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Until William McCorkle and wife Chantal were sent to federal prison for conspiring to commit mail fraud, wire fraud and money laundering (they are appealing the convictions), the couple claimed in flashy infomercials that he could teach anyone how to make big money buying and selling distressed real estate. McCorkle "students" (some of them paid shills) chimed in, on cue, with claims of having achieved financial freedom.The pitch was compelling. "[McCorkle] said that if you follow my program, and find a property, I'll put up the money and split the profits with you," explains Jacqueline Dowd. Although thousands bought the instructional materials on the strength of that pitch, McCorkle probably funded fewer than 20 properties, according to Dowd.
Consumers were led to believe that a $69 video along with ten books would teach them McCorkle's secrets. If they ordered right away, they'd get three free bonus books. Purchasers of this initial package were then offered additional materials including videos and audiotapes that could cost $1200 or more. Many customers demanding refunds got the runaround.
The McCorkles are gone, but other dubious, or risky, real-estate schemes filled the void. For example, Home Buyers of America (HBA), a corporation owned by "millionaire" real-estate investor Bobby Blair, was a joint-venture partner with First Resource, Inc., a subsidiary of a corporation called Fortune Financial Systems. The joint venture offered real-estate programs (taught by, among others, former McCorkle employee Steve Sitkowski).
Reacting to a February 1998 newspaper ad, the Kentucky attorney general's office obtained a restraining order against HBA "and other unknown defendants." The ad said that "millionaire Bobby Blair is turning the business world upside down by offering to front the capital needed for individuals to get started in the distressed real-estate market and first-time home buying." Blair, who says that he was unaware of the Kentucky promotion and had nothing to do with the creation of the ad, maintains, nevertheless, that there was nothing inaccurate about the ad.
The Kentucky attorney general's office accused HBA and the others of making false earnings claims at a sales presentation in the state, of failing to register with the state, and of making excessive earnings claims. Blair denies that false or excessive earnings claims were made.
In Florida, where HBA was based, First Resource created infomercials in which Blair appeared as a spokesman. According to Dowd, the infomercials featured real-estate agents "suggesting in the testimonials that they had bought the tapes and gone to the seminar and studied the program and made a lot of money because of that." However, Blair says that the people in the infomercial did not suggest that they had attended the seminars, and insists that although they were real-estate agents, they did make their money using his techniques.
Former First Resource spokesman Keith Collins defends the testimonials, saying there was no intent to mislead. "When you devise an infomercial to sell a product," he says, "if you haven't started the product yet, then it's kind of hard to have testimonials from people going to the seminar."
In any case, those involved in making the infomercials, including Blair, voluntarily agreed to properly identify employees or others used for testimonials, and to clearly state whether people offering testimonials had actually paid for, attended and successfully completed the program being offered. But they deny violating the law, and a Florida investigator says that those who appeared in the infomercial made the money they claimed.
Pediatrician Michael Kessler and wife Brenda, of Sugar Land, Texas, invested $7190 in HBA/First Resource programs, including more than $5000 for a personal-mentoring program that was supposed to give them access to lenders eager to finance no-money-down deals. However, the Kesslers say that when they found a property to purchase and called the recommended lending institution, the lender told them that it required at least 15 percent down.
The venture refused to give a refund until the couple wrote to the Better Business Bureau and the attorneys general of Texas, Florida and New York. The Kesslers were lucky. A scan of Internet bulletin boards uncovered numerous posts from unhappy HBA/First Resource customers claiming they could not get refunds.
Get-rich-quick pitches have been around for years, and one thing remains constant: pitchmen get richer; you will most likely get poorer.
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