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FTC: House-flipping seminar scheme cost consumers $400M

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EAST PROVIDENCE, R.I. (WPRI) – A Utah-based real estate company bilked consumers out of at least $400 million in a sweeping real estate seminar scheme, according to the Federal Trade Commission.

According to a lawsuit filed this month by the FTC, Nudge LLC and its affiliated companies hosted seminars across the country for years, promising to reveal the secrets of successful celebrity house-flippers.

The company has denied any wrongdoing.

The FTC says consumers were drawn into the scheme during free seminars that were really sales pitches for three-day, $1,100 workshops, according to the lawsuit. Those subsequent workshops typically included general information about real estate investing, misrepresentations about Nudge services, and another sales pitch for advanced training that could cost up to $40,000, the FTC said.

The FTC claims 95% of people who went to Nudge seminars paid more to the company than they ever netted in real estate transactions.

The FTC recorded undercover audio at several seminars. In one recording from 2017, an instructor claimed, “our students’ success skyrocketed.”

In a separate audio clip, an instructor explains, “This is about funding your deals, whatever you want to call it. I call it transactional funding, and this is one of my favorite sections to teach because this is how we make money together.”

“These defendants presided over a sales process that started with empty promises of future wealth and ended with many consumers left in financial ruin,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.

Jeffrey Knowles, an attorney representing Nudge LLC and other defendants in the case, said his clients plan to fight the allegations and look forward to telling their side of the story.

“The FTC’s groundless lawsuit and headlong rush to shut down a legitimate company operating lawfully for years are grossly unfair and do not reflect reality,” Knowles said in a statement emailed to Call 12 for Action. “At last Friday’s status conference in Utah, the judge expressed concerns about the emergency relief sought by the FTC years after the alleged conduct occurred.”

“Our clients provide valuable real estate education, training and experience to their customers,” Knowles added.

Susan Campbell (scampbell@wpri.com) is the Call 12 for Action and Target 12 consumer investigator for WPRI 12 and Fox Providence. Follow her on Twitter and on Facebook.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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