Wednesday, December 28, 2011
6.6% of elderly people in US major depression
######## surrounding the article denotes it is a “press release”
and was not written by Leasing News nor information verified, but from the source noted. When an article is signed by the writer, it is considered a “by line.” It reflects the opinion and research of the writer. It is considered “bias” as it is the writer’s viewpoint.
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--- Mergers, Acquisitions & Changes
Navitas Lease Corp. dba Navitas Leasing, Ponte Verde Beach, FL. (RLC Leasing Division, Columbia, South Carolina (11/11) Obtains California Finance Lender license. (11/11) Blue Mountain invests $22 million. Also reports $50 million expansion of its credit facility with Wells Fargo Capital Finance.
Puget Leasing, Bellevue, WA (11/11) May close and bank with it. Also appeals decision to pay prevailing attorney fees. http://leasingnews.org/archives/Nov2011/11_14.htm#puget
Pawnee Leasing, Fort Collins, Colorado (11/11) “...posted another successive quarter of growth in its portfolio, which now exceeds US $125 million for the first time. Net charge-offs during the quarter were also modest at US $1.1 million, contributing to the strong results."
Element Financial, Toronto, Canada (11/11) Steve Hudson says "Now's the Time!" Plans major expansion, including more business in USA.
First American Equipment Finance, Fairport, NY (11/11) William “Bill” Verhelle, CEO, First American Equipment Finance, past president of the Equipment Leasing and Finance Association, goes against the trend to build his company's business. He has been consolidating his offices to his Fairport, New York office, and in addition, a plan to add more employees with his company’s approach that has been bringing them success using Cisco's Show and Share and other internet/software programs.
LEAF Financial, Philadelphia, PA (11/11) LEAF Commercial takes over LEAF Financial.
Fallout from CMC Continues in Nevada Federal Court
The collapse of Commercial Money Center (“CMC”) has spawned millions of dollars of losses and attorney fees in the last ten years. Most of the litigation, as between the sureties which wrote performance bonds, and the lender-investors, which pumped millions of dollars into CMC, have been litigated in an Ohio District Court where all the litigation was coordinated.
The Ohio Court transferred one of the cases, between the FDIC (Receiver for NetBank) and Safeco Insurance, was transferred to Nevada for final disposition.
In FDIC v. Safeco, 2011 WL 4834305 (D.Nev 2011), Safeco wrote performance bonds for the leases, and many of the leases, Safeco claimed were phony. Safeco, unwilling to honor the bonds, refused to pay. The FDIC, as Receiver for the failed NetBank, sued Safeco under its performance bonds, and brought a Summary Judgment against Safeco on a multiple count Complaint for Bad Faith.
Under the applicable law, which was oddly Georgia because NetBank was located there, in order to prevail on bad faith against an insurer, the insured must place the insurer on notice of the claim prior to filing suit. It was conceded that the FDIC did not do so, and the Court quickly disposed of that claim.
The FDIC also brought a claim for the Breach of the Covenant of Good Faith and Fair Dealing, a claim remarkably similar to Bad Faith, and again, the Court concluded that since the FDIC didn’t give Safeco a heads up, the FDIC couldn’t maintain the claim, and the Court dismissed this count as well.
This routine decision is hardly the death knell of this action, and is merely dispositive of some of the tort claim whereby the FDIC could have obtained punitive damages against Safeco. It should be noted that in the Ohio litigation, the sureties have not fared very well, and most have cut deals with the lender investors, or in some cases the Bankruptcy Trustee. Given the fact that the claim of the FDIC is now cut down to actual size, this decision may provide an impetus to settlement of that claim.
Insofar as an analysis of the decision, at the risk of stating the obvious, insurers and bond sureties are notorious for denying claims, and when the lender investors underwrote these sub-prime leases for investment purposes, they relied heavily upon the strength of sureties’ strength and failed to adequately investigate the underlying lease pools, CMC’s principals and its licensing status. In short, the investment pools were approved based mainly on the strength of the sureties, and the investor lenders certainly missed their mark relying on the willingness of the Surety to perform.
From a procedural analysis, any bad faith claim by an equipment lessor against a Surety must be preceded by a demand, which was not done here, for unexplained reasons.
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Loose Ends: E.A.R./HL Leasing/NorVergence/Brican America
This came from Don Blody, now at Madison Capital, questioning tax returns and a search by Leasing News discovered the Greyhound fraud connection.
The various cases involving Sheldon Player and Equipment Acquisition Finance continue, and while his estranged wife Dorothy Malone has declared bankruptcy, he has not, and a recent event regarding gambling debts, winnings, have resulted in another case involving the IRS and the trustee regarding amounts paid that the trustee considers overpayment and due the creditors of the bankruptcy.
In the meantime, Player is still a player. There are casinos in Nevada where Sheldon Player is still able to play from Winnemucca to Wendover, Nevada and others, but perhaps not Las Vegas as the Equipment Acquisition Resource Bankruptcy Trustee is seeking money from various casinos when he gambled.
The trustees are still seeking $1.785 million from Wynn casinos, $471,000 from the Rio, $236,500 from the Luxor, and $30,000 from Harrah's.
Equipment Acquisition Resources from October 2005 to October 2009 sent 21 checks to Wynn totaling almost $1.8 million so Player, Malone, Anstett or others personally could allegedly engage in gambling and gaming activities at one or more of the Wynn casinos. Wynn attorneys claim the money was not the property of Equipment Acquisition Resources, but rather was compensation to its executives Player, Malone and Anstett.
There are other casinos, according to court documents, $4.3 million in payments to the Horseshoe Casino in Hammond, Ind., $584,000 in payments to the Ameristar Casino in East Chicago, Ind., and $30,000 to the Palms hotel-casino in Las Vegas. That Sheldon is still playing may be verified when the FBI picked him up for questioning at the Denver, Colorado airport and he had just returned by private Casino plan with $900,000 cash in a large duffle bag.
In the company bankruptcy proceedings whatever equipment existed has been sold, as well as rooms of equipment in various stages also deposed. Those who were asked to take a bid describe it as equipment on top of equipment with dirt and dust everywhere. And while there are some open ends, the IRS case seems to be the major event.
The FBI has not filed a case, although Player has served time in jail for the Greyhound fraud, and also be on probation. Readers ask why ex-con Player is not in jail, and is out spending money, enjoying life.
Evidently he knows how to play his cards, as the story about his actions began in Leasing News May 2, 2007.
These were originally questions from investors brought to Leasing News concerning American Express Leasing contracts.
Leasing News reported HL Leasing President Dan Ramirez and Chief Financial Officer Andy Fernandez were found guilty in a trial before a jury in Fresno, where they were ordered to pay $46.5 million to 1,200 victims.
Kathleen Otto, the late John Otto's wife, even though accounting was done at their home, was not found guilty by the jury, as reportedly they did not find evidence that her actions caused any financial harm to the victims.
However Ara Jabagchourian, principal, Cotchett, Pitre & McCarthy, LLP, Burlingame, California believes she could be held liable under the theory she was a shareholder of the three companies Otto had founded that reportedly defrauded the victims.
After winning the case against the president and CFO, Jabagchourian filed a brief basically to try and tie either Kathleen Otto as an individual or as the trustee for the family trust into the case, which the judge is considering and will make a ruling. He then will seek assets available.
In the meantime, many of the victims have not been able to file for loses as they claim it has not been determined a Ponzi scheme, although others on the blog say they have filed losses, one stated: and received "... over a 550K lost I received approximately $123K back from the IRS. It did take them a long time to finally send a check but I did get it with no further documents required."
There are those who lost their house, their retirement, and have gone back to work, moved in with their children, and others whose lives have been changed as dramatically due to the money they invested and appear will never see again.
This story began May 11, 2009.
Salzano to go to Trial January 23
These originally were complaints to Leasing News from NorVergence lessees.
NorVergence was forced into Chapter 11 on June 30, 2004, but was soon converted into a Chapter 7 on July 14, 2004 and assigned to Judge Rosemary Gambardella, U.S. Bankruptcy Court, District of New Jersey. There are over 1100 queries, plus, as other reports are included in various queries, and the case is being wound up.
Here is one of the latest: “Application for Compensation for Porzio, Bromberg & Newman, P.C., as Special Litigation Counsel to Charles M. Forman, Chapter 7 Trustee, Special Counsel, period: 11/1/2006 to 8/31/2008, fee: $1,529,871.00, expenses: $56,085.51”
The founder of NorVergence Thomas Salzano is scheduled for trial January 23, 2012 in Lake Charles Louisiana by the Attorney General's Office in conjunction with the local DA.
Calcasieu County District Attorney John DeRosier told KPLC News, "The 11,000 plus victims around the country and the total amount of money that they have lost through this scheme is in excess of $300 million and nobody was doing anything about it. Now, they come to Calcasieu Parish and that's where we draw the line. We're not afraid to go after a complicated case. I think that it is a legitimate case of fraud."
Assistant Attorney General David Caldwell told KPCL other states and the Federal Trade Commission has taken civil action against Salzano but Louisiana is the first to pursue a criminal case."
“We are the ONLY state or federal agency to have followed this through. We had a total of five victims in Louisiana out of 13,000. For the only individual business owner in our state we obtained FULL restitution from LIBERTY bank in an amount over 160k, and in order to do that we filed criminal charges for filing false public records in Shreveport Louisiana. We were the only agency to have obtained those results on behalf of its citizens. We've been busting our butts on this case, have run up against everything you can think of that would delay getting this case done, and we're still fighting. The wheels of justice turn slow, but that's not our fault. I can't make other states or federal agencies fall in line."
This story began June 29, 2004.
This was brought to Leasing News attention by Bernie Boettigheimer, CLP, of Lease Police.
"It appears Brican may be in the process of trying to sell parts of its lease portfolio and in doing an investigation, found NCMIC Finance Corporation dba Professional Solutions Financial Services (PSFS), Clive, Iowa has a claim against Brican for $38 million involving 1672 leases. It appears very similar to the NorVergence situation but in this case the seller of the equipment in this case specifically provided the lessee with a letter to make lease payments in certain situations, unknown to PSFS, according to the complaint."
Brican America, Miami, Florida filed Chapter 7 Bankruptcy July 13, 2010. It does not appear concluded. A 370 Fraud or Truth-In-Lending was filed August 12, 2010 with several attorneys representing hundreds of clients in the U.S. District Court, Southern District of Florida. Many motions with exhibits and depositions.
This story began October 5, 2009
Operation Lease Fleece
This story came from an FBI Press Release.
The latest has former Capital Werks employee Houshang Jangi sentenced on December 14, 2011 "Pay special assessment $100, all fines waived. Committed on the Single-Count Information to Bureau of Prisons for 15 months. Supervised release for three years under the terms and conditions of US Probation Office and General Order 05-02. Bond is exonerated upon surrender. It is further ordered that the defendant surrender himself to the institution designated by the Bureau of Prisons on or before 12:00 noon on February 13, 2012. Defendant advised of his right to appeal. (dg) "
"Information" was filed as to Houshang Jangi January 6, 2010." He was not one of the originally 23 arrested. There were over 30 eventually charged, and allegedly the case is considered “active."
This story began November 9, 2007
This started from Bernie Boettigheimer, CLP, who was looking for information regarding Charles K. Schwartz from a complaint he was slow in payments.
Charles K. Schwartz, 58, Allied Health Care Service Founder and President Charles K. Schwartz sentenced 16 years and three months in prison, plus three years of supervised release, and ordered Schwartz to pay $80 million in restitution for fraud, as wells to forfeit $75 million ( he filed bankruptcy before pleading guilty). He is now at the Metropolitan Detention Center in Brooklyn.
Bruce Donner, owner of Donner Medical Marketing, Inc. pleaded guilty to one count of mail fraud before U.S. District Judge Susan D. Wigenton in Newark federal court. Sentencing is scheduled for Jan. 11, 2012.
This story began February 19, 2010.
(Leasing News provides this ad as a trade for investigations
Tax indemnity in “true leases”
In “true leasing” the Lessor usually reduces the Lessee’s payment amount by the value of the accelerated depreciation (MACRS) or the value of the current stimulus depreciation. However, you must follow the guidelines for a “true lease” or these tax advantages will be disallowed. That means taken away!
How do you protect yourself if your yield is reduced accordingly? It is called tax indemnity:
This Agreement is entered into on the basis that Lessor shall be the owner of the Equipment for federal and state income tax purposes and entitled to such deductions, credits, and other benefits as are provided an owner of personal property, including but not limited to the maximum Modified Accelerated Cost Recovery System deductions ("depreciation") for the MACRS Property Class life under the Internal Revenue Code of 1986 ("Code"); and interest paid or accrued with respect to any loan made to or assumed by Lessor or its assigns to finance the purchase of the Equipment (collectively referred to herein as the "Tax Benefits").
If, with respect to any item of Equipment, Lessor or its assigns shall not have or shall lose the right to claim all or any portion of the Tax Benefits or if all or any portion of the Tax Benefits shall be disallowed or recaptured (hereinafter referred to as "Tax Benefit Loss") due to the acts or omission of Lessee, then the following provisions shall be applicable:
As you can see it is a lot of language that must be inserted into your lease agreement if you plan to offer true leasing. In addition to the MACRS depreciation or any allowed depreciation benefits you have the additional risk of the tax rate (34%-35%) or any state tax rate being changed during the term of the lease so you need a corporate tax “rate” indemnity.
The corporate tax rate prior to 1981 was 46% and with the concern over the current deficit it would not be inconceivable to see the tax rate being changed.
In “true leasing”--- in the past the value of the tax benefits played a big part in commercial equipment leasing because if the lessee can expense the rents instead of taking depreciation and interest then they can control both the speed of the deduction and the term. For instance the term of depreciation, in normal times, for data processing equipment is five years. A lot of lessee’s prefer to expense it over three years and put the depreciation “burden” on the Lessor. In this case the rent payment will go up slightly because the revenue stream (lease payments) will be higher than the allowable depreciation, causing the tax burden on the Lessor to be higher. However, the lessee gets a higher tax deduction and at 35% the savings are better than the increase in the payment.
There is a lot to learn about true leasing and the shift back to this type of leasing will put a lot of pressure on lessor’s to get up to speed quickly on the rules and requirements.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty-five years and can be reached at email@example.com or 502-649-0448
He invites your questions and queries.
Previous #102 Columns:
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Top Stories December 20--22
Here are the top ten sorties opened by readers:
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(3) U.S. Bank buys $700 million credit portfolio from BofA
(4) Leasing 102 by Mr. Terry Winders, CLP
(5) Equipment Lessor Saved by Exculpatory Language
(6) New Hires--Promotions
(7) Tom Brady mansion almost done
(8) At Last! Positive News Equipment Leasing & Finance 2012
(9) Paying Down Your 30 year Mortgage vs. Refi
(10) Uh-Oh! More on Dwolla "Instant Transfer"
Special Year’s Best Edition
Christmas has seen some excellent new films being released, and several were reviewed earlier. They may make the list of the Best of 2011. Here is a list, in alphabetical order, of some of the greatest movies released before this period in 2011. Several are already “On Demand” or down loadable and available also from Netflix.
Cave of Forgotten Dreams: A tireless cinematic explorer, legendary German director Werner Herzog takes viewers on another journey with this entrancing documentary. Gaining exclusive access into the Chauvet caves in the south of France, Herzog takes his cameras into rocky formations and wall drawings dating back to 30,000 years ago. The result is an eye-filling tour of humanity’s earliest remains, with a 3-D presentation that tests the format’s visual possibilities rather than just relying on its spectacle.
Certified Copy: Shooting his first film outside his native Iran, Abbas Kiarostami comes up with a haunting and utterly unique date movie. The story takes place between an English novelist (William Shimell) and a French antique shop owner (Juliette Binoche) who meet in Tuscany. Spending an afternoon together, the two strangers share stories as their personal backgrounds gradually come to the fore. Half stylish jigsaw and half perceptive romantic comedy, this is a must for film lovers.
Hugo: Though Martin Scorsese would seem like an unlikely choice to direct a children's picture, this lovely fantasy is not only one of the year's most enchanting films, but also Scorsese’s most affecting film in years. Set in 1930s Paris and following the adventures of a 12-year-old orphan as he seeks clues about his family and learns about the value of cinema from one of its forgotten pioneers, this is a heartfelt valentine to movies that enchants from beginning to end.
J. Edgar: Clint Eastwood continues to surprise from behind the camera with this engrossing biopic on controversial political figure J. Edgar Hoover, strongly played by Leonardo DiCaprio. Skillfully hop scotching from the 1920s to the 1960s, the movie follows Hoover as he almost single-handedly founds the CIA by tenaciously going after those he felt were a threat to the nation and introducing scientific methods such as fingerprints into police investigations. An absorbing combination of taut drama and history lesson.
Meek’s Cutoff: Set in 1845, this remarkable Western follows a group of settlers who end up separated from their caravan and lost in the Oregon desert. As they become more restless after coming upon an enigmatic native, can they find the way back home, or will their journey continue going in circles? Working with an exceptional cast that Michelle Williams, Reichardt envisions an Old West that’s both naturalistic and stylized, and utterly unforgettable.
Poetry: Veteran Korean actress Yun Jeong-hie delivers an astounding performance as an elderly widow who works as a maid and tries to hang on to her private space as cultural changes take place around her. To pass the time she enrolls in a writing class, and the fulfillment she gets from poems gives her life a newfound meaning. Complications arise, however, resulting in a sometimes painful but ultimately powerful journey from director Lee Chang-dong.
Road to Nowhere: After an almost twenty-year long absence, cult director Monte Hellman returns to the big screen with a tantalizing, enigmatic thriller. Set behind the scenes of a movie production, it weaves together a series of plot strands that evocatively mingle real world and the cinematic world, reality and fantasy. Though it may sound confusing, yet Hellman keeps things light touch by stressing the story's deadpan humor and melancholy poetry.
Take Shelter: Michael Shannon gives an unsettling performance as a small-town husband and father whose recurring nightmares about a deadly approaching storm begin to crumble the security he feels with his wife (Jessica Chastain) and small daughter. Is it all only in his head, or is there a real threat coming their way? Working expertly with mood and atmosphere, writer-director Jeff Nichols offers a one-of-a-kind blend of thriller, drama and everyday anxiety
The Tree of Life: The brilliant and legendarily reclusive director Terrence Malick offers a visually astounding, profoundly moving story of spiritual turmoil and redemption with perhaps his most personal work yet. Alternating with revolutionary freedom between visions of cosmic creation, alienation in a modern-day city and childhood freedom in a small Texas neighborhood in the 1950s (featuring Brad Pitt in a towering performance), it makes for challenging but unforgettable, soul-stirring viewing.
Uncle Boonmee Who Can Recall His Past Lives: The title is just the first unique thing about this marvelous Thai fantasy. The uncle of the title is an aging farmer who, while on his deathbed, receives a visit from his ghostly wife and son, who have come to prepare him for the next world. The plot suggests a horror movie, but director Apichatpong Weerasethakul instead offers a warm and funny look at the fluidity of spirituality and fate that’s both sophisticated and immediately accessible.
Lake Charles, Lousiana -- Adopt-a-Dog
Breed: Catahoula Leopard Dog/Australian Shepherd Mix
"I am already neutered, housetrained, up to date with shots, good with kids, good with dogs, and good with cats.
***NEEDS FOSTER HOME***
"Hi everyone! My name is Harlee! I am approximately 6 years young and I am a Catahoula/Aussie mix. I am a good sized boy, weighing around 75lbs, but I am very gentle and kind. My foster Mom always tells me what a handsome boy I am.
"I am very calm and easy going guy. I am housetrained, crate trained, know how to sit and I am not at all destructive. I get along really well with other dogs and I don't mind the kitties in my foster home either. I LOVE children more than anything! All ages and sizes! The more kids around me, the happier I am! I really love teenagers, they really seem to enjoy spending time with me.
"I am already neutered, have had all my vaccines and tested negative for heartworms. I have been kept on monthly preventatives for heartworms, fleas and ticks to keep me healthy. I promise I would make you a wonderful companion for years to come, please don't make me wait much longer for the family I want so badly.
"Adopt me today! My adoption fee is $50.00 to cover the cost of my veterinary care. My adoption fee has been lowered thanks to a kind donation in hopes of me finding my forever home even sooner. Please visit the All Creatures Rescue website to fill out an adoption application."
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This Day in History
1722--Birthday of Elizabeth Lucas Pinckney . Left to manage her father's three plantations in the Carolinas when he was called back to Antigua as military lieutenant general. Not only did she experiment with various crops trying to produce one that would increase the plantations' income - plantations being agricultural businesses, not family farms - she developed a method whereby the touchy indigo plant could be raised in the harsher Carolina climate. The English government was enthusiastic and subsidized its growing as the U.S. government would later subsidize tobacco. Export reached in excess of one million pounds and was a major income source for the entire region. After her marriage, she developed a method for growing silkworms in the Charleston area and manufacturing silk. As a widow she would return to her family's plantations and manage them - successfully, as usual. Two of her sons were prominent in the new United States politics. Her first shipment of 17 pounds of indigo dye caused a furor in London as merchants found it equal to the dye from the French colonies. The English Parliament gave the South Carolina growers a subsidy. France made it a major crime to export indigo seeds but it was too late. Then ELP did the most unusual thing ... and perhaps the most feminist thing: she distributed the seeds from her crop to any colonist planter who wanted them instead of keeping the magic seeds to herself for her other gain. Within five years, the 17 pounds of dye had increased to 40,000 pounds. This output increased in time and became a major source of income for the fledgling United States that desperately needed cash. President George Washington served as one of the pallbearers at her funeral.
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