Financial Advice May Bounce Experts Warn Consumers To Be Wary Of Get-Rich-Quick Seminars

Hundreds of Eastern Washington and North Idaho residents flocked to financial seminars this week, searching for an easier way to survive in a tough economy.

But anyone planning to use Financial Concepts Inc.’s program for starting a small business should beware.

FCI’s handouts and presentation were full of information that experts ranging from the Internal Revenue Service to the Harvard Business Review said is misleading at best and inaccurate at worst.

The Longwood, Fla.-based company’s parent organization is the subject of civil actions by attorneys general in four states. FCI, which conducted seminars in Spokane and Post Falls Tuesday and Wednesday, uses free seminars to recruit people to attend three-day financial workshops to be given at a later date.

The workshops cost $1,895.

With a fast-talking, polished presentation resembling a live infomercial, FCI representatives teased and tempted participants with stories of easy wealth.

Turn simple investments into millions, they said.

Use credit cards to start companies.

Earn money by fishing all day.

Success is all but guaranteed.

At one seminar, the 100-plus people in the audience - ranging from twentysomethings to older married couples - seemed to hang onto every word. Some signed up for the three-day seminar, scheduled for April 26 to 28 in Spokane.

Companies hawking get-rich-quick schemes find easy prey among people looking for ways to escape corporate downsizing or make an easy buck, Spokane area business officials say.

“I think people have more uncertainty about their jobs and are looking for more opportunities, and that’s why we see businesses like this coming into the area,” said Lisa Stephens, president of the Better Business Bureau of the Inland Northwest.

Formerly a division of the Charles J. Givens Organization, FCI was incorporated as a business last year, said its president, Steven Sitkowski.

In the past three years, the attorneys general of Ohio, Florida, Wisconsin, and Michigan have filed lawsuits or civil actions against the Givens organization. The suits allege, among other things, that Charles Givens used false advertising, failed to make refunds and taught flawed money management strategies.

Three of the suits were settled, with concessions from the Givens organization, including agreements not to mislead customers about refund policies, according to the Better Business Bureau. The Michigan case still is pending.

Sitkowski downplayed the civil actions against the Givens organization, saying people acting out of jealousy were trying to tear down a successful person.

“Everybody looks for the chink in somebody else’s armor,” Sitkowski said. Charles Givens, Sitkowski said, still acts as a consultant to FCI, which has not been accused of any wrongdoing.

The salesmen singing FCI’s praises during seminars at downtown Spokane’s Red Lion Hotel and Post Falls Templin’s Resort seemed unaffected by the controversy around the company.

At one FCI seminar at Templin’s Wednesday, a smooth-talking young man in a well-tailored suit rolled through a two-hour presentation peppered with cliches about easy wealth.

“Folks,” he said, “I’m here to take you out of the stands and get you into the game.”

The salesman’s presentation was filled with questions to the audience that he quickly answered (“Do you want to make more money? Of course you do”). In the upcoming three-day seminar, he said, new business owners would learn to give themselves tax-free raises and to write off expenses on their income taxes.

“Do I go on vacation?” he asked. “No, I go on business trips. It’s all tax deductible.”

Among the numerous things FCI promises to deliver to its customers are: attorneys, accountants, personal investment consultants, tax assistance and real estate training.

FCI touts its services as a lifelong financial network that will assist people in getting rich. FCI also promises to set up a home page on the Internet - for free - and said between 60,000 and 70,000 people will visit it each year.

The Internet site drew in Mary Kroiss of Spokane after her FCI seminar Tuesday. But when she got home and read FCI’s materials, she discovered that it would cost her $125 per month to maintain that home page.

When she looked through the “educational” materials she received, Kroiss called FCI and “un-signed up,” she said. She also sent FCI a certified letter canceling her membership.

“When we looked at the package of information, we were finding hidden costs,” Kroiss said. “There just wasn’t any consistency.”

FCI’s glossy handout also contains a quote - which Sitkowski said came from Harvard Business Review - that “95 percent of small business owners succeed their very first year.”

That made the managing editor of the Cambridge, Mass.-based magazine, and Spokane business experts, laugh.

U.S. Small Business Administration figures pin business failure rate at 24 percent after two years and 63 percent after six years, said Coralie Myers, co-coordinator of the Spokane Area Business Information center.

FCI also tells its potential customers they’ll actually make money just by joining the financial network. The first thing FCI says it’ll deliver to its new customers is a two-year historical review of personal income and business taxes. FCI says it will refile tax returns for refunds averaging $2,300.

That premise raised the eyebrows of an IRS spokesperson in Seattle.

“I can’t think of a legitimate way that any financial planner could go - sight unseen - and say, ‘I can guarantee a refund,”’ said Deborah Diamond, who stressed that she was speaking not about FCI, but generically about any company.

Linda Kiki of Spokane initially was entranced with FCI’s brochure and enticing promises. But after examining the company’s materials more closely, Kiki changed her mind.

“It’s just kind of scary,” she said. “A lot of people were paying, with credit cards and checks.”