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Bad Guy Bruce Donner sentencing rescheduled
Bruce Donner, 52, of Berkeley Heights, N.J., owner of Donner Medical Marketing Inc., a New Jersey corporation that purported to be a medical equipment vendor, and forged invoices for Schwartz at Allied Health Care Services, sentencing has been rescheduled again, this time for March 8, 2012 in Newark, New Jersey before Judge Susan D. Wigenton.
Donner's lawyer, Keith Biebelberg of Biebelberg & Martin, Millburn, New Jersey, said he looks forward to "putting forth a vigorous and hopefully persuasive presentation" on Donner's behalf for a more lenient punishment. It won’t make the leasing companies who were screwed very happy.
Charles K. Schwartz, 52, the founder of Allied Health Care Service was convicted of the same mail charge as Donner which carries a maximum sentence of 20 years. Schwartz was sentenced to 16 years and three months, plus ordered to pay $80 million in restitution as fraud, as well as forfeiting $75 million (he filed bankruptcy before pleading guilty. He is now serving his time at the Fort Dix Penitentiary in Fort Dix, New Jersey. When he gets out, he will have to pay a percentage of his income until his debt has been paid in full, as well as have three years of supervised release. He could be out when he is 60 years old with good behavior.
He and Donner were found guilty of executing over $135 million phony leases that caused losses of more than $80 million, not counting court and collection costs by more than 50 financial institutions that he was found guilty of stealing by using phony invoices for equipment that do not exist to lessees that did not exist.
Donner admitted that after he received the payments, he sent 95 to 97 percent of them to an entity Schwartz created to facilitate the fraud. He kept the rest as a commission. He reaped more than $4.1 million, funds that must forfeit, according to prosecutors.
While Donner was not named as the party who turned states evidence in the FBI Press Release, to those who have been following the case since Leasing News gave its first alert on February 19, 2010, know it was Donner who was unnamed:
"Schwartz and the medical equipment 'supplier' undertook efforts throughout the scheme to evade questioning from bank examiners who sought at various times to inspect the non-existent medical equipment, which technically belonged to the financial institutions. At one point during an August 2010 conversation between Schwartz and the purported supplier, Schwartz commented that the financial institutions had fallen "hook, line, and sinker" for the false explanation they had given to bank examiners who asked why the purported supplier used his home address on certain invoices.
Searching for New CLP Foundation Executive Director
Looking for a candidate with a balanced background to include non-profit association management; marketing and sales skills a plus as well as knowledge of finance and leasing.
The Executive Director is a part-time position, working from your own office or home. The basic operational duties include managing the CLP databases, maintaining accurate records, proctoring exams, coordinating updates and changes to website with Web Master and working on special projects as directed by the Board.
The Executive Director acts as a spokesperson in promoting the CLP program, primarily helping to organize volunteer efforts with the CLP Board and Committees. Association conference travel two to three times per year is required.
The Certified Lease Professional (CLP) designation is the preeminent credential for equipment leasing and financing professionals throughout the world. The title that appears after their name in correspondence, business cards, and in the press, shows the individual has demonstrated competency through testing of knowledge, continuing education and a commitment to their business practices and dedication to the industry.
Send resume to Cynthia "Cindy" Spurdle: firstname.lastname@example.org or telephone: 610.687.0213
"We are definitely satisfied customers after placing our employment ad in Kit's Leasing News. Although the person we hired hadn't seen the ad, a friend of her's in the leasing industry saw the ad and told her that Dakota was hiring...
(The position was filled and time was left on the ad, so it was changed to a marketing person, which they also were successful in finding. editor.)
"It turned out we not only filled our open position, but were able to find an experienced leasing veteran who just wanted a location change. It worked out well for everyone!"
Mae G. Philpott
"The ad worked great. We hired a Documentation Coordinator that has been out of the industry for almost 3 years as a friend of hers saw our ad on Leasing News. She is now in her 2nd full week.
"We are actually looking to fill 4 sales positions this year so we’ll likely be back again. It feels nice to be managing growth, albeit measured, again.
Andrew Nere, President
""I want to thank you for listing our Business Risk employment position in Leasing News. Through our various postings, we received resumes from over 50 very qualified candidates
""I am very happy to report that the position has been filled..."
Laurie Bakke, President
Career Crossroad— "Thinking of going into another industry."
I have been in Leasing Sales for a long time and it just isn’t fun any more, and deals just don’t get approved like they did in the old days. I am thinking of going into another industry. What are your thoughts?
The leasing industry has certainly gone through a tough time over the last few years – which has effected many individuals and companies – both large and small.
If you are considering using your sales talent in another industry … why? Have you really lost your passion for this industry or is it because the transaction types you were handling went down the tubes (e.g. trucking) – which of course as we all know this industry is cyclical / demand for each asset type changes as well.
If it is the latter, why don’t you present yourself to another leasing company showing your progressive success within the industry AND offer to take a commission only compensation plan until you have proven yourself … this scenario can keep you within the industry you enjoyed for a long time until recently.
If you have lost your “drive” for this industry, then consider companies and/or industries that were similar to the equipment niche you were (are) in (e.g. truck manufacturer or even a truck distributor or top dealer).
Regardless, the best thing you can do is to be more of a generalist with a 10-15% focus on a specific equipment niche. For example if you were a generalist (sales experience with a mix of asset types e.g. medical, it, ff&e, you would have a much larger window of opportunity for new positions). Keep these in mind moving forward ….
If you need further advice, contact me directly!
Previous Career Crossroad columns:
Leasing Industry Help Wanted
For information on placing a help wanted ad, please click here:
Please see our Job Wanted section for possible new employees
Fair Market Value as a Purchase Option
One of the problems of a Fair Market Value (FMV) purchase option is the question of whose FMV are we talking about? The lessor may be in a State where the equipment is valuable and the lessee is in a State where it has a modest value. Plus the cost of returning the equipment may exceed its real value. Then what is its true value. So many of these questions, plus lots of other issues, are not spelled out in the lease agreement.
Lately the tax courts have been looking at the return provisions for requirements that are called onerous that put pressure on the lessee to purchase the equipment because the return provisions are difficult to comply with. Thus making it a non-tax lease. Then we need to look at the tax indemnity portion of the lease to see if the lessor can collect the tax value that was lost.
One return provision we see a lot of is the right of the lessor to select anywhere in the United States for the return. If the lessor selects a location across the country then the return expenses may be so high to entice the lessee to purchase instead of return. This can cause a tax problem under a tax audit.
Some lessors have included qualifications to the FMV option such as: FMV installed (highest value), or FMV in exchange (street value), or orderly liquidation value (sold in parts), or Auction Value (commercially reasonable sale). The actual language on these options is longer but you see the attempt to qualify the FMV option.
Some lessors have chosen to offer a fixed price purchase option approximately equal to the future FMV of the equipment and back it up with research to that effect. This is allowed for legal, but is untested for Federal Income Tax.
If the lessee does want a purchase option the question should be “why.” The answer may surprise you but now you are getting to what they want to accomplish with the lease which may cause you to alter your lease proposal.
If you are going to offer a true lease that meets the IRS guidelines then any purchase option must not be conceived as a bargain. I believe that just to tack a FMV purchase option on to your lease would seem to indicate that you failed to ask the most important question: How long do you plan to use the equipment?
The real value of commercial equipment leasing is its ability to spread the tax expense over the actual term of use. Expensing the rent payments allows for a broad variety of payment terms and rent schedules. However, we see many lessors’ are offering level payments over 36, 48, and 60 months with FMV purchase options. If you asked the correct questions about the equipments use, maintenance requirements, insurance timing, and company cash flow you may find a payment plan that is different than level payments. Level payments just invite comparison to other financing opportunities and competition.
If you discover that the company exchanges equipment on a detailed schedule then perhaps a lease to that term with no purchase option but containing a upgrade clause would be more successful than a lease with a FMV purchase option.
An upgrade clause allows the lessee to act as your agent to trade the equipment in for the new equipment. The ownership of the equipment traded in belongs to the lessor and the replacement equipment is purchased by the lessor so no tax problems occur. There is no purchase option so there cannot be any “intent” to sell the equipment to the lessee for a bargain option. The lessor gets a reduced cost from the value of the trade in--- minus the residual assumption from the existing lease. It is true that any excess earnings from a residual sale is lost, but the trade in reduces the price “only” to the lessor and allows the lessor to retain a customer and still increase the lease rate because any payment offered by the competition must take into account the full purchase price of the new equipment.
A FMV purchase option should be a topic of discussion not just a common addition to your presentation. It will support how you view the lessee and how you present your lease. The more questions you ask the better your chances to offer a sound lease that the customer will accept.
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:
Bank Beat---Bank Brokerage and Investments to Increase
Last week Key Private Bank, the investment, trust and wealth management arm of KeyCorp ("KEY') established Key National Trust Co. of Delaware to provide trust services for wealth clients and prospects to take advantage of Delaware's favorable trust laws.
If you note in the chart below, KeyCorp had the second highest percentage of its revenue come from brokerage and investments, which generated 8.8% of its revenue from those business.
These products are not only very profitable to the banks, but also bring in the wealthy individuals and other entities, such as trusts, with their cash deposits, as often other business with companies and friends who also have deposits and all types of loan requirements. They are great income producers with little actual losses today.
KeyCorp has stated it is looking to grow its investment banking relationships with customers in the middle market.
Christopher Gorman, who is now president of Key Corporate Bank and chairman and CEO of KeyBank NA, told SNL Financial the corporate bank, which includes institutional and capital markets, real estate and equipment finance businesses, has identified 7,000 businesses within the company's footprint and industry focus that generate between $25 million and $1.5 billion in revenue
These products also have other advantages, such as helping the super-regional bank Regions Financial Corp. ("RF"), Birmingham, Alabama, who owes $3.5 billion, the most of any U.S. bank under the Treasury department's Troubled Asset Relief Program (TARP.) It may have $500 million to $700 million of excess cash and could tap $1 billion from its bank subsidiary with regulators' approval, in an effort to payback the money. Regions will also get $1.18 billion from the sale in January of its Morgan Keegan for $1.2 billion to Raymond James Financial, Inc., who according to SNL Financial chart above generated 18.5% of the company’s total revenue.
Last year with $251 million in the fourth quarter, followed by SunTrust Banks ("STI") at $142 million, then Fifth Third Bancorp ("FITB") at $90 million, and coming up from behind, KeyCorp at $85 million.
While SunTrust was second in percentages ( also second in actual dollars), Hugh Cummins III, who leads the corporate and investment banking operations at SunTrust, explained to SNL Financial that its SunTrust Robinson Humphrey Inc. has been able to capitalize on efforts to increase its market share in syndicated loans.
"We targeted [syndicated loans] as a way to get a foothold and become more important to our clients," Cummins told SNL.
SunTrust's investment banking income has also risen in recent years. In 2011, SunTrust's investment bank income increased to $317 million, up about 38% from 2006. Cummins believes SunTrust will continue to win new business. He expects to take more syndicated loan market share especially as European banks retrench from the market, and another goal is to grow the leveraged finance business, which includes leveraged loans and high yield bonds.
Perhaps some of the European bank problems may come from its arranging or involvement in syndicated loans, whose main goal is to spread the risk of a borrower default across multiple lenders (such as banks) or institutional investors like pension funds and hedge funds. These loans can also be split into dual tranches for banks (who fund standard revolvers or lines of credit) and institutional investors (who fund fixed-rate term loans).
It is one of the major elements that brought down the mortgage industry in the United States which lead to the current “great recession,” as well as the current fears in Europe from several banks sharing syndicated loans with banks in countries having serious financial troubles.
Let’s hope all new investments, especially syndicated loans, are more prudent.
Surprising 2012 Customer Loyalty Engagement Index
These results may surprise you. The ratings are not for “the best,” but the loyalty of customers in the United States---Brands that indexed highest for loyalty/ engagement -- and therefore most "delighted" their customers -- within some specific categories:
Coffee (out-of-home): Dunkin' Donuts comes out on top for the fifth consecutive year, followed by Starbucks, McDonald's (which was #2 last year), Tim Horton's and Krispy Kreme. The #1 loyalty driver in this category is not quality/taste (which ranks second), but service/surroundings. These are followed by variety/selection and brand value and location.
Fast Food: McDonald's, followed closely by Subway, leads the pack, with all other (non-pizza) QSRs trailing substantially. Among pizza QSR's, Domino's indexed highest, followed by Papa John's, Pizza Hut and Little Caesar's and Round Table.
Casual dining restaurants: Olive Garden, Ruby Tuesday, Red Lobster, Outback and T.G.I. Friday's lead the loyalty/engagement rankings. In this category, the big loyalty drivers are brand value and menu variety, customer service, décor/entertainment value, and healthy choices.
Cereals: Among adult breakfast cereals, the leaders are Cheerios, Honey Nut Cheerios, Special K, Mini-Wheats and Fiber One. A brand's perception as a "tasty lifestyle" cereal is the biggest loyalty driver, followed by ingredients/nutrition value and price/value.
Bottled water: The highest-indexed brands are Aquafina, Fiji, Poland Spring, San Pellegrino and Evian. Here, the key drivers are "brand for value," environmentally sound/purity of source, refreshing taste and widely available.
Beer: Among regular (non-light) beers, Sam Adams and Coors come out on top. Full-bodied taste and "a brand appropriate for all occasions" are the top drivers in this category.
Vodka: Kettle One leads, followed by Grey Goose, Chopin, Ciroc and Stolichnaya. Here, the key drivers are brand image, price/value and smoothness. "This is one of the categories that is most sensitive to carefully crafted advertising," reports Passikoff. "For example, Absolut is no longer among the short list of top-indexed brands because, while it's great on offering a wide variety of flavors, it seems to lack a clear, compelling image in consumers' minds."
A complete list of 2012 Brank Keys Customers Loyalty Index:
#### Press Release #############################
41 Months plus $2.5 MM for Ponzi Scheme
Santa Ana- Brenda A. Eschbach, 55, owner of Aventine Investment Services and EMA Investment Properties, was received a 41 months imprisonment for money laundering and mail fraud, announced the United States Attorney’s Office, Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation.
She also was ordered to pay $2.5 million in restitution by United States District Judge James V. Selna. Eschbach previously pleaded guilty to one count of money laundering and one count of mail fraud.
According to the plea agreement filed in court, from 2007 to November 30, 2009, Eschbach engaged in a scheme to defraud millions of dollars from investors. Through her companies, Eschbach convinced investors to invest in a real estate investment trust, KBS Capital Markets Group (KBS). Eschbach also misled investors by telling them she earned a Ph.D. from the University of California, Irvine when she in fact didn’t have a Ph.D. from anywhere.
In furtherance of her scheme, Eschbach mailed investor statements showing that investor’s money was invested and earning a profit. In relation to the mail fraud count, on December 31, 2007, Eschbach mailed a fabricated account statement to an investor, reporting a $1.3 million investment which didn’t occur.
Instead of investing, Eschbach used investor funds to pay off other investors in a Ponzi-like fashion and for her own personal use. Eschbach admitted that she misappropriated more than $2.5 million in total from investors.
In a related case, the U.S. Securities and Exchange Commission announced Wednesday that on February 14, 2012, it filed a civil injunctive action in the U.S. District Court for the Central District of California charging Eschbach with securities fraud, investment advisory fraud, and acting as an unregistered broker-dealer. In its complaint, the Commission alleged that Eschbach misappropriated over $3 million in investment advisory client funds from 2003 through 2009.
In the related case, Eschbach also consented to the issuance of a Commission Order barring her from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent, and from participating in any offering of a penny stock. Issuance of such an Order is predicated on entry of the proposed injunction against Eschbach and her plea of guilty in the federal prosecution.
The investigation was conducted by the U.S. Securities and Exchange Commission, Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation.
##### Press Release ############################
((Please Click on Bulletin Board to learn more information))
Top Stories February 13--February 17
Here are the top ten sorties opened by readers:
(1) Joe Woodley, CLP, et. al. to go to trial March 12 by Christopher Menkin
(2) Equilease Wins $260 million portfolio
(3) Leasing 102 by Mr. Terry Winders, CLP
(Tie) (4) Borland Takes Back U.S. Energy Capital
(Tie) (4) Arnold Schwarzenegger/Sylvester Stallone same hospital room
(5) Solar firms that lease panels see business grow
(6) Why I became a CLP
(Tie) (7) "Cigarettes Cheaper" Fraud Sentencing
(Tie) (7) Career Crossroad—"Don't want to give references on first interview."
(8) Aslam Khan—from dishwasher to owner of 150 stores IFC Conference Part II
(9) IFA Conference Opening Predicts Growth in Franchising 2012, General Economy
(10) Bank Beat---Illinois and Indiana Bank Fail/Why?
Not Counted Due to Technical Problems:
(Leasing News provides this ad as a trade for investigations
Siberian Husky/Heeler Mix
“...DOB 12/1/11...Contact firstname.lastname@example.org Hattie is playful, adorable and extremely smart. She would enjoy living with an active family and would excel at agility, fly ball and dock diving. She is working on leash and obedience training - already knows how to sit, down and high-five. She is crate trained and does well with not having accidents when free in the house. Hattie will be a medium sized dog when full grown and is vetted appropriate to her age. Contact email@example.com “
*****If you would like more information about the dog featured above, be sure to send a note to the "Contact Person." This is the person fostering the dog and they will be happy to answer any questions you have.
Also, in sending your note to the Contact Person, be sure to include information about yourself, family, home, yard, fence, other pets, work situation, and pet accommodations. This information will help us make the best match between you and one of our dogs***
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U.S. .Asia Stocks Fall Amid Greece Rescue Talks
Bettie Kelley Sousa New Chair American Board of Certification
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Now the hedged meads renew
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Consumers across three continents prefer lower alcohol wines
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This Day in History
1704-The first permanent newspaper was "The Boston News-Letter," first issued this day. The first in Pennsylvania was "The American," published in Philadelphia in 1719. The first in New York was "The New York Gazette," in 1725; the first in Maryland was the "Maryland Gazette," issued at Annapolis in the summer of 1728. "The South Carolina Gazette," printed at Charleston at the beginning of 1732, was the first issued in that province; the first in Rhode Island was "The Rhode Island Gazette," printed at Newport in 1732; the first in Virginia was "The Virginia Gazette," printed at Williams burg in 1736; the first in Connecticut was "The Connecticut Gazette," printed at New Haven in 1755; the first in North Carolina was "The North Carolina Gazette," printed at New Berne the same year; and the first in New Hampshire was "The New Hampshire Gazette," printed at Portsmouth in the summer of 1756. At the period of the French and Indian war newspapers were printed in all of the colonies excepting in New Jersey, Delaware and Georgia. The printing-machines on which all the colonial newspapers and books were printed were simple in form and rude in construction.
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