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Ron Lieber

Spin the radio dial, download a podcast or sit down for your next corporate gathering and you’ll have no trouble finding a self-appointed financial guru to tell you what to do with your money.

What you may not know: Financial experts, even those with bulletproof powers, may be trying to sell you something.

When David and Patricia Toshner of Fond du Lac, iris, first heard Jordan Goodman discussing the Woodbridge group of companies on the radio, they didn’t know he could also be a sales agent. They just trusted a man who called himself ” America Money Answers man.”

After all, Mr. Goodman was an 18-year veteran of Money magazine and an author with a smiling face on the cover. The radio station where they got their news pumped its honking, Rhode island-accented voice in their home, promising 6 percent interest plus their cash back.

Toshners put $ 510000, most of it from a workplace accident settlement, in Woodbridge. For several years, inspections have arrived regularly, just as Mr. Goodman said they would.

But just over a year ago, the checks stopped. Soon after, the securities and exchange Commission said Woodbridge, which Mr. Goodman described with glowing certainty, was a billion-dollar Ponzi scheme with thousands of victims.

And when Mr. Goodman discussed Woodbridge on the radio, he did not just hand out financial advice, the Commission said. He was one of the leading sales agents, earning more than $ 2 million by directing investors into it. The S. E. C. said Mr. Goodman “has in many cases misled investors into thinking that he is not paying deals based on sales commissions.”

Mr. Goodman, 64, agreed in December to pay what he earned as well as more than $ 315,000 in interest and a $ 100,000 fine. He also agreed to a lifetime security ban in the securities industry without admitting or denying the S. E. C. charges.

His agreement with regulators provides for a standard ban on declaring his innocence, and he declined to comment on the advice of his lawyer. Before signing the agreement, he publicly stated that he had no idea Woodbridge wasn’t working the way he said it was when he promoted it.

But a close examination of Mr. Goodman’s decades as a money guru reveals the many angles he worked. He made a living not only by books and speeches, but also as a paid Ambassador for financial services companies.

The companies Mr. Goodman endorsed were a motley assortment, odd bedside butts for a man who made his bones in one of the country’s most respected financial publications. He had financial relationships with companies that promise to pay off your debts for pennies on the dollar and allow you to borrow money using fine art and luxury handbags as collateral. And he dabbled in lending to borrowers with high-interest payday loans and then earned a few more by referring those who can be saved to a nonprofit credit counseling.

These arrangements were often made by Mr. Goodman, what is known as a branch, which allowed him to earn a Commission for each new client he helped these companies land. In other cases, he took a flat fee to offer his approval.

Relationships like this are not illegal: Similar mechanisms can be in play when people click on a link that directs them to an item for sale on Amazon. And these deals are surprisingly common in the world of financial gurus.

But Mr. Goodman was particularly aggressive in promoting companies that paid him, and sometimes withheld important information from his followers when discussing companies during his media appearances-behavior that in the case of Woodbridge, in particular the rankled S. E. C.

When I heard about Mr. Goodman’s case, I took a list of my memories. I met him twice at conferences and appeared on his radio show in 2017 to promote a book I wrote.

But as I began to look at how he got so many innocent people into this mess, it became clear that while the ending of his story was laid out in the S. E. C. charges, the beginning and middle were more confusing.

In a world of money experts who write or speak, where recurring subscription revenues are hard to come by, and hard to make money through old-fashioned advertising, there is no sin in pursuing alternative business models. However, we all owe our readers and listeners a thorough explanation of how we and our employers make money.

So let me start here: The New York Times owns Wirecutter, which earns fees when people read the site’s best reviews and click embedded links to make purchases. I am an unpaid member of the Advisory Board of Wirecutter Money, which publishes guides on choosing the best credit cards and plans to publish more personal financing content as the site grows.

Wirecutter discloses and explains its partnerships in many places on its website, and there Are many differences between what I do for Wirecutter and what Mr. Goodman has done.

So how many people in Mr. Goodman’s audience know about how he made money? And what lines that public money experts should never cross?

When Mr. Goodman arrived at Money in 1979, the magazine’s parent company, Time Inc., was a dominant force in publishing, a temple of fact-checking rigor and high editorial standards. Money alumni who worked alongside Mr. Goodman at various points include CNBC anchor Tyler Mathisen and Eric Schurenberg, who eventually edited the magazine.

And then came a heartfelt rallying cry to the defense Department so the bad guys can’t get you: “Reading between lies: how to spot fraud and avoid falling victim to the next wall street scandal.”

If you have such specialized knowledge that you can acquire in a place like money magazine, there Are many ways to make a living.

You can be hired by the company to address employees or conference attendees. Financial services firms can buy commercials on your radio show or hire you to develop new services.

Then There are affiliate commissions: cash paid for each new paying customer an expert helps deliver.

Mr. Goodman seems to have been an early adopter in the partner world, and his website lists more than 20 “Carefully selected resources to help improve your personal finances” like choosing the right credit card or health debt settlement.

But even other financial pros who make money on such relationships thought Mr. Goodman kept unusual company.

“It often seemed like it was playing in alternative spaces that the vast majority of us don’t play in,” said Philip Taylor, who runs the site Part-time money and FinCon, an annual conference for financial advice experts. He said he had declined Mr. Goodman’s invitation to do business with him and one of his affiliates.

One hint came in a book that Mr. Goodman wrote about a decade after leaving money: “Quick profits in tough times: 10 secret strategies to make you rich in an up or down economy.”

The book was a Declaration of independence of sorts by Mr. Goodman, who described how leaving the magazine freed him to explore the world of “secret investment strategies” – like buying tax liens and deeds to homes when others fell behind on their payments.

The final Chapter of the book, “Profit by doing nothing: Passive income Strategies,” suggests that readers fall into payday lending – as lenders. The idea carried Mr. Goodman’s approval: he signed on to a spell as President of the 4,800-person investment club that helped people gain access to the industry.

Mr. Goodman’s involvement in payday lending began as the personal Finance book market began to decline.

“Personal Finance is the kind of thing you can get online kind of everywhere,” said David Pugh, who spent 17 years at John Wiley

Mr. Goodman turned to what was then the author’s last resort, self-publishing. But technology will also provide a new way to build your brand: podcasts.

He was a frequent guest on personal Finance podcasts and started his own hybrid Internet radio show / podcast, “Money Answers Show”. Mr. Goodman promoted his affiliates aggressively: he appeared last year on “White coat Investor,” a podcast aimed at health care professionals, and mentioned at least five affiliates. He revealed his relationship with four of them, leaving his relationship with life insurance settlement, which buys policies from customers who want to get rid of premium payments.

Dr. James M. Dahle, a physician who hosts “White coat Investor,” said he had never before been a guest who mentioned so many branches so aggressively. He’s been gone ever since.

“It’s not even close,” he said.

But Mr. Goodman’s most powerful megaphone was the radio.

It has long been a fixture on the air, including power stations like KOA in Denver, KMOX in St. Louis and WGN in Chicago-50,000-watt broadcasters that can often be heard several States away.

Starting in 2014, according to the S. E. C., Mr. Goodman began touting the prospects of commercial mortgage bridge loans, in which ordinary people would help property owners and developers with their short-term borrowing needs.

During one appearance on the KOA show in 2015, Mr. Goodman told a caller that these products, which he called “very popular with Koa listeners,” would allow participants to earn 6 percent per annum and get their money back a year later.

“There is a way to get 6 percent and not worry about losing capital,” he said. “It’s very safe.”

Mr Goodman told listeners to visit a website where sales agents he worked for would help people sign up with Woodbridge.

The loans were supposed to work like this: people were handing over their money, and Woodbridge would find borrowers willing to pay 11 to 15 percent on short-term loans. When these borrowers have made their payments, between 5 percent and 8 percent will go back to investors and the rest will remain with Woodbridge and its agents.

Mike Rosen, host of the Koa show, said Mr. Goodman did not disclose his financial interest in Woodbridge – a 1 percent Commission on all the money that came through his endorsements.

And Mr. Goodman pushed Woodbridge hard. Mr. Rosen said he once accused Mr. Goodman of hiring listeners to call and ask about the loans, something Mr. Goodman denied.

The field was enough to convince even Mr. Rosen, who had been duped before in A bernardm Madoff Ponzi scheme, to invest.

“Jordan has a history, he has been reliable, and he has sold many copies of these books,” Mr. Rosen said. “He wasn’t the one who just fell off the truck with revess.”

Mr Rosen withdrew his money from Woodbridge after 12 months without incident. He was one of the lucky ones.

In December 2017, the S. E. C. accused Woodbridge of running a postal scheme defrauding 8,400 investors, many of whom were elderly. Money from new customers was used to pay for previous ones, the S. E. C. said.

Robert Shapiro, who ran Woodbridge, borrowed his money to invest in real estate, including Sonny and cher’s former estate, and withdrew $ 1.2 million for alimony payments and $ 3.1 million for chartering private jets, regulators said. He was fined $ 100 million.

Mr. Goodman was indicted a year after Mr. Shapiro was indicted. His radio recommendations were a key component of the charges: Of the 18 outside sales agents charged in the scheme, he was the only one also charged under a specific law for advertising – a violation of a rule prohibiting communication about security unless you disclosed your commercial interest in it.

Eric I. Bustillo, Director of the S. E. C. regional office in Miami, said, ” We are dealing with senior investors, older investors and retail investors who are often vulnerable and perhaps not sophisticated and easily influenced by people who are basically to provide an unbiased opinion.”

So what lines did Mr. Goodman cross?

A few things seem obvious: seeing that Mr. Goodman has been luring people in is almost certainly too risky for many of those who hear about it on a standard radio talk show. And not disclosing your financial interests was unethical and legally risky.

But what about the affiliate relationship itself? Does it stain everything they touch? And if not, how much disclosure is enough?

When I met with my bosses and the Times editor in charge of news standards, we discussed Mr. Goodman’s Saga and whether it was a mistake for me to continue advising Wirecutter Money. Because I don’t make money from Wirecutter, we don’t think it creates conflict.

However, I now reveal my role as Wirecutter in the biography attached to everything I write. And while The wirecutter guide contain copious disclosures, every time I write a column that links to one, it will include additional one – on-one for readers. Our weekly newsletter “Your money” often includes a link to Wirecutter Money guides. Those also now have revelations.

If Mr. Goodman’s case forces you to question other experts and their potential conflicts, well, good. Ask away. This stuff is too important not to.

As for Mr. Goodman, he owes $ 2.7 million to the S. E. C., and is named in two lawsuits that could put him on the hook for more.

His business prospects are not exactly rosy. Kaplan Publishing, which oversees Barron’s manual, which Mr. Goodman co-authored, is taking it out of print and burning existing copies.

“We expect our authors to act ethically and legally,” said Maureen McMahon, President and publisher of Kaplan.

“Our reputation is more important to us than the small relationship we have with a particular expert,” said the company’s chief Executive, Christopher Viale.

One person sticks to Mr. Goodman: Katie Cagle, a consultant who helps him book podcasts and do other work.

“I don’t believe he ever intended to do anything wrong, and he didn’t feel like he was doing anything wrong,” she said. “We tend to take the high road on almost every issue if we can.”

Victims in the scheme will get some of their money back once the now bankrupt Woodbridge sells its assets. At the same time, Toshners, a couple in Wisconsin who heard Mr. Goodman on the radio, sued him. Among other things, they claim he encouraged them to sell their home to have more money to send to Woodbridge.

“It was super safe and going back 6 percent,” said the couple’s attorney, Michael Schaalman. His clients would be skeptical of investments promising double-digit returns, but 6 percent does not seem suspiciously sky-high, he said.

Mr. Goodman’s lawyer has not yet filed a response. But Mr. Schaalman said that after Toshners asked Mr. Goodman directly, Mr. Goodman acknowledged that it was worth it to make some money if they made the investment. The details, however, were not clear, Mr. Schaalman added.

Last year, when Woodbridge was unraveling, but before the S. E. C. caught up with him in person, he talked about the company on the radio. Don McDonald, co-host of “Talking real money” on KOMO in Seattle, was Mr. Goodman on his show for the first time in years and in front of him about Woodbridge.

“I feel very bad that this was what happened, that the S. E. C. went after them in what I believe is a witch hunt, basically,” Mr. Goodman told him.

Months later, Mr. MacDonald was still baffled by it all.

“He is one of the smartest people in the financial business that I have ever spoken to,” he said. “It can’t be a duped investment like this.”

But Mr MacDonald did not write off Mr Goodman as evil-just vulnerable, as many people may be after watching less knowledgeable peers make money and wondering why they could not get a piece of the action, too.

“You see all these stupid people making millions and millions of dollars,” he said. “I think he looked at these real estate deals and was willing to suspend disbelief.”

Mr. Goodman has written extensively over the years about the kind of game we play with our money. His book on financial fraud offers sage advice that he may have done so to take himself: “the Endless search for easy answers or inside track makes no profit and never has.”

Doris Burke was involved in the research.

Ron Lieber is your money columnist and author of the upcoming ” What to pay for College.” He is an unpaid adviser to Wirecutter’s money Department and has previously written for the Wall Street Journal, Fast Company and Fortune. @ronlieber and Facebook

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