Guru's 'wealth without risk' is empty promise PERSONAL FINANCE

STAYING AHEAD

May 02, 1993|By JANE BRYANT QUINN | JANE BRYANT QUINN,1993, Washington Post Writers Group

New York -- When Ron and Sally Beadle went to a "wealth without risk" financial-planning lecture in July 1989, sponsored by financial pied piper Charles J. Givens Jr., they believed they were building a life. Ron, then 27, earned some $33,000 at a factory job in Cedar Rapids, Iowa. Sally, also 27, stayed home with the children. Young and hard-working, they had bought their own home and were eager to learn about other ways of getting ahead.

They didn't see the master himself, but heard his son Charles III, billed as "following in his father's footsteps as America's leading financial educator."

Inspired by Charles III's motivational talk, and by the dream of building wealth, the Beadles paid $400 to join the Charles J. Givens Organization and get its financial books and tapes. Following its advice, they canceled their $20,000 uninsured motorist policy -- derided by Givens as "auto insurance you don't need" (even though it was costing them just $8.40 a year). They also decided to let Ron's $50,000 cash-value universal life insurance policy lapse (it cost $396 a year, including a $50,000 term rider for Sally). Givens has called universal life "without exception, deceptive."

Today, Ron Beadle is dead -- killed in an auto accident by a man who was driving uninsured. Sally was left with around $55,000 in term insurance benefits (most of it from Ron's employer) to raise her three children. Last month, a jury in Cedar Rapids decided that the Beadles had been victims of fraudulent misrepresentation, by both the Givenses and their organization. The next part of the trial, coming up May 12, will determine what the defendants have to pay.

The younger Givens testified on the stand that if the Beadles had followed his strategies correctly, they'd have been ahead. When they dropped their other insurance policies they should have replaced them with additional term life insurance.

"They just didn't get around to it," says the Givenses' attorney, David Tedder.

The jurors, however, found that both Givenses, father and son, weren't qualified to serve as expert insurance advisers and had made false statements about the Beadles' policies.

Charles III, they found, failed to disclose that their existing life insurance should be kept until new policies were obtained. Tedder says that that level of detail normally wouldn't be provided in the initial lecture. Whether the Givenses appeal, he adds, depends on what the jury decides in May.

One reason the Beadles relied so strongly on the younger Givens' advice to drop their coverage, Sally testified, is the rags-to-riches story he tells about his past.

He claims that, as a young man, he made three separate million-dollar fortunes -- one in a music-business conglomerate, one in stocks and one in a luxurious yacht club. He lost them all, he says, because of bad advice from financial professionals. He says that when he made his fourth and final fortune -- in "leveraged business and real estate investments" -- he retired in order to spend his time teaching others how to succeed.

The Iowa jury concluded that that story is false. Givens' former partner in the music business, as well as the person who tried (and failed) to sell him land for his yacht club, both testified that no million-dollar fortunes existed -- nor, for that matter, did a functioning conglomerate or club. Givens conceded at the trial that "a large part" of his wealth had in fact came from selling get-rich seminars and literature.

Tedder says that, as a result of the jury's decision, Givens will now say, "I lost everything I had three times," instead of saying he lost $1 million.

Uninsured motorist insurance pays if you're hit by an uninsured driver who's at fault. Givens' rap on these policies is that they're "duplicate coverage," high-priced (if you call the Beadles' $8.40 expenditure a high price) and a waste of money. Supposedly, the cost of your injuries will be covered by your existing life, disability and health insurance. But few people have enough of such coverage, especially to cover the risk of becoming disabled for life. In Iowa, as in many other states, an uninsured motorist policy covers other economic losses, such as the lifetime income Sally and the children have now been deprived of.

Givens' rap on universal life is that you'll make more money with a combination of term insurance and other investments. Sometimes that's true but sometimes not, and Givens doesn't discriminate.

One thing for sure: Givens can make money if you follow his advice. He advises his followers to buy term policies and tax-deferred annuities through the Insurance Clearinghouse, in which he has a financial interest.

Another lawsuit has been filed against Givens in Indiana, also by a follower who canceled his uninsured motorist coverage and lived to regret it. "Wealth without risk" is an empty promise, from a man who, the jury says, hasn't been telling the whole truth.

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