Donald's Trump "university" isn't the only school of higher learning in hot water these days. It's joined by the "fix and flip" seminars sold by Armando Montelongo, the onetime star of the A&E series "Flip This House."
In a federal civil suit filed in San Francisco this spring, some 160 students claim they paid thousands to attend Montelongo's classes that would supposedly teach them how to buy run-down houses, fix them up and sell them for a quick profit. But, the suit alleges, the courses served only to enrich Montelongo.
According to Montelongo's hometown newspaper, the San Antonio Express-News, "students typically paid $1,500 for an introductory course, where they were recruited for 'bus tour packages' that cost up to $54,000. ... Classes on 'asset protection' cost $27,000 more. 'Market domination,' cash flow programs and master mentor classes cost up to an additional $55,000."
The suit maintains that Montelongo and his companies have "destroyed livelihoods, wrecked marriages, driven students into clinical depression and even resulted in suicide."
In an email to the Express-News, Montelongo's attorneys essentially dismissed the suit, saying it was filed by a bunch of lazy students who couldn't follow the pitchman's instructions.
Of the "more than 1.5 million people" -- hold that thought -- who have taken the classes, the email said, the "small group" of plaintiffs "have decided continuous hard work is not for them. Now, they have chosen to try and make money the easy way by clogging up our legal system with a frivolous lawsuit."
The suit accuses Montelongo and his companies of violating the Racketeering Influenced and Corrupt Organizations (RICO) Act by committing wire fraud and conspiring to deceive investors over a number of years. It estimates actual damages at $4 million, but triple damages can be sought under the RICO law.
Back to that "1.5 million people" figure: yikes. That's a lot of customers. No wonder Forbes once estimated Montelongo's net worth at $200 million.
Had the disgruntled students -- and possibly many others who have not come forward, perhaps too embarrassed to admit they might have been fleeced -- done a little sleuthing, they might have saved themselves a lot of time and money. An online guide called "The Top 20 Real Estate Gurus: The Good, Bad and Ugly" gives him just one out of five stars, and the Amazon reviews of his paperback, "Flip and Grow Rich," are less than scintillating. "The 'secret' revealed in this book is that you need to sign up for Armando's seminar," said one reviewer. "Don't waste your money."
An 2013 article in Forbes describes him as a "house-flipping huckster" who offers "long weekends of questionable advice, raucous showmanship and tours of foreclosed homes in some of America's poorest sections." Writer Abram Brown asked him to produce alums of his seminars who made millions by using his methods, but he either wouldn't or couldn't.
Whether the suit against Montelongo will prove successful is hard to say. But he's probably right about one thing: Millions of people have attended his and other so-called gurus' seminars.
As an owner of rental houses, I see the handiwork of these "instructors" almost weekly.
In just the last few days, I have received four letters and postcards asking me if I want to sell a property. Some are typed, some are made to look handwritten (while still being mass-printed), but they all say essentially the same thing. They promise a quick, clean, "as-is" cash sale -- no sales commission or extra fees. They'll even pay all closing costs. What they don't say is that they only want to give me half what the place is worth on the open market.
What this tactic says to me is that either a lot of people have taken the same class, or a lot of these get-rich-quick guys are teaching the same thing.
The advice here is to stay clear of anyone who promises you'll earn a fortune by following their investing techniques. If it's so easy, why are they peddling seminars, books and videos instead of flipping houses full-time themselves?
It may look simple on "unreality" TV, but it isn't.
(Next week: How to spot a scam artist.)