by Craig Harris - Jun. 2, 2008
12:00 AM
The Arizona Republic
Their advice in Rich Dad Poor Dad has appealed to millions of readers
and even drew the interest of Oprah, but the Valley co-authors of the wildly
popular financial book have broken up.
And, like many divorces, it isn't pretty.
Sharon Lechter, who co-authored Rich Dad and other similarly branded
books with Robert Kiyosaki, alleges in a lawsuit that her ex-business partner
and his wife are enriching themselves, diverting assets and wasting money in a
business that she claims to
The Kiyosakis deny the allegations and contend in court records that if
Lechter has been "damaged," it was caused by her own actions.
Success from the original book catapulted their joint venture, commonly
known as the Rich Dad Co., into a multimillion-dollar operation with offices in
Scottsdale. The
company now offers more than 20 financial books, CDs and games with a key
objective: to achieve wealth.
Lechter said in a lawsuit that while Robert Kiyosaki has been the face of
the company and appeared on TV programs, she was the one who "refined and
created" the original book. She also claims in the suit that Kiyosaki once
told staff members she was the only "indispensable" person on the
team.
Lechter, a certified public accountant who lives in Paradise Valley, now
wants a judge to dissolve the joint venture, appoint a receiver and have Robert
Kiyosaki and his wife, Kim, pay her compensatory and punitive damages. Lechter
also alleges that Robert Kiyosaki's "volatile temper, spurious
accusations, foul language and inappropriate behavior" created a hostile
work environment for her. The Kiyosakis denied the allegation.
"It is evident that Robert and Kim have executed a plan to willfully
destroy the joint venture, while simultaneously and purposely diverting
opportunities belonging to the joint venture to one or more entities owned
exclusively by them," Lechter alleges in the suit.
Robert Kiyosaki, who co-wrote a financial book with billionaire Donald Trump
and has appeared on The Oprah Winfrey Show, declined to be interviewed.
He and his wife live in Phoenix,
and the suit claims the couple has accumulated more than $9 million through
various Rich Dad entities.
The Kiyosakis have sought to dismiss the case, but the two sides also have
set June 11 as a deadline to reach a settlement. They began fighting last year
in Clark County District Court in Nevada.
In court records, Lechter said she filed there because the Rich Dad entities
are part of a joint venture based in Nevada
called CASHFLOW Technologies Inc. If a deal can't be reached, a trial is set to
start Dec. 29.
Kim Kiyosaki said the full story has not been told.
"I guarantee you, what you have is one side of the story. We have not
presented our case," said Kim Kiyosaki, who, court records show, owns an
equal third of CASHFLOW with her husband and Lechter.
Kim Kiyosaki also responded in writing to a series of questions from The Arizona Republic.
She wrote that the lawsuit was a first for CASHFLOW. And she added that Rich
Dad Poor Dad is her husband's story; he wrote the book and Lechter edited
it. She also wrote that there is no reason to consider having a receiver
appointed based on "our profitability and growth."
"The bottom line is that Robert and I are going through a divorce with
our former business associate. Sharon Lechter resigned from the company in July
2007," she wrote. "As in many divorces, Sharon's perception of her contribution and
value to the company is a surprise to us and at odds with what we perceive it
to be."
Lechter also declined to be interviewed, and her attorney did not return
calls. An attorney for the Kiyosakis declined to comment.
Lechter, however, issued a statement May 22, after being told that The
Republic was doing a story on the lawsuit.
In her one-page statement, Lechter was complimentary of the Rich Dad
organization, saying its mission always has been to "elevate the financial
well-being of humanity."
She also wrote, "We remain hopeful that an amicable resolution can be
reached and that the business partnership can be closed on pleasant
terms."
In the lawsuit, which includes hundreds of pages and some sections that are
sealed, Lechter's tone is harsher. The case also could become fodder for those
who have challenged the non-traditional advice in Rich Dad Poor Dad. The
book advises readers to avoid mutual funds and 401(k) plans and to leverage
themselves up to invest in small businesses and real estate.
Allegations
Lechter, in the lawsuit, claims she "often rewrote large sections"
of other books she and Robert Kiyosaki co-authored. And she alleges that Success
Stories, Rich Dad Poor Dad for Teens and Escape From the Rat Race were
written with ghost writers. Robert Kiyosaki's "involvement was
limited" even though he is listed as the lead author on the cover of those
books, the suit alleges.
Kim Kiyosaki, in responding to the paper's written questions, said a
writer/editor was brought in for Success Stories to organize stories
readers sent in after reading Rich Dad Poor Dad. She added that Rich
Dad Poor Dad for Teens is based on the original book, and the company hired
a cartoonist to work on Escape from the Rat Race.
Lechter also alleges:
• Robert and Kim Kiyosaki manipulated their salaries with Robert's increasing
and Kim's decreasing for personal tax-planning reasons, and they gave
themselves a discretionary bonus of $250,000 each in August, shortly after
Lechter left the company.
Kim Kiyosaki wrote that it was not appropriate to discuss company finances
or personal taxes, but she added that their pay and bonuses have not varied
from what they were historically paid.
• Robert in 2005 demanded that his wife get a 25 percent royalty on all new
books even if she didn't have a role in writing them.
Kim Kiyosaki wrote that she and her husband did not want to get into that
issue, but she wrote that the allegation was "petty and hurtful."
• In February 2007, Robert attended the NBA All-Star game in Las Vegas with a Rich Dad adviser and had the
company pay for a private jet and other travel expenses that weekend. Lechter,
in an affidavit, cited this as an example of "exorbitant" spending
and mismanagement of company funds.
Kim Kiyosaki wrote that the company has an ongoing business relationship
with the NBA, which wants to bring financial education to its players.
An NBA spokesman acknowledged that league officials had met with Robert
Kiyosaki "but he has not done work for us."
• The couple has commenced a systematic campaign of mismanagement to suppress
the value of the company and one primary goal is to ensure product "housed
in Nevada
does not sell."
Kim Kiyosaki wrote that the allegation is "ridiculous" and the
company is "more profitable and productive than ever."
The Rich Dad story
Lechter currently has her own Web site and for free writes a personal
finance column for Arizona Woman, an Arizona Republic magazine.
She and Robert Kiyosaki developed their partnership around 1996. At the
time, he was looking for someone to help write a book to promote an educational
board game he had co-created, the suit says.
Lechter, in the suit, says Kiyosaki gave her hundreds of pages of material
and she "reorganized and coordinated the content" and determined
which portions to "include and exclude" in Rich Dad Poor Dad.
At the time, no major publisher wanted it. So it was self-published and
released April 8, 1997.
Within a few years, the book had taken off, and an appearance by Robert
Kiyosaki on Oprah Winfrey's show in 2000 enhanced his celebrity status. Today,
the book has sold more than 27 million copies in 109 countries and has been
translated into 51 languages.
Robert Kiyosaki advocates taking control of your finances and buying
investments that create cash flow, and the book is based on how Kiyosaki's two
"dads" approached money.
He has said his biological father was highly educated but struggled
financially and left a legacy of unpaid bills. However, he said his other
father, a mentor, never finished eighth grade but became one of the richest men
in Hawaii,
leaving millions of dollars to family members and charities.
Sara Fleury, a Phoenix-based public-relations consultant who offers crisis
management guidance, said how much the suit damages the Rich Dad Co. and the
Kiyosakis depends on how the couple and their employees react.
"They need to lay low and hope it doesn't elevate," said Fleury,
president of B.J. Communications. "If they pay a lot of attention to it
and convey their concern frequently, it will cause more alarm."
John Reed, a California-based real-estate writer and frequent critic of
Robert Kiyosaki's advice, said he doesn't believe the lawsuit will hurt
Kiyosaki. Reed added that he had heard it was filed months ago, but didn't know
the details.
"I don't think it will dent him, and I don't think it will hurt
her," Reed said.
