net loss of $(30.1) million in 2004, and Adjusted
EBITDA of $23.4 million compared with negative Adjusted EBITDA of
($6.4) million in the prior year.
2005 Highlights
-- Student attendance increased 9.1% to nearly 370,000 vs. 2004
-- Cash received from course and product sales totaled $196.5
million, a 20% increase over 2004
-- Reported earnings per diluted share totaled $1.86 vs. loss per
diluted share of $(3.50) in 2004
-- Cash flows provided by operations amounted to $17.1 million,
vs. $(1.5) million over prior year
-- Cash, cash equivalents and restricted cash totaled $38.7 million
vs. $6.8 million in 2004
"We are proud of the significant achievements our team attained in 2005,"
said Russell A. Whitney, founder, Chairman of the Board and Chief
Executive Officer. "Through our team's hard work, efficiency gains and
cost controls, we believe 2005 represents an inflection point for our
Company and a platform for sustained growth in 2006 and beyond. We
take tremendous satisfaction in the growing number of individuals who
benefited in multiple ways from our training and ongoing support."
President and Chief Operating Officer Nicholas S. Maturo said, "Our
relevant and compelling course offerings proved our ability to provide
pertinent education content and deliver it on a cost effective basis. Our
portfolio of strong brands in both real estate and financial markets
education catered to the individual investor. The depth of our advanced
courses, the emerging electronic delivery of our course content and overall
margin management provided for a terrific 2005 and the seeds for a strong
2006."
38) On May 22, 2006, defendants issued a press release announcing the filing of an
updated registration statement:
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EduTrades, Inc. Subsidiary of Whitney Information Network, Inc. Files
Updated Registration Statement with SEC
CAPE CORAL, Fla., May 22, 2006 (BUSINESS WIRE) -- Whitney
Information Network, Inc.:
-- Kaufman Bros., L.P. and Noble International Investments Named Co-
Lead Underwriters
-- Filing Shows Increase in Size and Price of Public Offering
Whitney Information Network, Inc. (OTCBB:RUSS) announced today
that its wholly-owned subsidiary, EduTrades, Inc., has filed an amended
registration statement with the Securities and Exchange Commission
raising the initial public offering to 3,000,000 shares of EduTrades
common stock at a proposed offering price between $9.00 to $11.00 per
share. The shares will be offered on a firm commitment basis through
Kaufman Bros., L.P. and Noble International Investments, Inc., a
subsidiary of Noble Financial.
Subsequent to the offering, Whitney will own 7,600,000 shares of
EduTrades common stock, or 71.7% of the total shares of EduTrades
outstanding. Proceeds from the initial public offering are expected to be
used by EduTrades for development and expansion of its products and
brands, upgrading its technological platforms and working capital.
The announcement is not an offer to sell or the solicitation of an offer to
buy EduTrades securities. Any such offer or solicitation will only be made
by a prospectus and only in such states wherein the offering would be
lawful.
39) On June 26, 2006, defendants issued a press release reporting first quarter 2006
financial results, which stated:
CAPE CORAL, Fla--June 26, 2006--Whitney Information Network, Inc.
an international leader in the postsecondary education industry focused on
educating individual investors in real estate and financial markets,
reported revenue for the three months ended March 31, 2006 of $45.3
million, 17.9% over the restated prior year amount of $38.4 million and a
net loss of $3.5 million vs. a restated net earnings of $0.8 million in the
comparable 2005 period. For the first quarter ended March 31, 2006, the
Company generated Adjusted EBITDA of $8.7 million compared with
Adjusted EBITDA of $9.2 million in the comparable 2005 period.
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 24 of 37
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Q1 2006 Highlights
• Paid student attendance increased 18.7% over the same period in 2005
• Cash received from course and product sales totaled $57.3 million, a
20.7% increase vs. Q1 2005
• Cash flows provided by operations amounted to $8.7 million, vs. $6.7
million, a 30.2% increase over the same period in 2005
• Cash, cash equivalents and restricted cash totaled $43.7 million at
March 31, 2006 vs. $13.3 million at March 31, 2005
40) On August 15, 2006, defendants issued a press release stating:
CAPE CORAL, Fla.--(BUSINESS WIRE)--Aug. 15, 2006--Whitney
Information Network, Inc. (OTCBB: RUSS), an international leader in the
postsecondary education industry focused on educating individual
investors in real estate and financial markets, announced today that our
Board of Directors had declared a cash dividend of $1.00 per share.
The special cash dividend reflects the confidence by our Board in our
ability to continue to grow our business, increase free cash flow and build
shareholder value. It also demonstrates our appreciation to our
shareholders. After reflecting payment of the approximately $11 million
cash dividend, we have retained approximately $39 million of cash, cash
equivalents and restricted cash at June 30 to continue to fund our organic
growth, future strategic acquisitions, technology development and
improvements to our infrastructure. Consideration of future dividends will
be based upon periodic analysis of our cash position as it relates to the
cash requirements necessary to support our growth strategies.
The special cash dividend of $1.00 per share will be payable on or after
October 2, 2006 to shareholders of record on September 15, 2006.
We completed the restatement of our Consolidated Financial Statements
for the years 2001 through 2005, the quarters 2004 and 2005 and the first
quarter of 2006. Yesterday, we filed an Amendment to Form S-1 and a
Form 10-Q/A for Q1 2006 with the Securities and Exchange Commission
reflecting the restatement, along with our Form 10-Q for Q2 2006.
Q2 2006 Highlights
-- Paid student attendance increased 25.6% over the same period in
2005
-- Cash received from course and product sales totaled a record $59.7
million, a 17.1% increase vs. Q2 2005
-- Cash flows provided by operations amounted to $5.5 million vs.
$2.2 million, a 153% increase over the same period in 2005
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-- Cash, cash equivalents and restricted cash totaled $49.9 million at
June 30, 2006 vs. $21.4 million at June 30, 2005, a $28.5 million
increase
For the three months ended June 30, 2006, we reported record revenue of
$47.5 million, an increase of 16.1% over the restated prior year amount of
$40.9 million, and a net loss of $4.6 million vs. a restated net loss of $2.1
million in the comparable 2005 period. For the second quarter ended June
30, 2006, we recorded Adjusted EBITDA of $6.9 million, essentially the
same as in the comparable 2005 period.
During the first half of 2006, we recorded revenue of $92.4 million, a
16.4% increase over the restated $79.3 million in the first half of 2005,
and a net loss of $8.4 million vs. a restated net loss of $1.3 million for
2005. Adjusted EBITDA for the first half of 2006 was $15.5 million
compared to $16.2 million for the same period in 2005.
41) On November 14, 2006, defendants issued a press release announcing the
registration of common stock for nearly 5 million shares, which stated:
Whitney Information Network, Inc. Announces: Registration of 4.95
Million Shares of Common Stock
Intention to List on a National Exchange Q3 2006 Operating Results
CAPE CORAL, Fla., Nov 14, 2006 (BUSINESS WIRE) -- Whitney
Information Network, Inc. (OTCBB:RUSS), an international leader in the
postsecondary education industry focused on educating individual
investors in real estate and financial markets, announces that a
Registration Statement filed with the Securities and Exchange
Commission was declared effective yesterday at 5:00pm EST. The
Registration Statement covers 4.95 million shares of common stock in
connection with a private placement completed in December 2005.
We also announce our intention to list our shares on a national stock
exchange. We will commence an evaluation as to which exchange is best
suited for our investors and take the necessary steps to accomplish this
objective.
Q3 2006 Highlights
-- Cash received from course and product sales totaled a record $58.3
million, an 8.8% increase vs. Q3 2005, while GAAP revenues increased
18.8% to $52.3 million
-- Cash flows provided by operations amounted to $7.9 million vs. $6.0
million, a 31.2% increase over the same period in 2005
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 26 of 37
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-- Cash, cash equivalents and restricted cash totaled $61.9 million at
September 30, 2006 vs. $28.2 million at September 30, 2005, a $33.7
million increase
For the three months ended September 30, 2006, we reported record
revenue of $52.3 million, an increase of 18.8% over the restated prior year
amount of $44.1 million, and a net loss of $1.3 million vs. restated net
earnings of $5.3 million in the comparable 2005 period. Net earnings in
the 2005 period included a $6.7 million tax benefit. For the third quarter
ended September 30, 2006, we recorded Adjusted EBITDA of $4.3
million, a $2.7 million decrease when compared to the same period in
2005.
During the first three quarters of 2006, we recorded revenue of $144.8
million, a 17.3% increase over the restated $123.4 million in the nine
months of 2005, and a net loss of $9.7 million vs. restated net earnings of
$3.9 million for 2005. Adjusted EBITDA for the first nine months of 2006
was $19.9 million compared to $23.3 million for the same period in 2005.
42) The statements detailed above in Whitney’s SEC filings and press releases were
materially false and misleading, because the Company’s seemingly stellar results were only
possible through the use of illegal marketing techniques. In addition, defendants acquisitions of
related industry competitors are now under scrutiny.
THE TRUTH BEGINS TO UNRAVEL
43) Between November 21 and December 15, 2006, defendants revealed the existence
of two federal investigations:
Whitney Information Network, Inc. Receives Notice of SEC Investigation
CAPE CORAL, Fla.--(BUSINESS WIRE)--Nov. 21, 2006--Whitney
Information Network, Inc. (OTCBB:RUSS) announced today that on the
evening of November 14, 2006, it had been notified by the Securities and
Exchange Commission that the Commission was conducting a non-public
investigation to determine whether the Company has violated any
securities laws in connection with (i) the efficacy or trading success of the
Company's stock market education programs, and, (ii) the Company's
acquisition of certain other companies. The Company intends to provide
the Commission with any requested information.
Whitney Information Network, Inc. Receives Grand Jury Subpoena
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CAPE CORAL, Fla., Dec 15, 2006 (BUSINESS WIRE) -- Whitney
Information Network, Inc. (OTCBB:RUSS) announced today that the
United States Attorney for the Eastern District of Virginia has notified the
Company that it has commenced a grand jury investigation into certain of
the Company's marketing activities. The Company received a subpoena on
December 11, 2006 in connection with this investigation requesting
documents and information from January 1, 2002 to the present relating to
its marketing activities. The Company intends to cooperate fully with this
investigation.
The Company's Board of Directors has established a Special Committee of
independent directors to conduct an internal investigation of these
activities and the Company's acquisitions of other companies. The
Committee has engaged the law firm of Wilmer Cutler Pickering Hale and
Dorr to assist it with this investigation.
Separately, the Company also announced today that it intends to withdraw
its EduTrades, Inc. registration statement filed with the Securities and
Exchange Commission.
44) On December 19, 2006, defendants announced the departure of two high level
executives:
Whitney Information Network, Inc. Announces Departure of Officers
CAPE CORAL, Fla.--(BUSINESS WIRE)--Dec. 19, 2006--Whitney
Information Network, Inc. (OTCBB:RUSS) announced today the
termination of employment of Nicholas S. Maturo, President and Chief
Operating Officer and Rance Masheck, Vice President, Sales and
Marketing of EduTrades, Inc. (a subsidiary of the Company).
45) Between November 21, 2006 and December 15, 2006, Whitney stock dropped from
$5.65 per share, to $3.50 per share.
UNDISCLOSED ADVERSE INFORMATION
46) The market for Whitney securities was open, well-developed and efficient at all
relevant times. As a result of these materially false and misleading statements and failures to
disclose, Whitney securities traded at artificially inflated prices during the Class Period. The
artificial inflation continued until the time Whitney admitted that it was experiencing declining
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sales and these admissions were communicated to, and/or digested by, the securities markets.
Plaintiff and other members of the Class purchased or otherwise acquired Whitney securities
relying upon the integrity of the market price of Whitney securities and market information
relating to Whitney , and have been damaged thereby.
47) During the Class Period, defendants materially misled the investing public,
thereby inflating the price of Whitney securities, by publicly issuing false and misleading
statements and omitting to disclose material facts necessary to make defendants' statements, as
set forth herein, not false and misleading. Said statements and omissions were materially false
and misleading in that they failed to disclose material adverse information and misrepresented
the truth about the Company, its business and operations.
48) At all relevant times, the material misrepresentations and omissions particularized
in this Complaint directly or proximately caused or were a substantial contributing cause of the
damages sustained by plaintiff and other members of the Class. As described herein, during the
Class Period, defendants made or caused to be made a series of materially false or misleading
statements about Whitney 's business, prospects and operations. These material misstatements
and omissions had the cause and effect of creating in the market an unrealistically positive
assessment of Whitney and its business, prospects and operations, thus causing the Company's
securities to be overvalued and artificially inflated at all relevant times. Defendants' materially
false and misleading statements during the Class Period resulted in plaintiff and other members
of the Class purchasing the Company's securities at artificially inflated prices, thus causing the
damages complained of herein.
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SCIENTER ALLEGATIONS
49) As alleged herein, defendants acted with scienter in that defendants knew that the
public documents and statements, issued or disseminated by or in the name of the Company were
materially false and misleading; knew or recklessly disregarded that such statements or
documents would be issued or disseminated to the investing public; and knowingly and
substantially participated or acquiesced in the issuance or dissemination of such statements or
documents as primary violators of the federal securities laws. As set forth elsewhere herein in
detail, defendants, by virtue of their receipt of information reflecting the true facts regarding
Whitney and its business practices, their control over and/or receipt of Whitney ' allegedly
materially misleading misstatements and/or their associations with the Company which made
them privy to confidential proprietary information concerning Whitney were active and culpable
participants in the fraudulent scheme alleged herein. Defendants knew and/or recklessly
disregarded the falsity and misleading nature of the information which they caused to be
disseminated to the investing public. The ongoing fraudulent scheme described in this complaint
could not have been perpetrated over a substantial period of time, as has occurred, without the
knowledge and complicity of the personnel at the highest level of the Company, including the
Individual Defendants.
50) The Individual Defendants engaged in such a scheme to inflate the price of
Whitney securities in order to: (i) protect and enhance their executive positions and the
substantial compensation and prestige they obtained thereby; (ii) enhance the value of their
personal holdings of Whitney common stock; and (iii) allow defendants to sell millions of dollars
worth of Whitney stock before the truth was revealed.
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APPLICABILITY OF PRESUMPTION OF RELIANCE:
FRAUD-ON-THE-MARKET DOCTRINE
51) At all relevant times, the market for Whitney stock was an efficient market for the
following reasons, among others:
(a) Whitney stock met the requirements for listing, and was listed and actively
traded, on the OTC, a highly efficient market;
(b) As a regulated issuer, Whitney filed periodic public reports with the SEC
and the NASD;
(c) Whitney regularly issued press releases which were carried by national
newswires. Each of these releases was publicly available and entered the public marketplace.
52) As a result, the market for Whitney securities promptly digested current
information with respect to Whitney from all publicly-available sources and reflected such
information in Whitney 's stock price. Under these circumstances, all purchasers of Whitney
securities during the Class Period suffered similar injury through their purchase of stock at
artificially inflated prices and a presumption of reliance applies.
COUNT I
For Violations Of Section 10(b) Of The
1934 Act And Rule 10b-5 Promulgated
Thereunder Against All Defendants
53) Plaintiff repeats and realleges the allegations set forth above as though fully set
forth herein. This claim is asserted against all defendants.
54) During the Class Period, Whitney and the Individual Defendants, and each of
them, carried out a plan, scheme and course of conduct which was intended to and, throughout
the Class Period, did: (i) deceive the investing public, including plaintiff and other Class
members, as alleged herein; (ii) artificially inflate and maintain the market price of Whitney
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common stock; and (iii) cause plaintiff and other members of the Class to purchase Whitney
stock at artificially inflated prices. In furtherance of this unlawful scheme, plan and course of
conduct, defendants Whitney and the Individual Defendants, and each of them, took the actions
set forth herein.
55) These defendants: (a) employed devices, schemes, and artifices to defraud; (b)
made untrue statements of material fact and/or omitted to state material facts necessary to make
the statements not misleading; and (c) engaged in acts, practices and a course of business which
operated as a fraud and deceit upon the purchasers of the Company's securities in an effort to
maintain artificially high market prices for Whitney securities in violation of Section 10(b) of the
Exchange Act and Rule 10b-5. These defendants are sued as primary participants in the
wrongful and illegal conduct charged herein. The Individual Defendants are also sued herein as
controlling persons of Whitney, as alleged below.
56) In addition to the duties of full disclosure imposed on defendants as a result of
their making of affirmative statements and reports, or participation in the making of affirmative
statements and reports to the investing public, they each had a duty to promptly disseminate
truthful information that would be material to investors in compliance with the integrated
disclosure provisions of the SEC as embodied in SEC Regulation S-X (17 C.F.R. § 210.01 et
seq.) and S-K (17 C.F.R. § 229.10 et seq.) and other SEC regulations, including accurate and
truthful information with respect to the Company's operations, financial condition and
performance so that the market prices of the Company's publicly traded securities would be
based on truthful, complete and accurate information.
57) Whitney and the Individual Defendants, individually and in concert, directly and
indirectly, by the use of means or instrumentalities of interstate commerce and/or of the mails,
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engaged and participated in a continuous course of conduct to conceal adverse material
information about the business, business practices, performance, operations and future prospects
of Whitney as specified herein. These defendants employed devices, schemes and artifices to
defraud, while in possession of material adverse non-public information and engaged in acts,
practices, and a course of conduct as alleged herein in an effort to assure investors of Whitney '
value and performance and substantial growth, which included the making of, or the
participation in the making of, untrue statements of material facts and omitting to state material
facts necessary in order to make the statements made about Whitney and its business, operations
and future prospects in the light of the circumstances under which they were made, not
misleading, as set forth more particularly herein, and engaged in transactions, practices and a
course of business which operated as a fraud and deceit upon the purchasers of Whitney
securities during the Class Period.
58) Each of the Individual Defendants' primary liability, and controlling person
liability, arises from the following facts: (i) each of the Individual Defendants was a high-level
executive and/or director at the Company during the Class Period; (ii) each of the Individual
Defendants, by virtue of his responsibilities and activities as a senior executive officer and/or
director of the Company, was privy to and participated in the creation, development and
reporting of the Company's internal budgets, plans, projections and/or reports; (iii) the Individual
Defendants enjoyed significant personal contact and familiarity with each other and were advised
of and had access to other members of the Company's management team, internal reports, and
other data and information about the Company's financial condition and performance at all
relevant times; and (iv) the Individual Defendants were aware of the Company's dissemination of
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information to the investing public which they knew or recklessly disregarded was materially
false and misleading.
59) These defendants had actual knowledge of the misrepresentations and omissions
of material facts set forth herein, or acted with reckless disregard for the truth in that they failed
to ascertain and to disclose such facts, even though such facts were readily available to them.
Such defendants' material misrepresentations and/or omissions were done knowingly or
recklessly and for the purpose and effect of concealing Whitney ' operating condition, business
practices and future business prospects from the investing public and supporting the artificially
inflated price of its stock. As demonstrated by their overstatements and misstatements of the
Company's financial condition and performance throughout the Class Period, the Individual
Defendants, if they did not have actual knowledge of the misrepresentations and omissions
alleged, were reckless in failing to obtain such knowledge by deliberately refraining from taking
those steps necessary to discover whether those statements were false or misleading.
60) As a result of the dissemination of the materially false and misleading information
and failure to disclose material facts, as set forth above, the market price of Whitney ' securities
was artificially inflated during the Class Period. In ignorance of the fact that the market price of
Whitney ' shares was artificially inflated, and relying directly or indirectly on the false and
misleading statements made by defendants, or upon the integrity of the market in which the
securities trade, and/or on the absence of material adverse information that was known to or
recklessly disregarded by defendants but not disclosed in public statements by defendants during
the Class Period, plaintiff and the other members of the Class acquired Whitney securities during
the Class Period at artificially inflated high prices and were damaged thereby.
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61) At the time of said misrepresentations and omissions, plaintiff and other members
of the Class were ignorant of their falsity, and believed them to be true. Had plaintiff and the
other members of the Class and the marketplace known of the true performance, business
practices, future prospects and intrinsic value of Whitney, which were not disclosed by
defendants, plaintiff and other members of the Class would not have purchased or otherwise
acquired their Whitney securities during the Class Period, or, if they had acquired such securities
during the Class Period, they would not have done so at the artificially inflated prices which they
paid.
62) By virtue of the foregoing, Whitney and the Individual Defendants each violated
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder.
63) As a direct and proximate result of defendants' wrongful conduct, plaintiff and the
other members of the Class suffered damages in connection with their purchases of the
Company's securities during the Class Period.
COUNT II
For Violations Of Section 20(a) Of The
1934 Act Against Individual Defendants
64) Plaintiff repeats and realleges the allegations set forth above as if set forth fully
herein. This claim is asserted against the Individual Defendants.
65) The Individual Defendants were and acted as controlling persons of Whitney
within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their
high-level positions with the Company, participation in and/or awareness of the Company's
operations and/or intimate knowledge of the Company's actual performance, the Individual
Defendants had the power to influence and control and did influence and control, directly or
indirectly, the decision-making of the Company, including the content and dissemination of the
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 35 of 37
- 36 -
various statements which plaintiff contends are false and misleading. Each of the Individual
Defendants was provided with or had unlimited access to copies of the Company's reports, press
releases, public filings and other statements alleged by plaintiff to be misleading prior to and/or
shortly after these statements were issued and had the ability to prevent the issuance of the
statements or cause the statements to be corrected.
66) In addition, each of the Individual Defendants had direct involvement in the dayto-
day operations of the Company and, therefore, is presumed to have had the power to control
or influence the particular transactions giving rise to the securities violations as alleged herein,
and exercised the same.
67) As set forth above, Whitney and the Individual Defendants each violated Section
10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint. By virtue of their
controlling positions, the Individual Defendants are liable pursuant to Section 20(a) of the
Exchange Act. As a direct and proximate result of defendants' wrongful conduct, plaintiff and
other members of the Class suffered damages in connection with their purchases of the
Company's securities during the Class Period.
BASIS OF ALLEGATIONS
68) This complaint is pleaded in conformance with Federal Rules of Civil Procedure
and the PSLRA. Plaintiff has alleged the foregoing based upon the investigation of plaintiff's
counsel, which included a review of Whitney 's SEC filings, securities analysts' reports and
advisories about the Company, press releases issued by the Company and media reports about
the Company.
Case 2:06-cv-00687-UA-DNF Document 1 Filed 12/28/2006 Page 36 of 37
PRAYER FOR RELIEF
WHEREFORE, plaintiff, on his own behalf and on behalf of the Class, prays for
judgment as follows :
(i) Declaring this action to be a class action pursuant to Rule 23(a) and (b)(3) of the
Federal Rules of Civil Procedure on behalf of the Class defined herein;
(ii) Awarding plaintiff and the other members of the Class damages in an amoun t
which may be proven at trial, together with interest thereon ;
(iii) Awarding plaintiff and the members of the Class pre judgment and post judgmen t
interest, as well as their reasonable attorneys' and experts' witness fees and other costs; and
(iv) Such other relief as this Court deems appropriate .
JURY DEMAND
Dated: December a7 2006
Plaintiff demands a trial by jury .
By :
SAXENA IFEITE P.A
Maya Saxena
Fla Bar. No . 0095494
Joseph White
Fla Bar. No. 062106 4
2424 North Federal Highway
Suite 257
Boca Raton, FL 33431
Main (561) 394-3399
Fax: (561) 394-3382
THE BRUALDI LAW FIRM
Richard Brualdi
29 Broadway, Suite 1515
New York, NY 10006
Tel: (212) 952 -0602
Fax: (212) 952-0608
Counsel for Plaintiff
-37-

Free Lessons On The Secret Today! Posted By Robert Paisola

2008-02-06T01:06:00.001-08:00

7 home-buying traps, Posted By Robert Paisola

2007-04-08T22:23:00.000-07:00

First-time home-buyers face an unfamiliar road and risk purchasing the wrong place at the wrong time. Here's a guide to the potholes.

By Liz Pulliam Weston

Buying your first home is an exercise in faith. You don't really know what you're getting into, you're awash in unfamiliar terminology and everyone you meet seems to have strong (and utterly contradictory) ideas about which way the housing market is headed.

You may not be able to avoid every home-purchase mistake, but you can keep your regrets to a minimum by avoiding the following traps:

Blindly using your agent's inspector
Your agent may recommend a home inspector because he does a good job -- or because he keeps his mouth shut about problems that could torpedo the sale.

Yes, it's terrible to have to be so suspicious, but this is a big investment you're making. A good home inspection can keep you from buying a money pit. You can ask your agent for a recommendation, but get referrals from other recent buyers and try to interview at least three potential candidates before making your choice.

Few states regulate home inspectors closely, so real-estate columnist Ilyce Glink recommends you choose someone who belongs to the American Society of Home Inspectors, which requires its members to complete at least 250 inspections (or 750 if they don't have other licenses and experience). Ask about fees (which typically range from $300 to $700) and whether the inspector is licensed, bonded and insured, said Glink, author of "100 Questions Every First-Time Home Buyer Should Ask." Make sure you get a detailed, written report and, if at all possible, accompany the inspector so you can discuss the findings while they're still fresh.

Taking advice about what you can afford
Your agent, your broker and your lender don't know what you can afford. At best, they know the underwriting guidelines for various loans, which are designed to minimize the lenders' losses, not ensure that you'll maintain your financial health.

As I wrote in "8 big mortgage mistakes and how to avoid them," lenders know that you'll do whatever it takes to pay your mortgage, even if that means shortchanging your retirement, forgoing vacations and piling on credit card debt. You need to be the one to set limits on how much you want to borrow and how you borrow it. In general, limiting your housing costs -- including mortgage, property taxes and homeowner's insurance -- to 25% of your gross income will ensure you have enough money left over to cover other goals, like retirement savings.

Getting a 'temporary' loan
I'm hearing this potentially dangerous advice more often now that so many markets are spiraling out of the reach of first-time home-buyers: Get a mortgage with a low payment now, then refinance in a few years when your income is higher. This is the way some brokers and lenders are hawking adjustable-rate mortgages as well as their more exotic cousins, interest-only and flexible-payment loans.

There are a couple of problems with this advice. The first and most obvious is that no one can predict where interest rates will be five years from now. If they're substantially higher, you will have just passed up the opportunity to lock in rates when they were near generational lows. If your payment has been rising with those rates, you may not be able to afford your home even if your income is higher.

The other problem if you opt for one of the exotic mortgages is that you may not be building any equity in your home. If prices drop, you may owe more on your house than it's worth, which is going to make refinancing pretty tough unless you can come up with a ton of extra cash.

More experienced homeowners who are disciplined about money might be able to handle a trickier mortgage.

The better advice for first-time home-buyers may be to opt for a loan that will remain fixed at least as long as you plan to be in the home. If you plan to move after five years, for example, a good choice might be hybrid loan that remains fixed for five years before becoming an adjustable-rate mortgage. If you'll be in the home for a decade or more, or aren't sure how long you'll be there, you might want to opt for the security of a 30-year fixed-rate loan.

"You're locking in your housing costs for the next 30 years," said real-estate investor Gary W. Eldred, author of "The 106 Common Mistakes Homebuyers Make (and How to Avoid Them)." "If interest rates go up, your payment stays the same, and if they go down, you can refinance." Before you decide on a mortgage, spend some time in MSN Money's Home Financing Decision Center and educate yourself about the options.

Opening or closing credit accounts
Both can hurt your all-important credit score, the three-digit number lenders use to help gauge your credit-worthiness. That can result in your getting stuck with a higher interest rate or losing the loan you want all together. (Read more about credit scores at MSN Money's credit rating Decision Center.)

Real-estate columnist Tom Kelly knows how important credit scores are, but didn't think much about the ramifications when he applied for a new credit card while in the process of applying for a home-equity line of credit. That, plus his wife's closure of a few other accounts, shaved more than 30 points off the couple's credit score.

It was "really bad timing," Kelley said. "The lender for our proposed line of credit basically said, 'What have you guys been doing?' after our application had been filed and the new FICO scores had arrived."

Failing to investigate the neighborhood
"One common mistake is not looking at the property and the neighborhood at various times," said Dick LePre, senior loan consultant for RPM Mortgage in San Francisco and author of the RateWatch newsletter. "Look at it during the day, the late afternoon when kids tend to cluster, at night and on both weekdays and weekends."

This ongoing inspection can reveal good news, bad news or both. You may find your home is on a popular shortcut for commuters or near the gathering place for local kids, but only for a few hours a day.

"Something which you construe as a problem might only happen one day a week or at a certain time of the day," LePre said.

He also recommends quizzing a few neighbors about what they like and don't like, and about which direction the neighborhood seems to be going.

"Find out if there are any 'crazies' on the block," he said. "If there is empty space nearby, ascertain what the zoning is for that empty space. Is the next block over ... zoned commercial? Do you want a McDonald's as a neighbor?"

Buying when you're not ready
Buying a home is a great way for the average person to build wealth over the long run, but it's not for everyone in all circumstances.

If your finances are uncertain or your job prospects are up in the air, you might want to wait. Renting is also a better option if you're planning to move in a year or two.

Not buying when you are ready
All that said, you shouldn't let fear or uncertainty keep you on the sidelines if you're otherwise ready to buy a home.

Eldred notes in his book that the media have been decrying the high cost of housing and predicting price peaks at least since the 1940s. Although prices have fallen in various cities at various times, the overall trend has been upward.

Eldred recommends being cautious if your market is showing signs of weakening, such as:

Properties staying on the market longer.
A widening gap between the costs of owning and the costs of renting.

Even then, don't put off a purchase if you're able to stay put for several years -- long enough to ride out any downswings.

"In five or 10 years, prices will be higher than they are today," Eldred predicted.

Robert Paisola's 2007-2008 Seminar and Training Price List

2007-04-08T21:35:00.000-07:00

Due to the Recent Media Attention, we have been receiving a large number of calls regarding how much it would cost to have Robert Paisola speak at events throughout the world. Here is a simple price sheet. Prices are subject to change based on topics covered, Profit or Non-Profit and General Attitude of the Requestor.

See www.RobertPaisola.com for an Introduction based on the Hit Movie "THE SECRET"

2007-2008 Fee Schedules

Email : bookings@mycollector.com for the next Available Date!

3 1/2 FULL DAYS ONSITE WITH ROBERT AT YOUR LOCATION ANYWHERE IN THE WORLD $15,500.00 USD

3 1/2 FULL DAYS ONSITE WITH ROBERT AT YOUR LOCATION ANYWHERE IN THE WORLD ON TIMESHARE SALES $12,500.00 USD

CONVENTIONS, TRADE SHOWS, CORPORATE MEETINGS & CONFERENCES

NORTH AMERICA (Includes Canada and Mexico)

Keynotes and Seminars (up to 3 hours) $6.995,000

Full Day Seminars (up to 6 hours) $8,995.00

INTERNATIONAL

Keynotes and Full Day Seminars $15,500 USD

MULTIPLE PROGRAMS

We offer a 50% discount for additional programs booked for the same day at the same conference. For example, the first program is contracted at full price and every additional program is contracted at half price. We offer a 25% discount for additional programs booked by the same client/sponsor. For example, the first program is contracted at full price and every additional program is contracted with our 25% multiple booking discount. NOTE: This discount is applicable only if the contracts are issued simultaneously.

MEDIA & PUBLICITY

In order to create excitement and awareness of Mr. Paisola’s appearance at your event, he is happy to fulfill media requests when his schedule allows. Pre-recorded interviews are preferred over live interviews.

TRAVEL EXPENSES

Travel expenses are in addition to the speaking fee. Travel expenses include first-class airfare, up to 2 night’s hotel accommodations (Before and After the event) (king, non-smoking, guaranteed late arrival), meals and ground transportation in host city. A $75 per diem is also charged to cover ground transportation in home town, tips, and meals while traveling. To reduce Mr. Paisola’s out of pocket expenses, we request that hotel room charges be billed directly to the organization’s master account. When Mr. Paisola’s schedule includes more than one program on the same tour, airfare expenses are prorated.

HOLDING & CONFIRMING DATES

If you have specific dates in mind for your meeting, we're more than happy to hold a date for you. This hold can be placed on our calendar for up to 30 days. If another client requests the dates you are holding, you will be notified by phone and given 48 hours to make your decision either to go to contract or release the dates. To secure the date, a program agreement will be issued. This agreement is to be executed and returned within two weeks and requires a 50% deposit. The remaining 50% balance is due two weeks prior to the appearance.

RECORDING THE PRESENTATION AT YOUR EVENT

If you wish to video or audio tape Mr. Paisola’s presentation, you must sign a release. There are two forms; one is if you wish to use the recording for archival purposes only. The other is for those who wish to make the recording available to attendees or later for a period of time (either video or audio.) In either case, the releases must be signed, returned and approved by Robert Paisola

What Clients Are Saying About Robert’s Presentations:

"The best four days I have spent in my life!"
Bill Howell, President, Destination San Antonio

"This was by far the best class that I have ever attended.
You covered so much valuable information; I want to get back to my queue NOW!"
Donna Walker, Associates Capital

“Wow! So well organized! Awesome Personal Touch,
Great information presented in easy to understand language.”
Sandy Anderson, ExTerra Credit Recovery

“Well presented, clear, concise. Excellent pacing and delivery. Powerfully packed with quality information. A fantastic seminar minutes that will make me thousands of dollars in commissions!
Russell Stone, American Premier Holdings

Robert is teacher that knows his stuff and, more importantly, he presents it in a way that makes even my seasoned collectors collect more cash!”
Jennifer Barnett, DSH Financial Services

"Robert Paisola is incredible, My staff increased gross collections 130% after his trainings"
Gary Lee Gammenthaler, CEO, Mountain States Financial

--------------------------------------------------------------------------------

CALL NOW to receive Rob’s topic outlines, fee schedule, availability or to schedule a training.

1-877-517-9555

or

801-619-4700

See www.RobertPaisola.com for more Details

*Discounts May Be Available based on Location

Green Jello: St. George -- America's Fastest Growing Community

2007-04-06T13:14:00.000-07:00

Green Jello: St. George -- America's Fastest Growing Community

Executive Coaches Help Vet Nonprofit Job Applicants, Posted By Robert Paisola

2007-04-03T21:20:00.000-07:00

April 03, 2007

Executive Coaches Help Vet Nonprofit Job Applicants
People seeking top-level nonprofit jobs can now expect to be interviewed not just by nonprofit recruiters and their potential bosses, but also by executive coaches who advise the organization’s top executives, says The Wall Street Journal.

The extra step is part of an effort to reduce turnover, the newspaper says.

After interviewing candidates to help her run Family Justice, the New York charity she founded, Carol Shapiro finally found one she liked, but didn’t pick the job candidate because her executive coach found the candidate lacking in managerial experience, the newspaper reports.

Another contender who won approval from the coach got the job and joined Family Justice as chief operating officer in late February.

The interview by the coach benefits not just the charity but also the job seeker “because an executive coach can describe what this new boss will really be like,” says Marilyn Machlowitz, a New York recruiter who handled Ms. Shapiro’s search.

Put Your Learning into Action, Hire a Coach, Posted by Robert Paisola

2007-04-03T20:52:00.000-07:00

Want to reach your investment goals faster? Team up with one of Trump University's real estate investing coaches—seasoned investors who will give you the one-on-one time you need to succeed.

These successful real estate mentors know what works and what doesn't firsthand because they have excelled in the world of real estate investing—and beyond. Therefore, they know the latest techniques, and can walk you through the most effective methods—you can even have them help you with a specific investment deal. You can choose either a 4 or 6-session coaching package; where our coaches assist you through real estate deals, including:
Wholesale flips
Retail deals
Lease options
Agreement for deeds
"subject to" deals, short sales
Rentals
Every minute you spend talking to your coach gets you that much closer to your financial goals.

After decades of deal-making success, Donald Trump is ready to give something back.

This program, available exclusively through Trump University, is the only one that offers:

The proven know-how of Donald Trump
The latest interactive learning tools
A powerful alumni network
A tailored program, built to your areas of greatest interest
If you are one of the 65 students accepted into the next session of The Real Estate Investor Training Program at Trump University, make sure you prepare for prosperity -- this will be your ticket to fabulous success in the real estate business.

Take a big step toward financial independence and apply now for The Real Estate Investor Training Program at Trump University.

Invest Like a Pro, Posted by Robert Paisola

2007-04-03T20:50:00.000-07:00

If you are driven to make your fortune in real estate, but are lacking the big picture experience you need to invest like a pro, then here is a 100% guaranteed way for you to start investing your way to monumental wealth in the shortest time possible. This multi-leveled certificate program shows you exactly every step to take along the path to making really big profits in real estate. Financial freedom is now at your fingertips thanks to a learning curriculum like this. Take a look at what's included:

I Want To Learn

A Learn By Doing Program Curriculum That Teaches You …

See What Others Are Saying

"I may have found the missing piece of the puzzle for creating a complete picture of personal and financial success for my life."
— Howard P., Tampa, FL

"Now I know how crucial knowledge is to real estate investment, Trump University showed me the way."
— Carol S., Boise, ID

"What Trump University has going for it is its content. It is very good."
— Financial Times, 9/1/05

"No matter who you are, if you're going to have a shot at building wealth and improving your business smarts, you absolutely need to know about real estate."

How to Find and Purchase Income-Producing Properties
Spot undervalued properties before they hit the market
Find the property that fits your investment goals best
Identify trends in property values, rent levels and appreciation
Attract the ideal tenants
Real Estate Finance
Creative ways of financing
Assess a property’s net operating income and determine the amount of income you can expect from it
Estimate the market value of a rental property
Analyze a property’s expected ROI
Perform financial due diligence on a property you are considering
The Best Ways to Negotiate Profitable Real Estate Deals
15 negotiable gambits: how to use them and how to recognize them when they are being used on you
Checklists and steps for preparing for any negotiation
How to write basic contracts, legal documents, offer letters, sales contracts and more
Determine which terms are worth fighting for and which aren’t
Entry and Exit Strategies for Savvy Real Estate Investors
Execute a wealth creation plan
Make money through amortization, cash flow and appreciation
Find and profit from discount properties and foreclosures
Determine which geographic location is best for the kind of investments you want
Plan your exit before you enter a situation
Predict your ROI
Profit from advance strategies like condo conversions

From Trump University

Experience vs. Education By Donald Trump, Posted By Robert Paisola

2007-04-03T20:41:00.000-07:00

Experience vs. Education
by Donald J. Trump

I talk a lot about education because I think a good college education can really take you far in life. At the same time, however, some people are incredibly book smart but are clueless when they deal with the real world. Others are street smart but can’t handle anything other than what they’re accustomed to.

A couple seasons ago, we based an entire season of The Apprentice on this premise, pitting highly educated candidates against those with less formal schooling. In the end, we discovered that the key to success was experience, not education. Experience comes from action - or doing - and involves taking risks.

Knowledge is essential, but knowledge alone certainly isn’t enough. You must be able to act on your knowledge. You must put it to work because doing is how you learn and how you ultimately prove yourself.

I’ve certainly taken a lot of risks and not all of them were rousing successes. Few things worth doing are risk-free, so prepare to take chances. Don’t always play it safe, but do try to minimize danger and be aware of what you could lose. Often, the risk will be worth the gamble, but sometimes it’ll be more than you can afford.

Don’t underestimate anything until you try it. You need hands-on involvement to understand anything - whether a task or an entire business operation - to know the problems you’ll face. You have to gain experience, and that only comes from actually doing - and doing often.

Donald J. Trump is Chairman of Trump University.

Posted by lpfront@aol.com on 04/01/2007 9:54 PM
Mr. Trump, speaking of risks and learning from experience, I'd like you to look at www.yourburnteam.com and give me your ideas about this concept. I think that this is an economic shift that we may only see once in a lifetime. I would appreciate your insight. You can e-mail me at lpfront@aol.com
Posted by member1545919 on 04/01/2007 11:14 PM
What is the saying a ton of theory is worth a pound of experience? or worth it's weight in gold. After seeing the Apprentice this evening I would have to agree. The LA Time's readers do not want to be bombarded by science. Even we as dentists are inundated with too much science.
The other team had the right idea, stunning models, a simple product shaped identifier. That's what sells in LA, sex appeal. I remember a table clinic presentation I made back in 95 in Palm Springs re my training device: "Gumtex, the ultimate practise" was the slogan we developed. I also offered to display dental products for manufacturers. At the time a Florida manufacturer introduced one of the first alcohol free mouth washes. A picture of Heather Locklear with her signature endorsing the product was all it took. The stack of autographed pages disappeared in an instant. Beauty and sex appeal sell, particularly in Southern California, in fact it has global appeal. It is certainly the direction most of our trade journals are taking. Keep it sweet and simple, and you'll have a winner!
Dr B unraudds@telus.net 403-246-0523

Dr B unraudds@telus.net 403-246-0523
Posted by member1542774 on 04/01/2007 11:17 PM
Mr. Trump,

I consider experience to be a vast & largely imperative part of having a well considered education. I'm a firm believer that nothing is for sure. However, if you don't take a chance at success, you've already failed.

In relation to episode of "The Apprentice" airing April 1st, the gentlemen who got fired deserved it for not keeping his personal affairs out of business.

Best regards,
Barry Weisinger
Posted by DebbieDee on 04/02/2007 12:27 AM
One thing that I found, to accomplish a job is the hardest job. If we are bad in communication to people, then our job is worthless. The point from Mr.Trump are very good and encourage to people.
Yes, we need good education! But the most important, the way we are deal with people!
No matter our education, from famous university or not, it is worthless if we are unable to deal with people to accomplish our job!
Good communication can bring to argue! Be cool in your mind, and keep follow through what people words. People need a time to understand with thoroughly for some points. Nothing instant in this world!
I believe The Apprentice is one other way to sharp our skill in all aspect for do business! GOOD LUCK THE APPRENTICE!
Posted by member1549079 on 04/02/2007 12:39 AM
I strongly support every statement made in this article. One man can be brilliant and ignorant at the same time. It's like the saying, "You will never know until you try it," because before you can give a stand point, you should 'have a taste' of what you are talking about. I believe people who have been places and tried things, have a legitimate say in things. I might not be the best at naming the elements of the Perodic table, but I know how to act on my feet and defend any position given to me.

Allyson
Posted by member1366890 on 04/02/2007 3:05 AM
Education-experience-merging.
At first I know something about object.
Secondly, I experience that object.
Thirdly, I merge and become object.
Finally, Subject is object.
No action nedeed.

How do You read Ina on monitor( from right to left,?!)
Let somebody writte Ina on Your face.
How do You read it now:-)?

Ina Matijevic***
Posted by member1549255 on 04/02/2007 10:23 AM
This is right on the money. One must have both experience and education to be successful in
business
Posted by member1499085 on 04/02/2007 2:27 PM
Mr. Trump,

Great advice, but the problem I seem to be running into is I have my education in business administration but haven't been able to find work in this field because I lack experience. I have over 22 years of air force Supply experience, but I went to school to pursue a career in something other than supply after I retired. Even though, I recently read an article that businesses are starting to look for people with supply chain experience. Hopefully, my luck will turn.......rickyl
Posted by member1549388 on 04/02/2007 3:13 PM
Dear Mr. Trump,

generally education or better the stuff you learn in school and universities is the result of experiences. So it of course may appear that people with more work experience have the advantage, that they know what can be still found in no book.

I would say it depends on the type of business and the position inside a company if people with work experience or people with university degree are the correct candidates. Well i guess you know best that diffrent types of business require different types of peoples.

On the other hand, you will see in the way i write, that i belong to a foreign nation. Sure i am more the guy, who prefers to learn by doing, but without university education, i would be unable to read complex topics in english or to write here. And if you want so, by writing i gain experience. Certainly i make some mistakes, but i suppose that i am understandable.

So i would say as a german that in other nations it is more important among education to have a strong focus on other languages because we all already live in a global market. Therfore it needs a swift in the US to see more oppotunities to deal with other nations, but without the correct education people with only work experience will have no chance.They can only work for the local market.

And well when having focus on other languages this means a focus on other markets. Other markets require the knowledge of the diffrent laws and rules in other societies.

See i have some years of work experience in sales and also with key accounts. I decided to study again to be able to enter foreign markets. I know tons of business types that still not exist in your nation, but as long as i haven´t learned correct your law i will be unable to enter your market.

Therfore in my opinion it really depends on what people want to do and for which position they are needed. For sales generally it is better to take good looking people with experience, but when it is about management, leading employees, being responsible for the success of a company, it is definetely necessary at least to have a team of studied people.

In my country experience is part of university education, most applicants have to make an internship of 6 month before starting. During the education they also have to make an additional internship for 6 month, many students make two internships. And their is a large number of students, who made an apprenticeship or have some years of work experience before they decided to study. So here it is not the question experience vs. education, here it is no education without experience.

Maybe unemployment in your nation is not high enough, so that your people are not forced to learn more. Here we have unemployment rates between 10-20%. In nearly every family at least one is without job.

But we don´t put the head into the sand. We look forward to the future and we see an incredible growing market of e-jobs, jobs that can be done everywhere around the world as long the language is spoken.

This is what we do, in addition to our experiences we now learn to cope the future. There is hard competition on the work market. And we do not only learn one foreign language.

Well and you with your sharp words about the current US government will certainly agree that it isn´t i unwise if americans also would be able to speak other lanaguages, even if it is only to read foreign newspapers.

Unfortunately i can never take part on your Apprentice project, because i know, that you wouldn´t pay enough for a good idea, you are a business-man. If someone really believes in a career as new topmanager, tell me, when these guys are so talented, why then they were unable to found their own venture and just show by success what they can ?

Seriously i believe, that with your project you only found people who are willing to be on top in order to earn much money, but the real good ones you will never find.
Posted by www.ineedmynetwork.com on 04/02/2007 5:48 PM
Experience can be measured in many ways, execution is the best measurement of ability. If a good job was done, it doesn't matter how it got done. Many people can do well in school or make it off the streets, but never truly realize their dreams. On a purely financial comparison, the greater will side with education, however of the top percentage based on earnings would have nothing to do with either an education or "street smarts" it takes much more than one person to acheive success. A good judge of character is needed to find quality employees, intelligence is needed to know which "risk" has the greatest benefits and which the greatest pitfalls, and it takes balls to execute an idea in a successful fashion.

"Many good songs never get heard, and many good ideas never get realized."

Only with good mix of smarts, education, and determination and a bit of luck, can one succeed to a level of success that would deemed exceptional. While it may be easier for certain individuals to succeed I don't think that there is a definitive track. In order to be successful, each moment must be dedicated to success. A chain of successful decisions will yield successful results, Without 100% dedication over the course of many years, it is very difficult to acheive success. Research, planning and execution will determine the greatest potential return on investment of time, money and available resources

the bottom line is, how to get people to give you there money... That doesn't take an education, or hard times to understand. Whether its 1$ from a million people or $1million from one person. how can you take your 5 dollars and get someone to give you 10 dollars for it? maybe paint it fancy, and put some glitter on it, and tell them they need it! or turn that 5$ into a toy, and charge them $10?? or use technology, and build something that takes money and runs itself. Educate yourself, know the audience, and execute a plan. Neither education, nor street smarts will get you all the way there, but they'll definately help.
Posted by member1515164 on 04/02/2007 11:32 PM
Mr. Trump,

I agree that the end game is having more experience creates more success. My father was very successful salesman as well a high school dropout. Yet, through experience and self education, he got to the point where he was managing others who had MBA's. He would come home practically every day with a story about one of these individuals who had all this education and just didn't get how to sell. However, he believes so highly in education and it being a key to success.

There has to be a ballance between the two and that depending your profession you'll need more of one than the other. Gaining more education or more experinece is something we should all continue to do because the true goal is to have as much as possible of both. What's so great about your website and books is that they combine both of these essentials in a great way and I thank you for that.
Posted by KDReid on 04/03/2007 1:14 AM
Hooray for Donald Trump! Very well said Sir. I appreciate it like a good slam dunk! I also can appreciate success as experience getting its hands dirty, just as you in the wrestle ring! Awesome!
Posted by member1549783 on 04/03/2007 2:06 AM
If donald wants to run a University he should stop screwing up pronouns on every episode.

Donald stop using myself when it should be me.

When you say, "The others and myself will decide who to fire" that is totally wrong. Now every contestant is misusing myself too. It drives me crazy!
Posted by member1549819 on 04/03/2007 5:13 AM
MR. Trump thats is good advice but i really just came here to say

GOOD JOB ON SHAVEING Vince McMahon’s Head that was awsome
Posted by user89187 on 04/03/2007 6:08 AM
There is a lot to be said for both.
Posted by member1500449 on 04/03/2007 7:20 AM
Mr. Trump,

Watching the highly educated Tim trying to use every inch of his knowledge to save himself was interesting. I have a good friend with a PHD who has absolutely no idea how the real world works and we often get in discussions that end up with me saying something like 'yes..in theory..but in the real world this would not fly"!

Tim should have focussed on his strengths as a leader, and stopped defending his relationship. The correct thing would have been to admit that the relationship was wrong and give his absolute assurance that he was on track and ready to take care of business.

He didn't do this because he didn't have the experience to know what was going on in that boardroom. He never took control and certainly demonstrated to everyone how inexperienced he was.

Education is important. Experience is important. If you have a combination of both, your are in a better situation.

Tim was foolish to get involved with a girl during the formal job interview (thank you Frank for laying that on the table) and for someone with an extremely high education, he must have missed one of the most basic elements to success in business, don't let your heart lead your brain.

I remember as a young man working for a smart businessman who owned a chain of restaurants. When I commented on how good looking the girls were that worked for him he told me 'don't get your meat were you get your bread'. In other words work, make money and leave the girls alone. Excellent advice.

What course at Harvard teaches this?

Mitch Drew
mitch@beckbc.com
http://mitch-tv.blogspot.com
Posted by user26105 on 04/03/2007 7:20 AM
Hello Mr. Trump,

is true that a tree measure the time between new year and Eastern
but nothing compare with hands on tasks and learn by doing again and again and again. A special tought on a slow down just a bit period

Wishing You A Happy Passover and Easter
Daniela
Posted by member1549934 on 04/03/2007 12:58 PM
I had a look at www.YourBurnteam.com and I yawned. Do these guys really think they have invented something new. They are offering something which is to become an industry standard. It is called IPTV and everyone will be doing it very soon. These service are already offered by your phone company, cable company plus anyone else who wants to enter the IPTV industry.

These guys are just repeating what the IPTV industry has been saying for three years so these guys have not come up with anything new. In fact they are just working an old Dot com module of using flashy statements to promote an old idea which everyone is working on.

I own WEIPTV.com and have owned it for years. If I know this, then a lot of others have already moved on this idea. Invest into the infactstucture and let the flash burn out and burn someone else's money.
Posted by user5576 on 04/03/2007 1:28 PM
I totally agree with Mr. Trump about Street Smarts. Education is important, but at the end of the day, it is your experience in the real world that will make you successful and take risks or live in a bubble.
We need to change the way we think about retirement, working, Mortgages, living longer, etc. You need to be aware of what is going to be needed in society in the next decade to be successful. I am retired from Untied Airlines,unfortunately, I am getting 1/3 of what I had anticipated pension from the PBGC.
Corporate America not what it used to be.

The digital world is here and so is Social Networking, Streaming Video, Video Email. I am affiliated with a company that I believe will be the next Microsoft.

www.vmdirect.com/bdamico

Bevuall@aol.com.
In case anyone has an interest.

Beverly - Ft. Lauderdale, FL
Posted by member1444979 on 04/03/2007 1:50 PM
I couldn`t agree more with u Mr.Trump.i myself have lived this exprinces i.e no matter what education u had,until u have ex prince u can be left behind like in our culture they say 'until u rid horse and fall,u cant know how to ride' i m studying in college and i had bitterness of repeating few classes but until u do mistakes u cant correct them!
Posted by member1483533 on 04/03/2007 2:46 PM
I beleave we mean when we use the word success. I tryed something new , and successed at it . So this is how you do that... To be World Class I could tell you every bump in the road . Because Ive been there.
Posted by member1324644 on 04/03/2007 3:35 PM
After reading Mr. Trumps article, and several of the comments attached to this blog, a comment I see being hinted at but not stated clearly, which could be pertinent for many "wannabe" entrepreneurs, who may read this and panic at the thought, "I don't have an education or experience. All I have is an idea!"

By creating, or hiring an advisory team, whether that be on a full-time, part-time, or on a per consultancy session basis, even the most inexperienced, uneducated entrepreneur, can succeed by utilizing the education and experience of others. Having said this, a word of caution must be expressed. If as an entrepreneur, over time, you do not invest yourself in ongoing education, even if it's only reading a book, or attending one day seminars here and there, then expect the excessive usuage of advisors to be a significant drain on your critical cash flow. You must build yourself, as you build your business to the point whereby both you and your business can stand on you're own two feet. You can educate yourself as you gain experience. Trump University is a good resource for just that.

James C. Tanner
British Columbia, Canada

CNW Telbec

2007-04-02T22:50:00.000-07:00

CNW Telbec

Economist puts Utah 5th on pro-business list

2007-03-23T23:47:00.000-07:00

Utah ranked fifth in a poll of "pro-business" states conducted by economist and corporate relocation expert Ronald R. Pollina. "Pollina Corporate Top Ten Pro-Business States 2007: Keeping Jobs In America," a state-by-state evaluation of the job creation and retention efforts, ranked Virginia first. California was last.

The Pollina study evaluates and ranks states based on 28 factors including taxes, human resources, right-to-work legislation, energy costs, infrastructure spending, workers compensation legislation and jobs lost or gained. The evaluation includes state government-controlled factors based on incentive programs and state economic development departments.

Investing and Having a Website, No Longer A Luxury, Posted by Robert Paisola

2007-03-23T10:26:00.000-07:00

Most real estate investors already know that having a web site is not a luxury anymore, but a necessity. But most of them only have one web site. When trying to test new marketing, nothing works better then a web site to test your marketing idea and target a specific demographic such as marketing to FSBO's, pre-foreclosures, absentee owners etc…

There are now billions, if not trillions of web pages on the internet. So the competition for the visitors' viewing time is fierce. If your web site doesn't answer what's in it for them in 3 seconds or less, you are going to be "killed" by the click of the mouse.

This is why one page narrowly focused web sites are becoming more and more popular. They deal with a specific and targeted audience, while providing a solution to a well defined problem. Most real estate investors try to buy properties, sell properties, stop foreclosures, do short sales, wholesale, rehab and much more and all on one web site.

When there are too many choices people get confused. They want one simple answer and THEY WANT IT NOW! If they are facing foreclosure they don't care about your buyers list or how to get on it. Certainly they don't want anything to know about private money or self directed IRA's and how it can be invested in real estate. THEY WANT YOU TO TELL THEM HOW YOU CAN STOP THE FORECLOSURE.

That is it.

Just remember when writing your copy (your marketing text); What's in it for the reader, not for you!

The visitor does not care about you! Now this is harsh and it's not fair. But that is how the world works. And the human laws don't cease to exist on the home page of your web site. There is nothing wrong with having and elaborate branded corporate web site, but if you are doing a marketing campaign to a targeted audience, then don't send them to your corporate web site (which will only confuse them), send them to a niche web site that deals with your specific marketing campaign.

Remember, you only have 3 seconds to capture their attention. So if you are targeting a pre-foreclosure list, then send them to an easy to spell domain name that deals with pre-foreclosures and when they arrive answer what's in it for them in the very first paragraph in big red bold letters! If you only have 1 hour to write your copy, then spend 50 minutes in writing the headline that will capture the visitors attention.

If the visitor doesn't benefit from what you offered in the headline, they will click away to someone else's web site that promises to solve their problem. When asked why a real estate investor will not set up a targeted niche web site, the common answer is because it's to expensive to have them.

This misinformation comes from not understanding the economics of marketing. Web sites cost only $100 dollars to set up and $10 per month (or less) to maintain. The cost of a small marketing campaign is at lease $1000! These are rounded figures but show the relation in prices.

If you have a web site, ask for a discount (at least 50% off the second, third and other web sites) from your current web provider. You will get that very easy, or fire them and go to one of the thousand other web site providers – they are a dime a dozen.

So don't pay more then $100/$10. Now, let's look at the profits! First the huge advantage real estate investors have over 99% of other businesses, is that they have enormous profit margins. If you where selling soap for example, you couldn't afford to do the direct marketing since even if you sold 2%, it wouldn't be enough to cover your cost, but in real estate, even if you converted only 0.01% you could be making a fantastic profit.

So the cost of the second web site is totally irrelevant! The main question is; does it make at least 1 sale or not! And if done right it should! The beauty of niche web sites is that you can make many of them and if they don't work you just scrap them and make anther one. Once you find a winner, you keep it and look for the next winner.

Some investors have 5 or more, and they all make profits! In the future, real estate investors will have hundreds of web sites and they will all generate more profits then what they cost to produce and maintain! Most successful real estate entrepreneurs who are making 6 and 7 figure incomes are using multiple web sites.

They negotiate with the web site providers lower monthly fees so more profits stay with them not the web site provider. But you need multiple sites to test your ideas to make sure they work. Try pre-foreclosure we are expecting over 1 million pre-foreclosures in the next year (due to all the crazy loans out there).

Try marketing to absentee landlords. There are many lists you can get but you need a cheap web site to test your idea and if it works you could be raking in huge profits! And if not the risk is so small compared to the huge returns you can receive!

The 10 Reason Most Real Estate Investors Fail, By Robert Paisola

2007-03-22T21:22:00.000-07:00

The 10 Reason Most Real Estate Investors Fail and How to Overcome Them.

TIP#1 What Your Bank Won't Tell You About How to Accelerate Your Debt in a Fraction of the Time and Expense - using "Reverse Compounding".

Let's face it, your bank is not in the business of making you money, they are in the business of making themselves money. At least this is what their stockholders demand of them. Last year it is estimated that most banks earned nearly one half of their profit from late fees and extra interest charges.

Wouldn't you love to be one of them?What if you could become a bank yourself, managing your own money, and take advantage of the tremendous amount of interest savings. The result would be that you could pay off your debts and mortgage in a fraction of the time.Don't underestimate the cost of debt during your lifetime.

100 years ago debt was not much of a factor in the economy, while today it dominates our lives. Some scholars even say we have become slaves to the banks, and don't even realize it. Thanks to technology, we can now reveal methods that can help you actually reduce the cost of existing debt, regardless of interest rates.

Now this is not about lowering your interest rate or payments or refinancing, if that was a solution it would have cured the problem a long time ago. This is about the real cost of borrowing and paying off debt. The system we'll use is called "Reverse Compounding".

If you would like to hear the answers to this and to all 10 Questions be sure to attend our upcoming boot camp.

A Present of KNOWLEDGE from Robert Paisola- The Secret, Full Movie Online

2007-02-07T23:09:00.000-08:00

Hello! Hope you are having a great day!

I just want to first say - WOW! I want to share with you a movie that is SO deep and so real, it will explain why things happen in your life - good and bad.

I know the content of this movie is real because certain things have happened to me in my life. I can't even count them! This movie explains how I have been able to do the things I have done in life. Why certain things have happened and other have not happen. I know once you watch this, it will have the same affect on you.

I encourage you to watch this movie and pass this email to everyone you know to see it.

The movie is called "The Secret" and boy does it explain a LOT! Please take time out of your life, TODAY, and watch this. It should change it forever!

By the way I have a co-signer - Oprah Winfrey! I ask you to watch the movie today because I want you to tune in tomorrow, Thursday, February 8, 2007 (check your TV Guide for time). She will have the cast on her show and talk about this INCREDIBLE, life-changing movie! It will show you how to make more money, lose weight, fall in love, ANYTHING YOU WANT IN LIFE!! Everyone will be talking about this movie Friday morning you are getting a head start!!

I am sharing with you something that I believe in whole-heartily. I am very blessed it was sent to me earlier this week.

Thanks for reading this.

Best Regards,

Robert Paisola
CEO and President
www.RobertPaisola.com