Tony Hoffman’s Real Estate Firm Files for Chapter 11
A Westlake Village firm headed by television investment promoter Tony Hoffman, who preaches that investors can get rich quick through no-money-down real estate deals, has filed for protection from creditors in federal bankruptcy court.
The Chapter 11 bankruptcy filing of Hoffman’s National Superstar Inc., which as recently as this summer billed itself as “the largest and most successful real estate education company in the U.S.,” comes at a time when the fortunes of many real estate investment promoters are sagging.
Last fall, for instance, Success Development Institute, a Westlake Village firm that promoted the theories of real estate author Albert J. Lowry--once Hoffman’s employer--collapsed under $2.5 million in debt. Lowry said he severed his ties with that firm long before it failed, but records on file with the California secretary of state’s office name him as chief executive, chief financial officer and the company’s only director.
The promoters’ hard times mark a reversal from the late 1970s and early 1980s, when the inflation-fueled real estate boom gave rise to a flock of best-selling investment books, lecture programs and tapes.
It also inspired more than 100 television shows such as Hoffman’s “Everybody’s Money Matters,” a nationally syndicated talk show once carried by hundreds of cable systems and broadcast stations. Although many of promoters’ programs have gone off the air, Hoffman’s continue to be rerun in some markets.
Hoffman could not be reached for comment, but in court papers filed Oct. 3 in Los Angeles, National Superstar listed liabilities of $5.7 million and assets of $2.4 million. Lyndon Parker, president and chief executive, said National Superstar lost about $2 million last year on sales of $21 million and has cut its staff to 35 persons, from more than 100 earlier this year.
Parker said that Hoffman, National Superstar’s chairman, remains the company’s controlling shareholder although he reduced his stake this year to about one-third from 51.7%. Parker said Hoffman no longer conducts regular seminars but still draws commissions from sales of tapes and home-study programs.
In an issue of Money magazine published in April, Hoffman was quoted as saying he was worth more than $10 million, with half of his equity in National Superstar and the rest tied up in property. He also described himself as a “financial Phil Donahue.”
A Brooklyn native, Hoffman, 44, is known in the real estate seminar industry as an aggressive promoter with an extravagant life style. He lives in Westlake Village and is frequently pictured wearing twin diamond rings shaped like dollar signs and riding in a brown limousine with a license plate that reads “NEGOT8R.”
According to a biography distributed this summer by National Superstar, Hoffman owns a collection of customized automobiles that includes two Mercedes Benz sedans, a Mercedes sports car and a 1955 Ford Thunderbird. The biography also says he has an art collection featuring works by Salvador Dali.
On stage, Hoffman speaks with evangelical zeal about real estate and no-money-down deals. In December, 1984, Hoffman filled the Los Angeles Convention Center for a two-day investment program that the company said drew 11,000 people. Two pending suits were filed against National Superstar in Los Angeles Superior Court by plaintiffs who said they were injured by fans who rushed to the stage when an associate threw money and cassette tapes into the audience.
Hoffman also wrote “How to Negotiate Successfully in Real Estate,” in which he maintains that “all sellers are liars; all buyers are thieves.” The Simon & Schuster book, according to his biography, has sold more than 120,000 copies.
SEC documents show that National Superstar has had financial difficulty at least since the beginning of 1986. A Jan. 7 letter from Wayne S. Mills, a Utah accountant who audited National Superstar, warned that “there are conditions which may indicate that the company will be unable to continue as a going concern.”
According to the court papers, the largest creditors are Goodway Marketing, a Jenkintown, Pa.-based marketing firm owed $661,304; Tempo Television, a Tulsa, Okla.-based distributor of television programs owed $389,304, and Don Lewis Advertising, a Burbank firm owed $370,106.
Parker, a lawyer who said he was brought in three months ago to turn around National Superstar, said that its spending was excessive and that he has taken various cost-cutting actions, such as eliminating the live television broadcasts and reducing employee benefits. Parker said National Superstar also is negotiating with prospective investors.
Ray Kling, Tempo’s vice president of sales and programming, said his company last week stopped distributing Hoffman’s program to the 650 cable companies that were subscribers.
Kling said that programs like Hoffman’s were successful back in 1984 and proliferated as a result. He said the market eventually became saturated with such programs, however, and few have survived.
“The phenomenon of get-rich real estate success shows has achieved its peak and is on its way down,” he said.
