‘Rich Dad’ Will Remain $14.6 Million Poorer

MANHATTAN (CN) - Companies behind the Rich Dad financial self-help brand cannot avoid paying a $14.6 million judgment to The Learning Annex over abandoned plans for a lecture and PBS series, a federal judge ruled.

Based on a book by Robert Kiyosaki, "Rich Dad, Poor Dad" ostensibly draws from the author's upbringing and outlines a philosophy of financial independence through investment, real estate, business ownership and other ventures.

It spawned a series of books, games, lectures, and other audio and visual materials.

Critics have said, however, that the Rich Dad brand simply hawks dubious tips through a wide variety of products.

John T. Reed, who secured his MBA at Harvard Business School, has blasted the book for dispensing "much wrong advice, much bad advice, some dangerous advice, and virtually no good advice."

In September 2005, The Learning Annex and the companies behind the Rich Dad brand met to discuss potential marketing and expansion through a free seminar program, a PBS show and introductions to potential business partners.

In return, The Learning Annex stood to gain a share of the resulting increase in revenues.

Both parties signed a contract days after the meeting, but the agreement fell apart when Rich Dad allegedly pulled out of the contract by email on Feb. 2, 2010.

Rich Dad then allegedly pursued a partnership with Russ Whitney, a man memorably dubbed as a "real estate evangelist" in Reed's critical New York Times profile.

(That article spurred a lawsuit between Reed and Whitney, reportedly settled under confidential terms.)

The Learning Annex claimed that Rich Dad specifically denied talking to Whitney, then sued both parties on various charges. It later withdrew all claims against Whitney and went to trial against Rich Dad for breach of duty, quantum meruit and unjust enrichment.

A jury awarded $14.6 million to Learning Annex LLC and Learning Annex Holdings LLC on July 13.

Trying to head off defeat, Rich Dad argued that neither of these parties could collect because the interest in the lawsuit was held in another entity, Learning Annex LP.

To resolve the controversy, U.S. District Judge Shira Scheindlin accepted the Learning Annex's motion to add its LP as another party on Wednesday.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit