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Federal Investigators Charge Get-Rich Guru With Failing to Deliver

April 23, 1993|DENISE GELLENE | TIMES STAFF WRITER

The Federal Trade Commission on Thursday accused real estate guru David P. Del Dotto of deceiving thousands of customers with phony claims about how his get-rich kit made thousands wealthy.

The FTC said that Del Dotto, 42, the last of the get-rich gurus from the early 1980s, pitched his "cash flow system" at hotel seminars and on a lengthy infomercial appearing on the USA cable television network. By his own account, Del Dotto took in millions of dollars from the kits, which sold for between $300 and $370 apiece.

The FTC said there is no proof that Del Dotto's kit made thousands rich and said his books and tapes failed to deliver on numerous other promises. The agency made the allegations in an administrative complaint that also named Del Dotto's wife, Yolanda Del Dotto, and the couple's company, Del Dotto Enterprises of Modesto.

Del Dotto, a former drywall contractor and self-proclaimed millionaire, could not be reached for comment. His company released a statement denying the charges but saying it hopes to settle them to avoid costly litigation.

The FTC had no comment on Del Dotto Enterprises' offer to work out a settlement. The agency usually files administrative charges only after settlement negotiations have failed.

Unless there is a settlement, the allegations will be heard before an administrative law judge in June. The FTC is seeking to bar Del Dotto, his wife and their company from making further false claims. The FTC said it may also seek fines and compensation for consumers who purchased the kits.

Del Dotto gained fame as a real estate guru in the early 1980s, when rampant inflation fueled real estate prices, making quick gains possible. Using television as his pulpit, he starred in his own infomercials. Guests on his programs included Monty Hall, the host of the "Let's Make a Deal" television game show.

Through savvy promotions, he outlasted a string of other well-known real estate promoters such as Tony Hoffman, who took up pitching car wax after his real estate company went bankrupt in 1987.

A spokesman for Del Dotto said Thursday that the infomercials were pulled at the end of 1992 due to the FTC investigation. The company continues to conduct hotel seminars, however.

Among the allegations in the FTC's complaint:

* The infomercials, bearing such titles as "How to Make Money From Nothing," were not properly identified as paid advertisements.

* The kit did not tell buyers how to "pocket proceeds from home improvement loans" or show customers how to get low-rate loans, as advertised.

* The kit fails to show buyers how to obtain a credit card with a $100,000 credit line, as advertised. The FTC said only people with extremely high incomes could obtain such a large amount of credit.

* The company does not provide a telephone consulting service to assist clients in making real estate deals, as promised.

* The company didn't ship kits and other items, such as computer software, when promised and didn't provide refunds in a timely fashion. The FTC said the company deducted from refunds a 10% "restocking fee" that was not disclosed to customers at the time of sale.

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