Despite Florida Probe, Real Estate Promoter Tom Vu Still Wows Crowds : Investing: Some ex-students say he allegedly engaged in deceptive trade practices. But the Vietnam native denies the charges.
From the eager anticipation and lively conversations emanating from the crowd in Anaheim’s Marriott Hotel ballroom, it seemed like a rock star was en route. But when a side door opened, controversial TV real estate investment adviser Tom Vu bounded toward the podium.
“Hi! You ready to make big money?” Vu, 34, asked as the crowd of about 1,000 people leapt to their feet in applause. “Motivating folks is in my blood. You wanna be rich don’t you? Well if you make no money with me, you a loser!”
The real estate slump and disgruntled former disciples have silenced most of the flashy promoters who went on cable and late night TV in the 1980s to tout their pricey real estate investment seminars, books and cassette tapes as a way to get rich quick. But Vu, who runs three Longwood, Fla.-based real estate seminar businesses, still draws crowds--as his recent Orange County appearance shows--when he proselytizes about “the big profits in real estate.”
He arrived dirt-poor in the United States from Vietnam in 1975 and has gotten rich, he says, following advice he now gives to others. His campy hourlong television ads--which promote his seminars against a backdrop of bikini-clad women, fast cars, big yachts and huge mansions--are so infamous that they have been spoofed on both the Fox television network show “In Living Color” as well as on NBC’s late night comedy show “Saturday Night Live.”
But Vu’s rags-to-riches odyssey is receiving some serious scrutiny these days. The Florida attorney general is investigating claims from 20 of Vu’s students that he allegedly engaged in deceptive trade practices by reneging on promises to help students invest in real estate by becoming their “financial partner” in certain purchases. The attorney general is also examining whether Vu has violated Florida law by failing to register his businesses with the state.
“I’ve wanted to look into his operation for some time,” said Mark Barnett, an assistant state attorney general in Hollywood, Fla. “I understand that his people have raised questions about the motives of the people who are complaining. Frankly . . . what matters to me is the underlying truth of what they are saying. We’ve got affidavits from 20 of his students. If this guy (Vu) is breaking the law, then he needs” to be prosecuted.
Vu’s lawyer, Richard S. Wheeler, acknowledged that his client has some disgruntled students. But Wheeler said the Florida investigation is being “orchestrated” by competitors and others who want to give Vu a bad name.
“We categorically deny the charges that have been filed,” Wheeler said. “This is having a chilling effect on our business.”
Until the Florida probe, Vu had managed to avoid the financial and legal pitfalls that have derailed many of his competitors.
The best known of the 1980s real estate gurus, author Robert Allen, closed down Allen Group Inc. after the company that licensed rights to his real estate seminars filed for liquidation under Chapter 7 of the federal bankruptcy code in 1986. Similarly, former school teacher Ed Beckley, whose “Million Dollar Secrets” cable television program appeared in about 200 markets, in 1987 filed a Chapter 11 bankruptcy court petition seeking protection from thousands of former students who sought refunds. He listed $6 million in debts.
Although a few well-known TV real estate salesmen remain, such as Dave Del Dotto of Hawaii, Vu has become one of the most visible. He has done this, he says, by distilling his real estate advice into a simple formula: Locate the hopelessly indebted and persuade them to sell their homes--without a down payment--and for less than the property is worth.
“I always knew there was money to be made in real estate,” said Vu, whose easy manner and ready smile contrast with his aggressive salesmanship. “At first, I started out doing what everyone else was taught to do. Then I found a better way. My way.”
But, countered John T. Reed, a Danville, Calif., real estate investment adviser and book author: “The main problem with the nothing-down gurus like Vu is that when you buy property with nothing down, the existing debt on the property is a tremendous burden. The other problem is that it is very hard to do a legitimate ‘nothing down’ deal in a legal and ethical way. You either end up taking advantage of an unsophisticated seller or misleading an institutional lender” by not disclosing that you have no equity in the property.
“You can get a motivational kick from him, sure,” added Jane Garvey, editor of the Creative Investment Advisor newsletter in Glen Ellyn, Ill. “But I think you can get all of this sort of information from your library, for free.”
Still, Vu, who fills ballrooms from Orlando, Fla., to Montreal, finds people willing to pay as much as $15,000 for his advice. He seemed to receive an especially eager reception during a recent five-city tour of California. Many in Vu’s racially and ethnically mixed audiences imagine his Horatio Alger story could be their own.
“I listen because I want to be rich like him,” said Hocea Rodriguez, a 24-year-old Anaheim restaurant worker from the Philippines who attended Vu’s presentation at the Marriott. “I think he’s great.”
Born Tuan Ahn Vu, Vu said that he, his parents and nine brothers and sisters were among thousands of refugees who fled South Vietnam by boat after the communist takeover in 1975. Arriving at the Eglin Base refugee camp in Florida in June of that year, Vu says he and his family initially worked at odd jobs.
But following in the footsteps of his father, who had dealt in real estate in Saigon, Vu eventually saved enough money to buy his first house near Orlando, Fla., for $20,000. Since 1983, Vu--who owns seven mansions and a red Rolls-Royce--has been teaching others his investment techniques.
To some former students, such as Glen S. Singer, a San Jose engineer who spent $8,800 in 1989 to attend a Vu seminar, Vu’s advice is well worthwhile. Singer remains a Vu fan even though he’s had to move to a cheaper residence and return to engineering work after the only two real estate deals he did following Vu’s advice failed to provide a full-time living.
“I have not made a million dollars . . . but there are deals out there; you just have to go out and hustle,” said Singer.
But other former students are less forgiving.
“I was taken,” said Paul Devine, a Los Angeles public school teacher who said he may lose his home after taking out a $15,000 second mortgage to pay for Vu’s five-day seminar.
Devine said he was unable to interest Vu in assisting him in buying any real estate during a yearlong search of potential investments from Los Angeles to Nevada.
“I made dozens of calls to Vu’s office and they would just put me on hold or say the property I found wasn’t worth acquiring,” Devine said. “Out of 40 people in my class, everyone that I know that took the course came up with zero (properties.)”
“The Tom Vu system does not work,” Jo Jo Kwong of New York told the Florida attorney general in a recent letter. “I made over 200 offers on properties, some verbal, some on contracts. . . . They clearly would not entertain offers as low as I was instructed to make,” said Kwong, who paid $15,000 in July, 1990, to attend a five-day Vu seminar.
Some observers, such as Burlingame, Calif., lawyer Robert J. Bruss, who writes a real estate column that frequently appears in the Los Angeles Times, have endorsed Vu’s seminars as “highly beneficial” for novices who wanted to learn the fundamentals of real estate investment.
But most say the distressed, no-money-down real estate deals that Vu says can be found through diligent searches are more fanciful than real. They say no-money-down deals are less likely to work in today’s environment of low inflation and tax laws that restrict real estate writeoffs and deductions on second homes.
What’s more, Vu, who in 1989 paid $436,500 at an auction to acquire a mansion in the exclusive Sweetwater Club community near Orlando, allegedly has not always followed his own low-money-down philosophy. Though Vu disputes the claims, several former workers say Vu prefers to pay cash for property, often using the income from his real estate seminars.
“He takes the money of other people and puts it into real estate,” said one former employee. “He doesn’t do what he preaches . . . he buys all cash.”
Vu “is the greatest salesman in the business,” observed former Vu instructor Elmo Guglielmo, who said he was fired by Vu for offering free classes in Montreal to some of Vu’s former students. “These other guys laugh at Tom Vu’s commercials but they work,” he added. “Seventy-five percent of his students are males in their late 20s or early 30s and they want the fast cars and the women and the money.”
Not all of the appurtenances of wealth seen on Vu’s television shows are his, however. Vu’s lawyer acknowledged that some of the cars, boats and other props are rented. “He does not have a yacht . . . some of the houses are not his,” Wheeler said. “But Tom Vu does own seven (mansions) in that Florida community. He is a wealthy man.”
In an interview, Vu said he’s made the lion’s share of his money from real estate investments, not from holding seminars. He said it wasn’t until the industry shakeout in the mid-1980s that his seminars became profitable. He could not give a precise figure on the number of students who enrolled in his courses.
“In the mid-1980s, there was a time when none of us were making any money because there was so much competition and television time got so expensive” to buy, said Vu. “But I have survived. I think people like me because my advice is simple and because I’m entertaining. People tell me that watching my show is better than going to the movies.”