King of Real Estate Infomercials Probed in Millionaire University Scandal

FORT MYERS, Fla. – Investigators with the U.S. Justice Department and the Securities and Exchange Commission are looking into an expanding real estate bust in southwest Florida, which has sunk three credit unions and caused a flurry of lawsuits from buyers in the program, known as Millionaire University. Among other things, the probe is focused on Russell Whitney, king of the real estate investment infomercial and creator of such get-rich programs as Millionaire University, Rich U, Rich Dad, Teach Me Foreclosure and Real Estate Investing, and Teach Me To Trade, according to several sources involved in the widening case, which has caused the failures of Norlarco CU, Huron River Area CU and New Horizons Community FCU. A federal grand jury has been impaneled by the U.S. Attorney for the Eastern District of Virginia to investigate some of the same charges brought in dozens of civil suits by investors claiming fraud and securities violations, according to a financial disclosure by Whitney Information Network (pink sheets stock symbol RUSS), one of Whitney’s companies. Lawyers for Whitney met by teleconference last week with lawyers for NCUA, which has control of Norlarco and Huron Rivera Area, as well as attorneys for the real estate investors who say they were swindled by the Whitney get-rich programs. Whitney used cable and local television commercials to induce thousands of investors around the country to enroll in his real estate classes for as much as $10,000. These investors then bought properties in, among other developments, Cape Coral and Lehigh Acres, often from him, according to the company’s disclosures. The three credit unions helped further the scheme by providing millions of dollars–as much as $500 million–in mortgages. Many of those mortgages are in default because of a failure to pre-lease the properties, a key to the investment scheme. Lawyers representing Whitney did not return calls seeking comment.