Federal Court finds Henry Kaye misled over 'millionaires' advertising

Mr Henry Kaye and his company, National Investment Institute Pty Ltd, now in administration, breached the Trade Practices Act 1974 by engaging in misleading conduct in the promotion of a "millionaires" property investment course, the Federal Court found today.

Justice Susan Kenny has indicated that she will make declarations as to Mr Kaye's breaches of the law and permanent injunction orders restraining Mr Kaye from engaging in the offending conduct or similar conduct in the future.

The Australian Competition and Consumer Commission alleged, and the court found, that in the advertisements promoting the "millionaires" property investment course on radio and on the internet claiming that:

• Mr Kaye could turn ordinary Australians into millionaires with no money down, no equity, no debt and a price protection guarantee that if the market were to go down they would not lose their money by teaching them and by them following Mr Kaye's property investment strategies when, in fact:
• the strategies do not enable ordinary Australians to become millionaires;
• that neither Mr Kaye nor NII had reasonable grounds for claims that an ordinary Australian would, if they followed Mr Kaye’s strategies, become a millionaire; and
• that neither Kaye nor NII had reasonable grounds for claims that five volunteers provided training by Mr Kaye would become property millionaires in six months without using their own money or taking on a risk of debt.

The ACCC further alleged, and the court found that Mr Kaye and NII claimed that a thousand ordinary people who signed up and paid to be taught property investment strategies by Mr Kaye would become property millionaires within 12 months when neither Mr Kaye or NII had reasonable grounds for making the representation.

Justice Kenny has determined that the Court will make declarations and permanent injunctions.  She commented that the relief "marks the Court's disapproval of the conduct found to have contravened the TPA".

Further Justice Kenny said the declarations "will serve patently to vindicate the Commission's claim that Mr Kaye has contravened section 52. In the circumstances of the case, this is fitting in the public interest".

ACCC Chairman, Mr Graeme Samuel, said the decision was an important warning to all in the property seminar business that they must not take the truth lightly.

"The message it sends to both other spruikers and the community in general is that the ACCC can and will deal with these activities".

The ACCC will return to court on 5 November 2004 to deal with the injunctions, declarations and awarding of costs.