Tarek & Christina’s Sem­i­nars Are a Scam

IN­VEST­MENT PRO CHARGES: EX­CLU­SIVE IN­VES­TI­GA­TION In Touch goes in­side the Flip or Flop stars’ real es­tate course and un­cov­ers alarm­ing new in­for­ma­tion

In Touch (USA) - - Legal news -

On a large screen in a ho­tel con­fer­ence room, Tarek and Christina El Moussa ad­dressed the au­di­ence in a pre­taped video mes­sage. “We can’t be here to­day be­cause of our busy film sched­ule,” Tarek said. “You are here ab­so­lutely at the right place and time. There has never been a bet­ter op­por­tu­nity to in­vest in real es­tate than to­day. We are proof that this will work for you.” The stars of HGTV’S wildly pop­u­lar home buy­ing, sell­ing and ren­o­va­tion se­ries Flip or Flop had at­tracted ap­prox­i­mately 130 peo­ple to a “free” sem­i­nar for their Suc­cess Path real es­tate in­vest­ment train­ing pro­gram on Nov. 5 at the Laguardia Plaza Ho­tel in East Elmhurst, N.Y. Tarek and Christina have drawn tens of thou­sands of peo­ple dur­ing the past three years with the lure of celebrity and the prom­ise of wealth.

The only prob­lem? Real es­tate pro­fes­sion­als and an­gry fans charge that what Tarek and Christina are sell­ing is a scam at worst, mis­lead­ing at best. Two In Touch re­porters went un­der­cover and at­tended the Nov. 5 sem­i­nar and dis­cov­ered trou­bling tac­tics that in­clude ques­tion­able math, too-good-to-be-true guar­an­tees and high-pres­sure sales meth­ods urg­ing at­ten­dees to sign up for a three-day re­treat with a tu­ition of $5,997 — or a dis­counted rate of just $1,997 if they signed up that day. The price goes as­tro­nom­i­cally higher for more “ad­vanced” house­flip­ping cour­ses, in­clud­ing a course for more than $75,000 (dis­counted to $43,294)! A sem­i­nar leader also tried to lure at­ten­dees into a $4,997 mem­ber­ship in the Tax Liens In­vest­ment Buy­ers’ Club, an in­vest­ment ap­proach known for be­ing so com­pli­cated and risky that even sea­soned pro­fes­sion­als steer clear of it. The “good news” for at­ten­dees — that day the mem­ber­ship was “dis­counted” to $1,597.

Pay­ing stu­dents were also promised an ex­clu­sive list of prop­er­ties that have been or are about to be fore­closed on. But these lists can be ob­tained for free on­line or at county court­houses. The pro­gram fur­ther promised to “align our stu­dents with our pre­ferred lend­ing group, which will grant fund­ing ac­cess for real es­tate deals,” some­thing ex­perts say grossly mis­rep­re­sents the loan type and cost. “The whole thing is a scam,” James Wise, real es­tate bro­ker and co-founder of the Holton-wise Prop­erty Group in the Cleveland area, charges to In Touch. “They’re teach­ing a busi­ness plan that sounds ap­peal­ing but it just won’t work. They’re giv­ing false ad­vice.”

Com­plaints about Tarek and Christina’s sem­i­nars are ram­pant. The Bet­ter Busi­ness Bureau has fielded com­plaints, and on­line in­vest­ing and other sites are filled with an­gry com­ments from peo­ple who

at­tended the sem­i­nars. Griev­ances have been lodged against Zurixx, the Salt Lake City–based com­pany that runs these sem­i­nars, which in­sists that most at­ten­dees are sat­is­fied with the pro­gram.

But mul­ti­ple sem­i­nar at­ten­dees felt cheated when In Touch went un­der­cover. They told re­porters that they were there af­ter see­ing an ad on In­sta­gram invit­ing them to “join” Tarek and Christina that day. One guest said she “def­i­nitely” thought Tarek and Christina were go­ing to show up, and mut­tered “damn it” af­ter the video an­nounced they wouldn’t be. When sem­i­nar leader Steve Wy­man, who de­scribed him­self as the cou­ple’s busi­ness part­ner, was ques­tioned by an un­der­cover re­porter about whether Tarek and Christina would be at the pricier fu­ture re­treats, he crit­i­cized the cou­ple. “The celebri­ties aren’t the best teach­ers,” he said.

So what ex­actly is he teach­ing in their name? For starters, Suc­cess Path pro­motes tax lien buy-ins. “They tell you there are these great subur­ban houses that cost $250,000 and the owner let it go into tax fore­clo­sure and you can pick it up for their back taxes, which are $8,000. Well, that doesn’t hap­pen,” ex­plains Wise, who has at­tended and sent staffers to the free sem­i­nars to in­ves­ti­gate. “The only prop­er­ties that are avail­able that you can pick up just for the back taxes are proper- ties in [ poor neigh­bor­hoods] scat­tered across the U. S. that usu­ally have a net value of less than zero.”

The math just doesn’t add up. Steve, the sem­i­nar teacher on Nov. 5, claimed that Suc­cess Path stu­dents keep 100 per­cent of sales profit and their lend­ing part­ners make 2 to 4 per­cent “of the amount that is loaned.” But that didn’t ad­dress the in­ter­est rate be­ing charged. These type of loans — called hard-money loans — are short-term and very high­in­ter­est for flip­ping houses. “There is no way Christina and Tarek’s stu­dents are get­ting low-cost loans,” Wise says. Hard-money lenders, he adds, “are not giv­ing out loans to peo­ple who couldn’t qual­ify for tra­di­tional loans, at prices that are half what tra­di­tional loans are, for prop­er­ties and deals that are 10 times riskier. No way.” There’s also lim­ited in­ven­tory of dirt-cheap prop­er­ties these days com­pared to what was out there dur­ing the 2011 real es­tate cri­sis. “Now that prop­erty val­ues have gone back up, [ banks] are charg­ing a rea­son­able price for these prop­er­ties. What the peo­ple run­ning the sem­i­nars are giv­ing you is pure fab­ri­ca­tion.”

Suc­cess Path in­sists it’s help­ing its stu­dents, not harm­ing them. “More than 50,000 peo­ple have at­tended our sem­i­nars over the past three years and there have been less than 20 com­plaints,” Tarek and Christina told In Touch in a state­ment. “Peo­ple have gone on to change their lives and achieve their dreams us­ing our mod­els and strat­egy.” But many who’ve at­tended their sem­i­nars feel duped and have given bad re­views to Tarek and Christina. “Please do not fall into the same trap I did,” wrote one at­tendee. “Will never watch those scam­mers on HGTV ever again,” wrote a man who said he knew the pro­gram was not on the level when the pre­sen­ter claimed they would loan up to $500,000 to sem­i­nar at­ten­dees “no mat­ter what their in­come or credit rat­ings were.”

Wise be­lieves the Flip or Flop cou­ple are tread­ing on dan­ger­ous ground. He tells In Touch, “Tarek and Christina El Moussa should be ashamed of them­selves.” ◼

TAK­ING AD­VAN­TAGE Real es­tate ex­pert James Wise (@jameswise­hwpg) says the El Mous­sas’ Suc­cess Path sem­i­nars tar­get “poor peo­ple who are gullible and sold a pitch on high-pres­sure sales tac­tics and emo­tion. It’s all com­plete garbage.”

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