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Managing Your Money

Business Section


Note Brokering: Harder Than it Sounds

By Jane Bryant Quinn
Thursday, June 18, 1998

NEW YORK – If you catch get-rich shows on television, you may have seen "Millionaires on the Road." It tells you how easy it is to make money in a business known as "discounted notes."

Just attend a free workshop, a TV show croons. There, a pitchman will plug a five-day, $5,995 course at the Diversified Cash Flow Institute (DCFI), with dapper money guru Larry Pino. You're told you'll learn "three easy steps" that will "change your life."

That sounded just fine to my associate, Temma Ehrenfeld, who – in pursuit of a story – was willing to risk becoming a millionaire. She attended a course in Austin, Tex., in March 1997.

We waited 15 months, to give Pino's students time to put their lessons to work. Then we asked them how they were doing. Not well, as far as we could learn.

In the cash-flow or discounted note business, you buy and sell streams of future payments due. Here's an example of what that means.

Say that someone buys your house but can't afford the down payment. You agree to take monthly installments over a certain number of years, and receive a note outlining the payment terms. That note can be sold to an investor for something less than its face value. You'd get cash. The investor would get the remaining payments due.

Cash-flow gurus urge you to start a business brokering these kinds of deals. A broker sniffs around for people holding notes they might want to sell, then takes those notes to an investor. If the transaction closes, the broker earns a commission.

Pino, 46, a lawyer in Orlando, Fla., describes himself as an "exceptional business trainer." His seminar experience goes back to 1983 – not always in the best of company.

He first lectured for huckster Charles J. Givens Jr., who ran some dubious financial-planning organizations. In 1993 and again in 1996, juries decided that Givens had committed fraud. Later, Pino taught for Dave Del Dotto, an earlier popularizer of "cash flow," who settled an FTC action in 1996 with a $200,000 fine. (Del Dotto went bankrupt; the FTC says he never paid).

Pino himself was reprimanded by the Florida Bar Association in 1988 for misusing an investor's funds.

Pino says his past seminar associations shouldn't be held against him. "I was just hired to come and teach," he says. "I learned from them what not to do." He calls the Florida matter "a regrettable error," and says he paid the money back.

Pino's successful students – or those who hope to be – think he's the best thing since Post-it Notes. His infomercial glows with testimonials.

But what about the 32 people who studied with Ehrenfeld? Some couldn't be found for a follow-up; others didn't answer her calls. Of the 18 who replied, only one had any deals – two small ones that paid $300 and $750.

Five other students were working at the business, unsuccessfully so far. Two tried, then "moved on," as they put it. Six have done nothing with their expensive course, although they harbor fantasies of success. Four quickly concluded that they'd wasted their time and money.

The question about Pino's courses, and others like it, is the sales pitch. Does it give a true picture of what it takes for success? Or does it prey on people's innocent hopes?

Pros in the field say that note brokering isn't as easy as Pino's TV show makes it sound. Work "when you want, where you want, how many hours you want," the infomercial promises, over pictures of golf and foreign travel. But people who are succeeding told us that they're working 50 to 70 hours a week and couldn't earn a living part time.

Pino claims there's "limited competition" for deals. That's baloney, replies Ed Burris, who used to work for Metropolitan Mortgage, a major note investor headquartered in Spokane, Wash. "There's lots of competition. Pick up any newspaper and you will see the ads." Burris says he had close to 1,000 brokers on his list. Most did one transaction and never returned.

If you think you might have the skills to be a note broker, check it out free at two Web sites: or For a low-cost start, try the $65, two-tape lecture and book, "How to Start a Discounted Note Business," by Jon Richards, available through either site. The next step might be Richards' 18-hour, "Profits in Discounted Notes," $495, followed by hands-on courses available at a fraction of Pino's price.

Pino explains the business, too, but wannabes should start small. They're less likely to break their bank accounts, or their hearts.

Jane Bryant Quinn welcomes letters on money issues and problems but cannot offer individual financial advice.

© Copyright 1998 Washington Post Writer's Group

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