Don't Tread on Me 

When millionaire real estate guru Russ Whitney sicced his lawyers on a local critic named John Reed, he had no idea what he was getting into.

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Russ Whitney's June 2002 lawsuit against John Reed alleged one count of unfair competition, two counts of libel, and three counts of trademark infringement. He sought triple his unspecified lost profits, triple the money Reed had made off his name, punitive damages, and legal fees.

While Whitney now had Reed's full attention, he was unsuccessful in another respect: Reed wasn't shelling out for a lawyer. Instead, armed with a stack of books with titles such as Sack on Defamation and Sue the Bastards, he represented himself. He started by drafting a motion to dismiss the case out of hand. Despite being overly wordy, it was thoroughly argued, and backed by relevant case law. And although it was not enough to convince the judge, Reed remained undeterred: He was already at work building his case against Whitney's good name.

In Building Wealth, Russ Whitney's opus on how, as it says on the front cover, he went "from rags to riches through real estate," he describes his difficult upbringing, as well as how he went from a twenty-year-old with a dead-end job at a slaughterhouse to owning a million dollars' worth of real estate by age 25.

Reed studied Building Wealth and Whitney's other books closely, eager to learn all he could about his opponent. Constructing a timeline — a classic investigative technique — he noticed something interesting: "He wrote about how rough he had it as a kid and how brilliant he was as an investor," Reed says. In between, however, "there was a four-year hole, where otherwise it was quite detailed."

Reed put a note on his site asking if anyone knew of Whitney's whereabouts from 1972 to 1976. Before long, the answer arrived in his e-mail inbox. Whitney, a reader with law enforcement ties told him, had spent much of that time in prison. As Reed verified with a visit to the New York State Department of Correctional Services' Web site, Whitney was convicted of second-degree robbery in 1974. He soon filled in the details: Whitney had pled guilty to participating in a 1972 robbery of a convenience store and served nineteen months before being paroled in March 1976.

Establishing that his nemesis was an ex-con — and posting it on his Web site for all to see — was not all. In November 2002, amid a steady stream of motions and counter-motions in the legal case, Reed took a four-day trip to Schenectady, the town in upstate New York where Whitney had bragged of making his first fortune in real estate.

A shivering John Reed trudged through the snow and slush in his Californian's sneakers, visiting, among other places, the county recorder's office, the library's newspaper archives, and each of the six properties he traced back to Whitney. When he was done, Reed made his assessment. "On his 25th birthday," he told his readers, backing up his findings with addresses and property values, "Whitney had $98,000 of highly leveraged real estate."

And there was more. At the county clerk's office, Reed found a $1.2 million judgment against Whitney. Initially, Reed assumed it was a real estate deal gone sour. But as he reported to his readers, it turned out to be something else entirely.

Early one winter morning in 1980, Whitney smashed his pickup truck into a nineteen-year-old man who had been standing on the side of the road. The teenager's head shattered half his truck's windshield on impact, but Whitney soon drove away, claiming later he hadn't known what he'd hit. Hours later, a passerby found the victim, who survived, but with severe permanent brain damage.

The criminal case against Whitney went to a grand jury, which declined to indict him. Subsequently, however, a civil jury found Whitney 75 percent liable for the accident and ordered him to pay the victim $1.2 million. Reed tracked down the victim's lawyer, Phil Rodriguez, who said Whitney had refused to pay up, and threatened to file for bankruptcy before he finally agreed to pay well under a third of what the jury had awarded. That was in 1988. As Reed noted on his site, Whitney had by then been bragging of his multimillion-dollar fortune for years.

Next, Reed got personal. Following up on another reader tip, he found a 1995 paternity suit filed against Whitney, a married father of two. As the court records document, and as Reed dutifully reported on his site, Whitney initially denied having had a three-year affair with a former employee, but after a paternity test showed a 99.92 percent chance that he was the father of her child, he lost the suit and acknowledged that the baby was his.

In addition to child support, Whitney was ordered to pay his former lover's legal fees. A year later, when Whitney had only paid $250 of the $3,000 bill, the judge gave the CEO seven days to make good on the remainder or face jail time.

Shortly after splashing all this across his Web site, Reed says he received a call from Louis Gigliotti, a lawyer then representing Whitney. "What would you say if I told you Russ regrets having filed this suit?" Reed recalls him as saying. (Gigliotti, reached in Fort Lauderdale, says he doesn't recall making the statement.)


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