"Rich Dad, Poor Dad" author files for bankruptcyArticle added by Roccy DeFrancesco on October 22, 2012
Roccy Defrancesco

Roccy DeFrancesco

MI

Joined: May 24, 2006

How could it be that someone who wrote a best-selling book on how to grow your wealth filed for bankruptcy?

When you initially read the title of this article, it certainly catches your attention. Some may even get a wry smile when thinking that the author of a self-help financial book ended up filing for bankruptcy. If you surf the Web, you’ll find a few stories on this — the title of the one I liked the best is: “Rich Dad-Bankrupt Dad.”

How could it be that someone who wrote a best-selling book on how to grow your wealth filed for bankruptcy?

For the record, Robert Kiyosaki, author of "Rich Dad, Poor Dad," did not file for personal bankruptcy. His company, Rich Global LLC, filed for bankruptcy on August 20, 2012. Rich Global LLC is the company that seemed to start it all back in the day with his "Rich Dad, Poor Dad" book.

Why did Kiyosaki’s company file bankruptcy?

It had one big creditor it couldn’t pay. That creditor is The Learning Annex.

What most people don’t understand about best-selling books is that many of them do not become best-sellers because of the content. Look at Suze Orman or Dave Ramsey’s books. They are some of the worst financial books ever written; but because of good press and good marketing, they have sold millions of copies.

As a side note, if you didn’t read my popular article, "Is Dave Ramsey an idiot?" you can do so here.

The
The Learning Annex supposedly was the marketing arm behind "Rich Dad, Poor Dad."

They were supposed to receive a portion of the profits from Kiyosaki’s speaking engagements, and a district judge in New York awarded The Learning Annex $23.7 million in damages.

Instead of paying the damages, Rich Global LLC, filed for bankruptcy.

Apparently, Mr. Kiyosaki started several other businesses after he became famous from his book and is now worth over $80 million. Unfortunately for The Learning Annex, they will not see any of that money.

What’s the moral of this story?

There are a few.

1. Try to foresee the future when putting deals together. The Learning Annex ended up getting stiffed because Kiyosaki took the fame that The Learning Annex created for him with their marketing and parlayed that into other businesses that are not connected to Rich Global LLC. I’m sure if The Learning Annex had to do it again, they would have crafted an agreement so they could get at Kiyosaki’s other assets if they were not made whole for their marketing efforts.

2. This is really a not-so-good example of good asset protection. Kiyosaki did a great job of protecting himself and his assets from the claims of The Learning Annex. So morally, he may owe The Learning Annex $23.7 million but legally, his $80 million net worth is not at risk.
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