(CN) – More than a dozen companies conspired to defraud investors through “Millionaire University,” which is not a school, as advertised, but a trick to sell undesirable property in southwest Florida at inflated prices, according to a federal complaint.
The 28 plaintiffs from across the country say Millionaire University lured them to spend $20,000 apiece on real estate courses. Their “educators” enticed them to buy undeveloped lots, get financing, build homes and market them for sale or rent. The appraisers, however, wrote fraudulent, inflated appraisals, and the lenders provided millions in illegal funding to finance construction, according to the complaint in Tampa Federal Court.
Defendants include the Whitney Education Group, the Wealth Intelligence Academy, Gulfstream Development and Kane Realty.
Millionaire University lures students through infomercials and mailers, takes advantage of student-teacher trust by introducing students to a “lucrative” real estate investment opportunity, according to the complaint. The conspirators claimed students’ investment would help them earn back what they paid for the course, plus capital with which to make future investments, the plaintiffs say.
The defendants introduced students to a “power team” of contractors, lenders, brokers, managers and title companies, all of which allegedly received inflated commissions and fees to participate in the fraud.
Despite the defendants’ promises that they would pay interest on the loans and would not overdevelop the land, they created a “glut” of homes in an undesirable area that cannot be sold or rented except at a “crippling loss” to their owners, according to the complaint.
The former students say the properties were not “premium” lots, as advertised, because they are in remote places with poor roads and high crime rates. And they say the defendants packed together five or more of the same model home, leaving students competing against one another.
Independent appraisals valued the properties much lower than the defendants did, so the plaintiffs cannot collateralize refinancing to pay off the loans, they say.
And they say the defendants charged excessive commissions and violated federal regulations.
The plaintiffs seek rescission of contracts and punitive damages for RICO fraud and breach of fiduciary duty. They also want their mortgage assignments voided and an injunction to keep the defendants from foreclosing on the properties. They are represented by G. Wrede Kirkpatrick with Conwell Kirkpatrick