CONSUMER WINS FIGHT FOR REFUND
How I Got My Money Back from Henry Kaye
This is the story of how I was fortunate enough to be refunded all the money I had paid to NII for their so-called "Investment Mastery Course".
I signed up with National Investment Institute (NII) in December 2002, through circumstances which will be covered below.
One of the books on the NII recommended reading list was "Real Estate Mistakes" by Neil Jenman. After reading his book, I noticed there was going to be a seminar by Neil in Adelaide on March 3, 2003. My husband and I decided to attend. It was quite any eye-opener. I decided to write to Neil about NII as by this time, four months after starting the Investment Mastery course, I was beginning to have my doubts about the value of the material I had.
This is what I wrote to Neil on March 5 2003.
I attended your seminar in Adelaide with my husband on Monday night.
I am not sure if I have made a mistake or not, so I'm asking for your opinion on a commitment I have made. I went to a seminar by NII (National Investment Institute) last December and signed up for a 12 month course for $15,000 for which I received 9 cd's and the promise of monthly workshops during the year.
All we want is the opportunity to look after ourselves when we retire, as we know we won't be able to depend on the government.
I have noticed however that on attending the workshops there is a lot of pressure to purchase ongoing services With what I'm paying already I'm not prepared to commit to anything else.
What do you know about this group and should I tread very carefully?
Well, was I in for a shock! Neil pointed out some facts about Henry Kaye and directed me to the ASIC web site. I also did some further research. My heart plummeted as I realised my hopes of being financially independent on retirement were false, and that I had also committed myself to spending $419 a month for the next four years for a course that was worthless to me. I asked Neil if he could help me.
I sent Neil a copy of the recommended reading list I had received with my course notes, with the following comment.
I have read most of these books now. One of the things that bothers me is that the methods we are being taught by Henry Kaye run contrary to what most of the books say.
I decided to write down the reasons I felt uncomfortable about the NII course. This is what I wrote.
Reasons why I went off NII
1. The information in the Recommended Reading List did not correspond to that given by NII.
2. We were encouraged to misrepresent ourselves to valuers, banks, real estate agents
3. We were told not to listen to friends, neighbours, relatives, as they wouldn't understand what we were doing because they didn't own lots of properties themselves.
4. I found out the person who introduced me to the first seminar was offered payment by NII to bring prospective customers along.
5. I felt Alan Meagher from NII was more interested in obtaining new members than in looking after the existing ones.
6. The information given in the DVD's was based mainly on apartments and units constructed in the Melbourne area.
7. I was told at one of the workshops that the speaker only went to one female banker at the NAB in Victoria for his loans – did this mean he got them because it made her agency look good and she received corresponding benefits, rather than that the method he used was something everyone could do.
8. The workshop I attended in February consisted mainly of a presentation from a company associated with NII, who offered a reduced rate to subscribe to a database system that supplied information we were recommended to obtain in the course notes. This same subscription had been offered at the 'special' reduced rate at a previous meeting.
9. Almost all correspondence received from NII contained an 'offer' of some sort to send them more money. Eg "Attend Henry Kaye's conference – send $500 to secure a place. This will be refunded to all graduates" – but what is the definition of a "graduate"? That has never been properly explained.
10. We were assured at our initial meeting with Alan Meagher that the course was approved by ASIC and it was all above board and ethical. I have since found out this is not so. If this is untrue – what else is?
11. I found the content in the course to be of poor quality, with much repetition and very hard to follow.
12. After reading readily available property and investment magazines, I have learnt as much if not more than I have from NII. So what am I paying all this money for?
13. I heard of several members who had bought or committed themselves to so many properties that the banks would not lend them any more money, so they were encouraged to enter into joint ventures or mezzanine funding to enable them to continue to purchase properties.
14. Later in the year the course offers a field workshop with the opportunity to purchase property sourced by NII. If I can't trust them this far, why would I continue?
15. At the Workshop in February we were shown how to find out information on sellers (using their new database to look up property deeds), such as how long they had had their mortgage, and how much it was for, so we could negotiate with them to leave money in the property and then we wouldn't have to use our money for the deposit. I feel uncomfortable with this, as it is using other people. It may be perfectly legal, but it doesn't feel above board to me. It reeks of 'spying' on people. I would hate it if someone did it to me.
On March 23 Craig (from The Jenman Group) sent me Case Notes which had been used by another person in 2002 to receive a full refund from Henry Kaye. Their circumstances were slightly different to mine, but I went through the notes thoroughly and culled out the information which I considered would be useful to my case. The following letter is the first one I sent to NII on April 24 2003, requesting full refund of monies I had outlaid, and the reasons why I thought the refund should be granted. I addressed my letter to Alan Meagher as he was the person who spoke at the introductory seminar I attended, as well as the consultant who assured me NII were genuine and above board. He also signed me up for the course and arranged the loan with Australian Direct Finance, which was agreed to within two days with no questions asked.
Thursday, April 24, 2003
National Investment Institute
L6 / 185 Victoria Square
Adelaide SA 5000
Attention: Alan Meagher / Henry Kaye
My initial introduction to NII (National Investment Institute) was through a work colleague who, after asking me if I owned my own home, then enquired as to what my retirement plans were. On being told that I didn't really have any, he recommended my attending a seminar in Adelaide the following week to which he had "free" tickets. I wasn't at all keen on going, but he was quite insistent, and in the end, to avoid embarrassment, I agreed to go. He also managed to convince three other work colleagues to attend as well, though these people turned out to be more astute than I was and decided not to get involved. Under normal circumstances I would never have gone to this seminar, but Hilton Gibson is a senior engineer and said he had attended previous seminars and followed what was taught, and that it worked for him and he claimed it was a good thing to do. He was also going to recommend the course to our Company Manager.
The seminar was very emotional and full of hype and focused on pointing out the importance of investing money in wealth education, a topic necessary in order to validate and cushion the $15,000 fee to be applied. Repetition of the wealth education became an unconscious competence in the back of my mind. Never having been exposed to anything quite like this before, I was soon convinced that here was the answer to our future. If we paid for and attended the seminar we would be taught how to invest in many properties and be financially secure in our old age. It was stressed that most people retire broke, and do not enjoy their old age. We were going to be the fortunate ones, as with the knowledge we were going to learn and the assistance of the NII, we would become wealthy very quickly through property investment. A great many statements were made in reference to making extremely large amounts of money over a very short period of time through investing in real estate.
NII's argument and marketing approach was carefully and strategically charged with emotion – the words used "sounded like evidence, but were really lacking evidence".
My main objective at this stage was to find the means to enable my partner to come home, as he had spent three and a half years working interstate. This seminar appeared to provide the way to do this, by allowing us to purchase properties with no money of our own, do them up, then sell them without having to pay stamp duty. This is one of the strategies we were going to be taught by Henry Kaye and his associates. As well as being taught these things we were also to be "mentored" by our own consultant who would be there to hold our hands along the way, and help us with any problems we might encounter.
So after attending the initial seminar on Tuesday December 3, 2002, and knowing that my husband would be home the following weekend, I made an appointment with Alan Meagher, who was also one of the main speakers at the introductory seminar. This appointment was for a meeting on Saturday December 7 at the NII temporary offices in Victoria Square, where the details of the NII courses available would be explained to us, and what we could expect to get out of them. My partner, John O'Malley, had some misgivings at this meeting about the "bona fides" of the NII organisation, but Alan Meagher assured us both that his organisation was completely trustworthy and honest. John made it very clear that he was working interstate and would not be able to attend any seminars or meetings, but I was persuaded to attend a seminar explaining how the investment system worked. Alan was very convincing, explaining how the system worked and how investment properties could be purchased with either no deposits or, as he put it (and how NII constantly emphasises) using other people's money. He further touched on mezzanine finance and other methods of obtaining finance including using other people's assets. We explained that our only assets were our home, cars and personal items, that we had very little in superannuation and that our working lives were limited due to our ages. We were assured that by using NII's methods our ages would make no difference, we would not be required to use our assets and it was never too late to invest in properties, and if we followed NII methods excellent returns could be produced in 4 to 5 years.
We were being sold emotionally by the NII rhetoric and wanted to become rich – emotion took over logic and we felt reassured by the verbal promises given. We wanted to "make money with no equity risk in less than 4 years", we were sold on Henry's brochures reciting people's experiences about all the average people who had made it, and Henry had subconsciously implanted the seed wealth education investment was necessary. To me this course was to be equivalent to a year at University, and if the content was what was promised it would be well worth it.
At the commonwealth level the Trade Practices 1974 covers the conduct of all corporations and their agents.
Section 52(1) of the Act provides that:
A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
It is located in Division 1 of Part V of the Act, which are titled 'Unfair Practices' and 'Consumer Protection' respectively. The operation of the section was described by Justice Fox of the Federal Court in Brown v The Jam Factory Pty Ltd: 
Alan further stated that should anyone be dissatisfied with what his organisation had to offer, and could not make, in his words "many, many times over what it would cost to join the Institute, he would refund all monies paid".
After the meeting at Victoria Square John and I then met up with Hilton Gibson, who invited me to the first seminar. We discussed the forthcoming seminar and Hilton again said it was a good idea, it was worth the money I would be spending, and he had paid $55,000 to become a platinum member of NII, whereby they provided him with first refusal on "good" investment properties and other types of investments. We have since been informed that Hilton was paid by NII to bring people to the introductory seminars, so the value of his advice is now questionable.
According to the Trade Practices Act, conduct is misleading or deceptive if it has that effect on the recipient of this conduct. The question is not whether the person engaging in the conduct made a false or misleading representation but whether the effect of the conduct made was false or misleading – And in this case it was, I have not received the services I was promised.
Following this meeting I then met with Alan on December 9 2002, where I had to sign a document committing me to finance a debt for $15,000 prior to allowing me to attend a weekend seminar commencing on Saturday December 14 2002. If I did not attend this seminar, the next one available was not until later in 2003 in Melbourne, with all the extra costs of flights and accommodation.
I attended the seminar which was "full on", including having persons from the audience, with, among others a single mother who, it was claimed, originally commenced with no money or assets and over a few months had purchased properties worth in excess of a million dollars and was now "set for life" with regular income and would continue to purchase properties resulting in early retirement with a fantastic life style.
It was stated many times over that the money paid to attend this seminar meant nothing as we would all recoup any money outlaid within the first few months following NII principles.
The first session of the seminar was designed to get everybody attending into a frame of mind where they would be more accepting of the information that was to follow. Rhetorical questions were asked such as
Do you want to be poor for the rest of your life?
Would you like to earn 1 million dollar pa?
Do you want to learn how to make money with no money?
We were made to feel lucky for being involved with the group, and were also convinced that we were getting the "deal of a lifetime". Throughout the seminar a sense or urgency was generated, with a you must act now mentality pervading, and a sense that you would miss out on the opportunity of a lifetime if you didn't rush out and act right now. We were also told that our accountants, financial advisors, friends and family would not understand what we were doing. If they queried what we were trying to do we should ask them and how many properties do you own? The assumption being that if they knew what they were talking about they would own a lot of properties themselves, and because they didn't their knowledge and advice was therefore suspect and not to be taken. According to Henry's key statement "only learn from the best, before you ask any questions or seek advice from anyone make sure you ask them how much they own in property, if they don't you're wasting your time".
Subsequent to the seminar I then commenced to follow the advice I had paid so much for. After reading the literature provided by NII and watching the DVD's also provided and purchasing and reading a number of books recommended by NII, I then spent an inordinate amount of time carrying out what Henry Kaye refers to as due diligence. As recommended I selected areas for real estate, attended real estate agents, plus all properties for sale, open houses, auctions etc that I could find. I looked at several properties for purchase, but fortunately signed up for nothing. I mentioned some of the strategies Henry Kaye suggested to several real estate agents, only to end up feeling as if I had done something underhanded and was left with the impression that I had no idea of what I was talking about. I also received the same response when I contacted various financial institutions with regard to obtaining loans for properties.
So I decided it was about time I got some more "mentoring" and assistance from NII as had been promised with my initial purchase of the course. But when I rang and emailed both Alan Meagher and the NII office in Melbourne about when I could expect some assistance, either in the form of a personal consultation or the workshops that were supposed to be part of the course, one every month for the next 12 months, I received no response. This was in January, and I received no further communication, after repeated phone calls, until mid February, when I received a letter informing me a workshop was due to be held on the 18th Feb at the Radisson Hotel in Adelaide. At this stage I was beginning to realise that the NII consultants were more interested in attracting new recruits than they were in helping the students they already had.
Under the Trade Practices Act 1974, any unfulfilled promissory contractual terms either verbal or written by a corporation or their agent or a promise constituting a representation with respect to future matters which lack occurrence, are a breach. The corporation involved will render a contravention injunction corrective advertising and damages as well as a variety of additional orders at the courts discretion.
With high hopes I went along to the "workshop" thinking that I must have misunderstood the material I had been studying so carefully over the last two months, and that it would all be explained to me by the consultants/tutors, and that perhaps I could pick up tips from some of the other attendees. This was not the case, as all we got over the two and a half hours was a lecture by Karl or Stephen (I am not sure which one was talking, but as they both say more or less the same type of hype, it doesn't matter much) on how well they were doing in Melbourne, how many units they had, how much money they were making, but no specifics, no detail on how the properties were financed, nothing that was applicable to our current situation here in Adelaide. Then we were treated to a sales pitch from an associate of NII trying to persuade us to sign up for an internet data base subscription that would do all the work Henry Kaye claims we need to do to acquire the right blue chip properties, with a huge discount if we signed up on the spot.
I was becoming even more concerned about the value of the course I had paid for after reading the books recommended by NII. Almost all of the recommended reading list authors stated that "wealth does not happen overnight, it grows slowly". Then I started to read Property Investor and Australian Women's Money and discovered that the information I was paying so much for was available for practically nothing in the magazines and on the internet.
Some of the methods NII suggest using eg mention to Real Estate agents that you are a property investor and will be buying & selling several properties so they will act only in your interest are unethical.
I had finally received a document that would enable me to revalue my property that was purported to be worth $195.00 but would be given to me free for attending the initial seminar. When I received the cd I was most disappointed to receive a document that I could have created myself on a spreadsheet with very little effort, and in fact I had created something similar when I was trying to track properties for sale in the areas I was studying. This is yet another example of the lack of value for money and misrepresentation of course content from NII.
It seems the only time I receive any communication from NII is in the form of letters advising of upcoming seminars by Henry Kaye and asking for a deposit of $500 to book a seat (refundable on attendance).
I firmly believe that a number of statements made by Alan Meagher and his colleagues were misleading and deceptive and due to my total dissatisfaction with the level of service and course content provided I request that any money I have paid be returned, any expenses that I have outlaid be reimbursed, and that the agreement NII had me commit to be rescinded.
Take note that I reserve to the right to produce this letter at a further date.
Sharron M Dyson
NII's initial response was a standard letter dated 28/4/03 thanking me for my enquiry, and advising me that my concern would be heard at the next Monthly Review Meeting where a decision would be made. The following extract is taken from their letter.
"To help the Client Services Team process my application, and ensure all the information is available for the Review Meeting please forward the following information:
· Copy of original booking form
· Name of Original Consultant
· Copies of any Credit Card/Bank statements or loan documentation showing payment of any monies disputed
· Copies of any other relevant documentation.
Please provide us with the precise reason for your request to alter your enrolment and return this letter to the Client Services Team etc
14 days after our Review Board has met, you shall receive notification by written correspondence."
I was under the impression that my letter had stated very clearly my reasons for a refund, but they obviously had stock letters to send, hoping that applicants would be put off and stop asking for their money back.
Six days later on May 7, I received an almost identical letter from NII, the only difference being this one had the date of 29/5/03 as the date when the Review Meeting would be held where they would consider my request.
My response was as follows.
10 May 2003
National Investment Institute Pty Ltd
Level 3, 210 Kings Way
South Melbourne Vic 3205
Client Services Team
With reference to your letter(s) dated 28/04/2003 and 30/04/2003 respectively, please find attached the following documentation to back up my request for the refund of all monies that I have outlaid to date on the Investment Mastery Course, and further for you to arrange to rescind my agreement with Australian Finance Direct.
· Original Booking Form – Application for Enrolment 606809 dated 9/12/02
· Australian Finance Direct Contract Document dated 9/12/02
· Copy of original letter to NII dated 24/4/03 delivered to Alan Meagher by hand on that date, and e-mailed to NII Melbourne, outlining precise reasons for the request to rescind our agreement
· Scanned copy of Investment Mastery Program brochure – clearly showing money back guarantee is offered
· List and copies of all receipts for money expended in pursuit of "Investment Education"
Then I waited for a response from NII. Three weeks later a letter dated June 18, 2003 arrived with the Review Board decision.
"The Client Services Review Board has convened and considered your application. Your application to the Review Board has been unsuccessful. A letter will be sent to you shortly providing a more detailed response. Unfortunately Customer Service is unable to give any verbal response until you receive it. If you have any questions, please wait until you receive this letter. Karl Walter, Chairperson, National Investment Institute Review Board"
So I waited for the written response as to why I had been turned down for my refund. And waited. By this stage I had had enough and just wanted to get on with my life, so I told my husband John that he could now take over and follow this mob up and if he could get my money back for me I would be extremely grateful. Finally on July 14 my husband got tired of waiting for a response and sent NII the following letter.
July 14, '03
National Investment Institute P/L
Level 3, 210 Kingsway
Att: Karl Walter
c.c. A. Meagher – NII Adelaide
Re: REVIEW BOARD DECISION
As of this day my wife, Sharron Dyson, has requested that all further correspondence be dealt with through me, John O'Malley, see attached letter.
I acknowledge your correspondence dated June 18 in reply to Sharron's correspondence dated April 24. Your correspondence rejecting Sharron's claim took 55 days, an inordinate amount of time from any organisation. Your letter also stated that a detailed response would be forthcoming.
It is now a further 27 days and we are still awaiting this "more detailed response." I would consider 27 days ample time to compose a letter so it is apparent from your lack of resolve that you have little if any intention of doing anything other than "drag out" this matter.
If that is your intent then be assured I do not give up easy and this issue is far from finished.
Not knowing your role in this so called investment institute I may be contacting the wrong person, if so please contact me with the name of the relevant person.
I am surprised that your "Front man" the conspicuous person who "recruits" are led to believe is N.I.I. who does all your "spruiking" on the C.D's provided and who are told will be available to discuss any problems with them and assist them if needed, Henry Kaye, is suddenly not involved.
I have full and complete knowledge of all that occurred with this affair as I was an attendee at the meeting with Sharron and A. Meagher in Adelaide on Saturday December 7.
On this occasion certain statements were made by Mr. Meagher in relation to investments. Among them was regarding ways of obtaining returns on property absolutely without outlaying any of you own money.
However to obtain these benefits it was necessary to sign up for a "course", for which payment was required prior to attending, and where amid a number of other claims he stated a "guaranteed money back" offer was available if not completely satisfied with the results of the course.
I will reiterate on Sharron's behalf that she was not satisfied with the "course" and is requesting that the "Loan" she was "convinced" to sign up for be rescinded and all other monies outlaid by her including all costs be repaid.
Should we be unable to reach a sensible resolution then, along with a copy of this letter, I will be forwarding a copy of all previous correspondences to the persons listed below to warn them of your organisation's deceptive activities, and in particular the methods used in getting persons involved with your organisation and to sign for your so called "courses."
However I trust this can be resolved amicably.
The Ministers' for consumer affairs - each state & territory.
Our members of parliament - both State and Federal.
While we were awaiting a response to this last letter, on Monday July 21, I received a call at work from Craig asking me if me and my husband would like to fly to Sydney to attend a seminar that night. Henry Kaye was going to be there.
We arrived in Sydney just before 7pm, and went straight to the Hotel in North Sydney where Henry Kaye was speaking. A Channel 7 team were waiting just down the road and I had an interview with them on the street, before being going in with a cameraman to the room where Henry was speaking.
I was sitting in the front row with the cameraman beside me, and when I felt the moment was appropriate I stood up and asked Henry why he wouldn't honour his 100% money back guarantee, and refund me my money. His immediate response was "this is not the time or place, I will discuss it with you after the meeting". But I felt it was the time and place and faced the audience, which seemed to number about 500 people, and told them not to waste their money like I had. I actually remember very little of what I said at the time, and when I ran out of words, my husband, who was standing near the door, started shouting at Henry.
It was about that time that NII, (they were calling themselves PCG that night, but it was still the same people) realised we had a cameraman with us, and they panicked. We were leaving and the NII security people asked the cameraman for the film he had taken, and when he refused they took it off him. The reporter from Channel 7 managed to get it back and escape with it. After having to drive past a road block by NII personnel, we all met up at another venue in North Sydney. If NII had nothing to hide, why were they so afraid of their activities being filmed.
I stayed in Sydney the next day to be further interviewed by Channel 7 and then my husband and I flew home to await further events.
On Wednesday July 23, I received a letter dated July 21 from NII as follows:
The Review Board met on 17th July 2003 at which time your refund application was reconsidered.
We are pleased to advise that the Review Board has recommended your application for a refund be accepted, subject to your execution of the following document:
· Enrolment Amendment Form
· Deed of Release Form
Please find these documentations enclosed.
To enable your application to be processed, please sign where indicated and return them to:
Karl Water, Review Board Chairperson, National Investment Institute"
At first I was delighted at the thought that I would get my money back, but then I read the Deed of Release Form, particularly the following clause
3. NII and the Client will keep the terms of this agreement strictly confidential. The Client understands that this agreement's disclosure could adversely affect the commercial interests of NII which would take legal action against the Client in response.
I got angry as I realised it was a gag clause, and if I signed it I would never be able to discuss NII in public in future. So I discussed it with my husband and asked him if he was prepared to lose our money, as I was not prepared to sell my silence to get it back. He was very supportive, and agreed if I felt so strongly about the matter he was prepared to back me up. I knew at this stage that a reporter would be contacting me and I was keen for the story to be told in full, and I knew Today Tonight were going to be airing their story. So I sat on the documents and waited to see what would happen.
The reporter contacted me on Thursday, and the article was printed on Saturday July 26, with my comments included. The Today Tonight show screened on Wednesday July 30. On Thursday ASIC announced Henry Kaye, NII and Novasource were no longer allowed to trade or conduct seminars until they had met with ASIC requirements, and they would have to refund all people who had purchased courses between March 1 and December 31 2002, who had relied on the fact the courses were ASIC approved, when in fact they weren't.
On the Thursday I rang Australian Finance Direct, who had loaned me the $15,000 for the Investment Mastery Course, to find out the payout figure for the loan, and was astonished to be told that NII were in the process of paying it out, and that I would receive a full refund of the money I had contributed. On Friday I received another phone call from AFD confirming that this was the case and that my cheque was in the mail, and when I arrived home on Friday night, the cheque was there.
The end result is I have my money back, I do not have to keep quiet about anything, and I feel very empowered at having stood up for myself against this mob. I am also extremely grateful to all the people who helped me and for all the support given me.
Sharron Dyson, August 4, 2003
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