Rich Dad Broke Dad?

02/05/16

A seminar promoter owed nearly $24 million for arranging speaking gigs for Robert Kiyosaki, the best-selling author of “Rich Dad Poor Dad,” is fighting for access to a secret lawsuit.

Lawyers for Learning Annex LLC, which has accused Mr. Kiyosaki of moving “tens of millions of dollars plus other lucrative assets” among his companies to avoid making royalty payments, are now arguing to unseal an August 2014 lawsuit that appears to cover similar ground.

The request comes during Learning Annex’s long-running fight to collect from Rich Global LLC, the entity that licenses the “Rich Dad Education” brand and the Rich Dad logo.

Court papers show that Rich Global took in more than $45 million in royalties from the Rich Dad seminar business from March 31, 2007, to April 31, 2010. But after Learning Annex accused Rich Global of withholding royalty payments under their agreement, Rich Global filed for bankruptcy protection—saying it only had $1.8 million worth of assets.

The bankruptcy filing put Wyoming lawyer Tracy Zubrod in charge of looking for ways that Rich Global can pay off its debts, including the royalties owed to Learning Annex. In August 2014, she sued Mr. Kiyosaki and several of his companies—litigation that has unfolded under seal.

Text in the docket of Rich Global’s bankruptcy indicates that Ms. Zubrod’s lawsuit calls for a “turnover of property” and “recovery of money” from Mr. Kiyosaki and his companies, but none of the court documents—not even the complaint or the docket captions—are available for public viewing.

“Transparency is a bedrock principle in the American legal system,” said Learning Annex lawyer James R. Belcher in documents filed in U.S. Bankruptcy Court in Cheyenne, Wyo. “The court’s doors are open to the public, and so is its docket. There exists a longstanding, strong presumption that documents filed in court should be open and accessible to the public.”

The lawsuit was sealed by Judge Peter McNiff, a bankruptcy judge who retired last year. Reached by phone, he declined to comment.

A Rich Global lawyer didn’t respond to an emailed request for comment. In a 2012 meeting held by the Justice. Department, a Rich Global representative denied that the company “transferred assets or rights to receive royalties or revenues prior to its bankruptcy filing,”

Lawyers for Mr. Kiyosaki’s companies haven’t responded to the latest request to unseal the lawsuit, but in earlier court papers, they said they’re worried that Learning Annex officials will use the sealed information to “cudgel, disparage and otherwise wrongfully attack [his companies] in the press and in other public venues.”

In October 2012, Mr. Kiyosaki wrote about his dispute with Learning Annex in a blog, saying being rich makes you a target for lawsuits—“I am going through this right now,” he wrote—and he advised people who own assets to explore “the benefits and protection offered by a corporation.” Here’s an excerpt:

We live in a litigious society. Everybody wants a piece of your action. The rich hide much of their wealth using vehicles such as corporations and trusts to protect their assets from creditors. When someone sues a wealthy individual, they are often met with layers of legal protection and often find that the wealthy person actually owns nothing. They control everything, but own nothing.

Learning Annex won a $23.7 million judgment against Rich Global LLC in 2012 after arguing that it has unfairly been “cut out of an enormously successful business deal for putting on educational seminars” after the 1997 financial book became wildly popular.

Learning Annex lawyers pointed out in court papers that Mr. Kiyosaki’s former partner, Sharon Lechter, also once accused him of transferring millions of dollars in cash to cheat her out of payments. She ultimately got $10 million in that dispute, court papers said.

Write to Katy Stech at [email protected]. Follow her on Twitter at @KatyStech

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