Loans Answers

Has anyone attened a Robert Allen Seminar?

Question: 17 years ago I went bankrupt (rental property). One particular distressed property which had a mortgage on it became abandoned (no one lived there) before the proceedings were over. After the bankruptcy was finalized I found the bank didnt want it. And I still was the deed holder. About 2 months after the bankruptcy was finalized the property was torn down. I was liable for the tear down which I paid. This property (a lot) is in a flood zone and can not be improved. It is completely worthless. I appear to be stuck with it forever. I owe back taxes and weed control on it. I moved out of the state 5 years ago, and now live 1000 miles away. 1. What legal action can the city, county, state take to recoup the back taxes? 2. Will I be stuck with this property forever? 3. So far this hasnt effected my credit. Will it? 4. What is the best solution? I thought of advertising the property with a 500 dollar landscaping credit (cash) in hopes someone in dire needs would take it over and aggree to assume all back tax’s as payment in kind to me for the lot. Is that legal since my reasoning is to get out of the back taxs?

Answer: At best, you would have negative cash flow following his books. At worst, you would go bankrupt and wind up in jail. He doesn”t put it this way, but his nothing-down techniques almost all require you to mislead an institutional lender or take advantage of an unsophisticated seller or both. The president of his Atlanta Robert Allen Nothing Down Club literally went to federal prison (at Eglin AFB, FL) for doing illegal nothing-down deals. There is virtually nothing in his material about how to make a profit. Rather he simply assumes that real estate goes up so much every year that you need only buy it to cash in. Click here for a little story about his association with probate guru Jim Banks.

Allen himself got into financial difficulty with the IRS as early as 1984. In 1986, IRS filed a $346,395.79 lien against Allen. In September of 1987, when I wrote an article exposing his financial difficulties, he also had:

another $65,649.90 IRS lien more than $76,000 of delinquent tax warrants filed by the State of Utah lawsuits and judgments regarding over $100,000 in unpaid fees to fellow gurus who spoke at his meetings Allen declared bankruptcy in May of 1996. See my 8/96 article. In what must have been a weak moment when I was interviewing him for the “87 article, Allen told me I “do a great job and that I keep guys like him honest.” I have it on tape (with his knowledge and permission). I won”t take credit for keeping him honest-or give anyone else credit for doing that.

I have received a number of inquiries asking me to document the fact that Allen went bonkrupt. This is quite unusual. I have received no other such inquiries about my statements that other gurus went bankrupt. I suspect there is some organized campaign telling people that I made this up. I did not. I got it from a story in the San Diego Union. I called the real estate editor of the San Diego Union at the time to confirm it. The records of Allen”s bankruptcy are in the San Diego federal bankruptcy court. If you know of anyone who is saying tat I made this up, please send me that person”s name and when and where they said that.

I think Allen has an interesting story to tell. But it”s not the one he sells. He should speak about real estate investment the way a reformed alcoholic speaks about drinking. For cheaper , accurate information on real estate finance, see my book How to Use Leverage to Maximize Your Real Estate Investment Return, my High Leverage Real Estate Financing cassettes, and my newsletter articles on finance.

Later, he was sending out an e-mail soliciting customers for a business opportunity that has “nothing to do with real estate.” One reader tells me Allen is now into multi-level marketing of vitamins. The most well-known multi-level marketing company is Amway. As far as I”m concerned, nothing he has ever done had anything to do with real estate. It was merely about making Bob Allen rich and famous.

Click here to read an email from one of his seminar graduates.

On 9/4/02, a reader told me Allen was back to 65% real estate in his current seminar.

I also heard that Allen was telling people his bankruptcy was caused by an avalanche that destroyed an expensive home he and his wife were building. He tried to pawn that story off on me, too. Here are the details as I recall them. The avalanche occurred around February. But the IRS and the State of Utah had filed liens against him for non-payment of taxes months before the avalanche. Furthermore, I interviewed him by phone about all this and recorded the conversation with his approval.

I asked him what kind of real estate genius, as he was claiming to be at the time, would fail to insure his home. He said he did have insurance against the avalanche. “Did you file a claim?” “Yes.” “Did the insurance company pay it?” “Yes.” “So how did the avalanche cause your financial difficulties if it was fully insured?” He then mumbled something about a deductible. Gimme a break. At the time, he was claiming to be a multi-millionaire. Millionaires are not bankrupted by the deductible on their homeowners insurance. Plus there is still the pesky fact that he was in financial difficulty before the avalanche ever happened. And then there is the question of why he was building a mansion in the mountains when he was not paying his state and federal taxes like the rest of us.

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