Feb 25, 2010

Harmonic Wealth Author Pleads Poverty -- Updated

Crossposted from Reflections Journal.

"James is not a wealthy guy." ~ Attorney Brad Brian on Larry King 2/4/10

What to do when you discover that the emperor's new clothes are shackles and an orange jumpsuit? But James Arthur Ray may be sporting the orange ensemble for a while, unless he can reach a new bail agreement.

Defense lawyers said Ray could not afford his bail, even though he told reporters he was worth $10 million a year ago. But his lawyers say Ray owes massive amounts to attorneys and other creditors – and he really has a negative net worth of $4.2 million.

Prosecutors asked for bail to be set at $1.5 million, but his attorneys say he can't even afford that. They're asking for a bail of few thousand dollars or ROR.

Alex Smyth testified that Ray's business is operating at a loss, employees were laid off, his properties are in foreclosure and that Ray essentially drained his bank accounts following the Oct. 8 sweat lodge ceremony in anticipation of high legal fees, not in an effort to flee. 

There are really only two possibilities here. Either James Arthur Ray is lying about his net worth -- forensic accountant Richard Lee Echols's conservative estimate was a net worth of $2.4 million -- or he's really broke.  The conundrum here for Mr. Ray is that whether he's hiding assets or he's too poor to post bond, it still adds up to fraud -- not the first time I've used that word in regards to the creators of The Secret.

No matter what he or his attorneys say, at this point, it sounds like doubletalk

“Despite misconceptions perpetrated in the media, Mr. Ray is not a man of significant assets and certainly not the millions reported in the press,” his attorneys wrote in documents obtained by The Associated Press from the court.

Well, who perpetrated the misconceptions? James Arthur Ray.

Ray himself has touted his wealth and success in numerous media interviews and on his Web site, including an estimated $10 million in revenue in 2009 and a seven-figure advance for his book, “Harmonic Wealth” that hit the New York Times Best Sellers List in May 2008.

He told “Fortune Magazine” for an April 2008 article that his financial goal was $21 million a year and that he was sure there were limits, but “I am not aware of them.”

Assuming Ray was telling anything approaching the truth about that income, what happened to all that "wealth?" There's no question that he's taken a financial hit. He's had to cancel all his seminars. I have little doubt that book and product sales are down due to all the bad publicity. Lawyers are expensive. No argument that he's in a financial crunch. But I find it a bit concerning that a successful financial guru, didn't know to put a little away. Or did he think that once he knew "the secret" he would never face another rainy day? 'Cause baby, it's pouring!

It looks more like he was living a profligate lifestyle, spending money faster than he "created" it. He built a facade of the success he promised his readers. He purchased multiple properties, all but one of which is in foreclosure. And the whole house of cards is collapsing.

There's a problem with setting yourself up as someone who knows "how the universe works." It's an awfully high bar. Eventually, the people who buy your books and take your seminars will notice that your method doesn't deliver on its promises. For all their investment, they're still not creating "harmonic wealth in all areas" of their lives, and neither are you.

Update:James Arthur Ray received a substantial bail reduction and should be released as soon as he surrenders his passport.

An Arizona judge has lowered the bond from $5 million to $525,000 for a motivational speaker charged with manslaughter for the deaths of three people, clearing the way for his release as early as Friday.

. . .

Darrow said Ray can post cash or a secured appearance bond, and ordered that he surrender his passport. Ray also cannot organize, supervise or conduct any sweat lodge ceremonies or other activities that might physically harm others.

The order does not restrict Ray from travel in the United States or specifically from conducting self-help seminars he built a business on, but he must first provide a written itinerary to his attorneys and to the court upon request.

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