The get-rich-quick trick

Breaking down his students' emotional defences in the name of financial security has made wealth guru Roy McDonald a very, very rich man.

Sydney Morning Herald/September 13, 2003
By John Garnaut

At a secluded 80-hectare bush property in the Hunter Valley, 30 kilometres west of Cessnock, Father Dave Smith took off his shoes and entered the Born Rich lecture hall.

The Anglican priest, who is acting rector at Holy Trinity in Dulwich Hill, where he trains disadvantaged youths in boxing, had paid $5500 to learn how to manage a small inheritance on behalf of the church.

The hall's windows were covered and the air-conditioning was uncomfortably cold. A swarm of consultants encouraged 100 "students" to cheer before Strategic Management Works' owner, the wealth-creation guru Roy McDonald, entered the room.

When the man finally arrived, he was the only person allowed to wear shoes. From then on he was addressed as "the Government".

What followed, according to Smith, was five days' deprivation of food and sleep in the name of financial security. He said conditions appeared to be manipulated to reduce the emotional defences of the group and enhance the power of McDonald.

Some who have spoken to the Herald say they have profited from the Born Rich experience. Others, however, say they regret spending thousands of dollars on the courses and business and real estate ventures. Some say their emotional lives have seriously suffered.

"I believed, when I signed up, that I was going away to do some training in financial management," Smith wrote to McDonald after the Born Rich seminar. "I did not realise that I was being inducted into a cult."

McDonald, 58 this week, says he owns 24 companies that turn over $30 million a year - most of that from course fees conducted though the Sydney-based company Strategic Management Works. Born Rich is his showcase seminar. Its graduates feed McDonald's network of accountants, property developers, real estate agents and financial planners.

Complaints against him have recently increased. Both the Australian Competition and Consumer Commission and the NSW Office of Fair Trading are investigating his activities, according to the Office of Fair Trading.

McDonald grew up poor in Bankstown, failed his high school Leaving Certificate and had made his first million selling real estate at age 28.

In 1988 he struck it big by holding off desperate developers before finally selling a small corner of land at what is now the Optus building in North Sydney for $7.2 million. He had paid $184,000 for it 14 years earlier.

During the 1980s McDonald shifted his sales focus to financial advice.

One of McDonald's senior managers from the early 1990s says he was the "absolute best" salesmen he has ever seen. Declining to be named in this story because it would be detrimental to his current business, the manager describes McDonald's unusual tactics.

"Roy would break people down, and then show them a way out. If he made someone cry he would come racing out of his office, saying 'I got through'."

That manager quit in the mid-1990s as he grew concerned about the content and methods of McDonald's financial advice.

Aspiring investors are recruited at free public seminars each Tuesday night in Crows Nest. A billboard promises to turn $1 into $1 million within seven years.

Inside, a dozen volunteers and commissioned consultants usher newcomers through to the seminar room, where a tanned and impeccably attired McDonald gently assures them that his is not some kind of cult or get-rich-quick scheme.

He walks up and down the aisle, hands constantly gesturing to match his message, asking audience members by their first names if they are with him. Clients and colleagues describe McDonald as the most charismatic man they have ever seen.

Soon he has the audience chanting "tax is optional" - a feat replicated even when McDonald appeared only on video in one seminar attended by the Herald last month.

After two hours, the presentation climaxes on the importance of making a decision. All you have to do is make a decision to change your life, he says, snapping his fingers. That decision is to put your credit card down for a $6000 discount "option" on doing Born Rich.

Born Rich arrived in Sydney in 1990, when McDonald says he licensed the name and content of a course run by Bob Proctor, an American "multi-tier" marketing guru. McDonald says he began to borrow methods and teachings from self-help gurus Anthony Robbins and Robert Kiyosaki (the author of Rich Dad, Poor Dad) and confrontational self-awareness organisations such as Landmark and Insight.

The program has also incorporated neuro-linguistic programming techniques from the new-age "journey therapist" Brandon Bays. Fees range from $6300 for the five-day course (or $4500 for the "early bird" discount) to $21,000 for the Billionaire program, since renamed the Success Club.

McDonald says he does not lead any form of cult or promote any particular religion. "We use references from all the great works including the Bible, Gandhi, Nelson Mandela, Mother Teresa, Bob Proctor, just to mention a few," he said.

A number of participants described an intense "high" during and immediately after the course, which persisted long enough for them to recruit new members, postpone demands for refunds, pump money into investment schemes and sign up for more courses.

The most serious allegation against McDonald is that Born Rich involves psychological techniques that should not be conducted in a public and uncontrolled environment without trained counsellors.

Father Smith says participants were under great pressure to conform or risk being punished with group ridicule or blasted by McDonald's giant water gun. Some were abused and humiliated and broke down in tears or screamed.

McDonald instructed a distraught young man to relive on stage a childhood experience of his father forcing him to eat his own faeces, says Smith. McDonald then instructed participants to conduct similar "integration" processes with each other.

McDonald describes the process differently. "The technique is basically a conversation, looking at their position in life and setting some targets. Now what comes up is a lot of stuff." He says the young man's experience on stage was healthy and says he has received a letter to that effect. The seminars are supervised by his partner, Katrina McGilchrist, who is a "fully accredited therapist with 'the Journey' (a new-age emotional healing technique)."

A former professor of educational psychology at Avondale College, Dr Lyn Gow, who attended Born Rich in January, says McDonald destabilised her and others until they felt they were drowning, and then threw them the only rope.

Gow was enthusiastic about the initial Born Rich course after she completed it. Her family has paid $47,000 in course fees in less than a year. But she soon crashed into disillusionment after mortgaging her house, losing her shareholdings and watching her family's health and relationships deteriorate.

Gow has been demanding her money back since April. On Tuesday, when she had co-ordinated a protest with others demanding a refund, McDonald offered a conditional return of course fees.

Smith got most of his money back. He says he receives about one letter each week from unhappy Born Rich graduates. Most of them do not wish their stories to be publicised and do not maintain contact.

Their efforts to speak out are not helped by McDonald's message that illness and difficulties are self-inflicted.

Others, it seems, are pleased with the results and remain committed.

Paul, who does not want his surname revealed, completed Born Rich in May last year with his wife Debbie. He says Born Rich made them half a million dollars in property trading profits and "changed our lives".

Many pay $400 to join McDonald's "SSS" squad, which earns commissions by recruiting new members.

McDonald says he's in for the long haul. "This is my passion. I'll be doing this for the rest of my life."

As for Smith, he never did invest the inheritance in McDonald's scheme. He put the money into 200 hectares of bushland near Taralga, and hopes it will become Australia's premier adventure camp for children.