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Headlines--- PinnFund/Leasing figure to give back millions Eastern Association of Equipment Leasing November Conference UAEL B-Law Suggested Changes Controversy FASB Adds Financial Performance Reporting To Its Agenda Convenience Key to Successful Holiday Season Auction puts the gavel down on a dot-bomb Webvan BofA completes break with S.F., ---A.P. Giannini Rolls Over in his Grave Willis Lease Finance Updates Status of Exposure to Swissair Bankruptcy ### denotes press release PinnFund/Leasing figure to give back millions By Mike Freeman San Diego Tribune Union Staff Writer The ex-girlfriend of jailed PinnFund USA/PinnLeasing USA founder Michael J. Fanghella has agreed to settle her dispute with the Securities and Exchange Commission by returning millions in property and cash. Kelly Cook, 35, will hand over most of what remains from the $14 million she received from Fanghella. Court records indicate that those assets total at least $8.5 million and perhaps more. That would be the largest sum recovered to date in the PinnFund case, where 160 investors were allegedly bilked out of $330 million over a span of seven years, according to the SEC. Cook, who had a seven-month romance with Fanghella last year, will hand over property including a Laguna Niguel house that's on the market for $5.75 million, several luxury cars, a $350,000 ring, other jewelry, art and furniture. The settlement was reached on Monday between Cook and Charles La Bella, the former U.S. attorney in San Diego. It must be filed in U.S. District Court in San Diego to become final. Cook's lawyer, William Genego of Santa Monica, declined to comment on the deal. Now in private practice, La Bella was appointed by U.S. District Judge Marilyn Huff to hunt down what's left of PinnFund's missing millions. Despite La Bella's efforts, authorities think most of the money is gone. SEC officials have said they would be surprised if $30 million is recovered. Meanwhile, La Bella has begun pursuing others who authorities think received ill-gotten investor funds. He has already settled with Fanghella's ex-wife, Patrice, and is seeking funds from a few former PinnFund employees. The latest is ex-PinnFund president Keith Grubba. La Bella has filed a lawsuit against Grubba seeking more than $5 million. The case is pending. Grubba's lawyer could not be reached for comment. In March, the SEC filed sweeping civil litigation against PinnFund, Fanghella, James L. Hillman of Oakland and others. It alleged that Fanghella and Hillman ran an elaborate securities fraud in which investor money -- earmarked solely to fund PinnFund mortgage loans -- was used to pay for Fanghella's lavish lifestyle and to provide large commissions to Hillman. $109 million judgment Fanghella disappeared shortly after the SEC action and didn't resurface until Aug. 1, when he turned himself in to authorities. He now faces criminal charges, as well as the SEC judgment in excess of $109 million. He remains behind bars in the Metropolitan Correctional Center in downtown San Diego. Hillman says he's innocent and is fighting the SEC. He does not face criminal charges. Authorities never accused Cook or a company she controls, Reliance Holdings, of any wrongdoing. But the SEC sought to have the gifts, property and cash returned. By settling with Cook, authorities avoid a possible appeal and lengthy court fight, said Steven Owen, a lawyer who negotiated the deal for La Bella. Cook met Fanghella at a Christmas party in New York in December 1999. After dating for a time, Cook, who was identified in court documents as a former porn actress, broke off the relationship. In August 2000, Fanghella sued Cook in Orange County seeking the return of the house, ring and other gifts. The lawsuit pinpointed for authorities how much Cook had received. Cook and Fanghella settled their legal tangle in September 2000. $2.1 million in cash Prior to Monday's talks, Cook had already agreed to hand over all but $2.1 million in cash and the $350,000 ring. Authorities said Cook claimed Fanghella had harassed her after the breakup, so she was entitled to the cash and ring because they were part of her settlement agreement with Fanghella. But in this latest deal, Cook was only allowed to keep $100,000 for attorneys' fees related to her settlement. In addition, La Bella agreed not to seek the return of $108,000 that Cook's elderly mother in Georgia received from Fanghella to pay off her mortgage. Finally, Cook's former lawyer and current boyfriend, Charles Spagnola, got to keep $162,500 to cover legal fees for work he did for Cook prior to her settlement. "The end result . . . is Kelly Cook and Reliance Holdings get nothing," Owen said. "There was some consideration given to some other people to eliminate the possibility of an appeal by her." Cook must move out of the Laguna Niguel house within a couple weeks, Owen said. Yesterday, she was expected to turn over six cars -- "a Mercedes, a Porsche Boxster, a BMW X5, two Vipers and a Jag," Owen said. "We're getting the $5 million house. We're getting most of the cash and $1.5 million in jewelry. We're getting the furnishings, the Persian rugs . . . It's hard to think of everything, it's so much." Mike Freeman's e-mail address is mike.freeman@uniontrib.com. His phone number is (760) 476-8209. ___________________________________________________________________ Eastern Association of Equipment Leasing November Conference Get everything your company needs to know about the leasing industry...ALL IN ONE DAY! EAEL Expo 2001, Monday, November 19 at the Sheraton Meadowlands in East Rutherford, NJ, 8:00AM to 6:00PM. Three featured speakers: Mike Fleming, DJ Harrington and Everett Erlich. 12 Timely Workshops and 40 Exhibitors. For more information, contact the EAEL office at 914 381 5830 or visit the EAEL website: eael.org. United Association of Equipment Leasing New By-Law Suggested Changes Well, the vote will be on UAEL.org in less than thirty days, but broker members don’t seem to be very happy. Leasing News has received over a dozen e-mails, confirmed that all but one are a UAEL member ( the other may be a new member not on line ). Not one wanted us to use their name, so we are not going to print them. While we utilize “name withheld” for reporting purposes, in this case, if they don’t want to be named, we won’t print what their objections might be. If they don’t have the guts to stand behind their objections, they can talk to the wind. We ask all e-mail senders permission to use their message, unless they state otherwise in their e-mail. Some of these said not to use their name, and others that we asked for permission told us: “Actually Kit I would prefer that you do not mention it. I have a number of contacts in the industry that I might still call upon over the coming months as my business continues to drop. Thanks again though.” “ We do business with Centerpoint, so it might effect our relationship. Please don’t print our name. “ “It may be held against us, and I would prefer you print our opinion, but not my name or the name of my company.” “ Please with hold my name, but not my objections.” If you are interested in the by-law changes, here they are in pdf format: http://www.leasingnews.org/PDFFiles/UAEL%20Ballot.pdf While we are not going to print what the e-mail senders sent, here are highlights, in our opinion: The number one complaint appears to be this: to knowingly make false or misleading statements or withhold information vita to a business decision ---even if such information becomes known to us after the funding of a transaction— It is the “after the funding of the transaction” clause that is the number one complaint. I don’t see the harm in this. If you find out about a lessee having a problem, or if equipment was not delivered, or something was wrong, after the funding, why wouldn’t you inform the funder? Or is there a legal consequence here that I don’t understand? If you are not party to the fraud or deception, why cannot you report it to a funder or any source? Don’t you want to see the funder stay in business? Aren’t you supposed to help them, whenever you can, as we are all in this together? If you have an opinion, we will print it if you give permission to use your name. The sections about an arbitrator and timing seem logically to me. If Victor Harris, who has been the long time Standards Chairman recommends them, what is wrong with them.? A committee of legal experts went over these. I don’t see the problem here. I see improvement. What is your opinion? Other timing issues seem to be an enhancement for the committee’s use.. I like the “upon 5 verbal complaints on a member company the Standards Committee may initiate their own review, etc. “ This looks good, too, so why would anyone be upset with the change. What am I missing here? There is a philosophical question regarding changing the Non Member vs. Member filing fee of $100 to $250 per complaint. This appears to be a cost issue. I personally think these should be underwritten by a sponsor to encourage more people to speak out and to improve the ethics and business practices of the very few in our industry. I don’t know. I don’t know. Maybe I am wrong about this. I always thought standard and ethic committees were very important to all leasing associations. If they see changes they want to make, we should support them, shouldn’t we? Opinion, as the old adage goes, is what makes a horse race. If you have one on the by-law changes, please let us know---but sign your name, if you want to share it with other readers. If I missed something here, we would be glad to print your opinion, but you need to sign your name to this one. Kit Menkin, editor __________________________________________________________________- Florida License Plates Supporting RewardsFund.org are America's Latest Weapon in Nation's Drive Against Terrorism
Florida Legislature accelerated the state's drive against terrorism today by speeding into enactment legislation authorizing a new "United We Stand" Florida license plate, the proceeds from which will help fund one of the U.S. government's most effective anti-terrorist programs. --------------------------------------------------------------------------------------------- ### ############### ############################### FASB Adds Financial Performance Reporting To Its Agenda
NORWALK, CT--In an effort to provide better and more meaningful information to investors and ceditors, the Financial Accounting Standards Board (FASB) has added a project on financial performance reporting to its agenda. The project's objective is to improve the quality of information displayed in annual and interim financial statements so that the public is better able to evaluate a company's performance. The project will determine the usefulness of adding certain aggregations, classifications, line items and subtotals covered in annual and interim financial statements. As part of this project, the Board will examine whether financial statements provide sufficient information to allow investors and others to calculate key financial measures, such as ratios and other metrics. Examples of items that may be required to determine key measurements include depreciation, amortization, and research and development expenses. The FASB plans to coordinate its efforts with those of the International Accounting Standards Board, which recently adopted a similar project. It is important to note that because the FASB does not have authority over how a company describes itself in press releases, analyst presentations and similar media, the FASB project will not address the use of pro forma earnings commonly used in corporate press releases. About the Financial Accounting Standards Board (FASB) Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors and others rely on credible, transparent and comparable financial information. For more information about the FASB, visit our website at www.fasb.org. The Financial Accounting Standards Board... Serving the investing public through transparent information resulting from high-quality financial reporting standards developed in an independent, private-sector, open due process. * CONTACT: Financial Accounting Standards Board Sheryl Thompson, 203/847-0700, ext. 268 ### ########################### ###################### __________________________________________________________ Convenience Key to Successful Holiday Season By Michael Pastore eCommerce News Online retail and travel sales from the 2001 holiday season will reach approximately $11.9 billion, according to Jupiter Media Metrix. That would represent an 11 percent increase over last year's $10.8 billion. Online shopping will see slower growth this holiday season, but Jupiter expects to see more people shopping online (46 million in 2001, up from 36 million in 2000) and consumers allocating a greater percentage of their holiday budget to online shopping. "As traditional retailers brace for a holiday shopping season fraught with uncertainty, online retailers are facing quite the opposite -- the first fairly predictable holiday season," said Ken Cassar, Jupiter senior analyst. "The attacks of Sept. 11 will in fact have a net zero impact on online retailers. Because fewer Americans will travel via air this year, and those that do will be less likely to carry armloads of packages through tight airport security, there's an increased likelihood that consumers will buy from online and catalog retailers. However, any benefits that this creates will be offset by the negative economic impact of the attacks." An Jupiter Consumer Survey from October 2001 found that only 14 percent of those that plan to buy gifts online this season believe they will spend less than 10 percent of their budget online, compared with 18 percent in 2000 and 61 percent in 1999. But even though online holiday budget allocation is increasing, spending per person is decreasing because the online population is less affluent this year and the weak economy is causing holiday budgets to shrink. Top Online Purchases 2001 Holiday Season Consumer Bought/Planning to Buy Books40% Clothes & Shoes 30% Toys 29% Music 28% Videos 20% Computers/Computer Accessories 18% Source: Jupiter Media Metrix The 2001 holiday season will also see a demographic shift. For the first time, women as a group will spend more than men. Women will also account for more than half (53 percent) of the total online holiday buying population. The average holiday spending per male will remain higher due to purchases in more expensive price categories such as consumer electronics and PCs. The online merchant landscape has certainly changed, as many of the dot-coms have disappeared in favor of traditional brands, but consumers will buy from the same gift categories this season as last. According to Jupiter, top products consumers have already bought or plan to buy online this season include: books (40 percent), clothing and shoes (30 percent), toys (29 percent), videos (20 percent) and music (28 percent). The category with the largest projected drop this year compared to last is computers and computer accessories. Last year, 24 percent of consumers said they would buy computers or computer accessories online -- this year that figure is only 18 percent. The weakness in the computer market has dual causes: the weakened computer sector, which has been exacerbated by the recession; and an increasingly mass-market online buyer who is less interested in technology. "The slowdown in online retail sales growth this holiday season is actually a blessing in disguise. For the first time, online holiday sales will be somewhat predictable. In order to capitalize, online retailers must appropriately scale their businesses to balance high consumer expectations with their own need to show a profit," Cassar said. Important Factors in Online Shopping Convenience 49% Price 2% Both 30% Source: GartnerG2 The keys to a successful holiday season for those selling online will once again revolve around customer satisfaction. Providing the customer with convenience will again be the key. According to research by GartnerG2, 81 percent of online consumers value convenience when making a purchase online compared with 33 percent who value price savings. "In a down economy, businesses might conclude that the emphasis on lower price would increase. We found exactly the opposite," said David Schehr, a GartnerG2 analyst. "This is not to say that online merchants should begin to raise their prices, but alternatively, they should focus their energy on getting the customer in and out of the site as quickly and efficiently as possible." Convenience-related issues (including speed of use and ease of access) are the dominant motivating factors among respondents who purchase online; only 33 percent of the respondents feel that getting better prices is an important driver to buying on the Internet. Almost half (49 percent) of the Gartner respondents feel that only convenience is an important factor of online buying, compared to 2 percent who feel that just price is important; 30 percent of the respondents feel that both convenience and price are important. According to the research, 59 percent of online buyers limit their purchases to the handful of sites that they find familiar and comfortable. These online buyers save time in two ways: limiting the search time to find a retailer and speeding up the buying process through familiarity with the site structure and operation. Auction
puts the gavel down on a dot-bomb Webvan Kathleen Pender, San Francisco Chronicle Staff Writer Scavengers from all walks of life swooped down on Webvan's bankruptcy auction in Foster City yesterday. There were people from the neighborhood looking for PCs for their kids, workers from nearby biotech companies on their lunch hour, network administrators hunting for cut-rate tech gear, and lots of hardware resellers. Four of the first eight items up for bid were purchased by a woman who lives across the street from Webvan and was attending her first auction. The woman, who wouldn't give her name, bought a 19-inch TV/VCR (for $180) and a General Electric refrigerator ($650) for her house. She also purchased a basketball hoop ($275) and a Sub-Zero refrigerator ($800), which she intends to donate to her church. Some people came out of curiosity -- to see how dot-coms lived back in the glory days before investors shut off the money spigot. "We wanted to see what it takes to blow 850 million bucks," said Randy Ataide of Mountain View Cold Storage, a produce distributor in Fresno County that used to do business with Webvan. "It's just a foolish tragedy," he said. Ataide and his colleague Tom Bruner came to the auction hoping to pick up a few PCs, laser printers and servers for their firm. "These guys had the opposite of our business plan," Ataide said. Their business plan was "field of dreams: Build it and they will come," Bruner said. "Our business plan: Start small and get bigger," Ataide added. Webvan has been holding auctions at offices and distribution centers across the country since it filed for bankruptcy in July. This week's auction, at its Foster City headquarters, is the biggest. The final one takes place next week in Las Vegas. There are 3,366 items in the Webvan auction catalog. Most of the items are late-model Sun and Compaq servers, Cisco routers and switches, Compaq PCs, 21- inch Viewsonic monitors, Polycom teleconference phones with digital remote controls and more than 100 Herman Miller Aeron chairs, the status symbol of the dot-com era. There's also a 50-inch Pioneer flat-screen plasma monitor, Precor gym equipment, a complete videoconference facility and a security surveillance desk. About 1,500 people registered to attend the auction in person, and 3,380 signed up to participate online, according to DoveBid, which handled the event. It's difficult to tell how many actually attended, because people streamed in and out of the auction site on Webvan's second floor throughout the day. Cell phones went off constantly, as bidders checked in with people back at home or the office. The auction was scheduled for between 9 a.m. and 7 p.m. yesterday and again today from 9 a.m. until the last item -- 33 boxes of assorted power supplies, strips and cords -- is sold. Most things went for a fraction of their original price. Webvan's high-end Smed cubicles, which DoveBid said are priced at $5,000 to $8,000 new, went for $450 to $1500. The most expensive item was an EMC data-storage system that DoveBid says cost close to $1 million new. It went for $92,500 to a telecom and networking company in Milpitas. Another EMC system went for $44,000 to a sports-related dot-com. But many things still weren't cheap enough for resellers to make a profit. "A lot of this you can get cheaper on EBay," said Tim Olson, who used to work as a programmer for a dot-com and is now trying to make a living buying and selling used technology. "These prices are good for end users. For resale, you have to be careful," said Peter Faris, a sales consultant with Sun Valley Technical Repair in Morgan Hill, which fixes and sells used hardware. Faris was at the auction to buy for his own company and to make contact with other buyers who might need repairs on equipment purchased from Webvan. All merchandise at the auction is sold as-is. Prices at the Webvan auction were high because bidders were also participating via the Internet. "When they open it up to the Web, it goes nuts, " Faris said. He said the "buyer's premium" charged by the auctioneer "also kicks up the price." DoveBid, also based in Foster City, charges buyers a 13 percent commission, with a discount for cash payments. A variety of Dove-family members took turns as auctioneers yesterday. First up was Ross Dove, who kept the patter fast and funny. Auctioning off the basketball hoop, he mentioned that it was adjustable, "so even short Jewish guys like him (referring to his father, Millard Dove) can dunk." Then he pretended that Michael Jordan was trying to bid, and teased that the hoop came with four courtside tickets to the Final Four. Later on, Dove said, "For those of you holding back on your bidding, there are going to be no more dot-com failures after today." The joke got a big laugh, because everybody knows it's not true. ________________________________________________________________ BofA completes break with S.F., A.P. Giannini Rolls Over in his Grave by Christian Berthelsen, San Francisco Chronicle Staff Writer In a move that symbolically completes Bank of America's power drain from San Francisco to its headquarters in Charlotte, N.C., the executive in charge of the last major business line based here is returning to North Carolina. Ed Brown, the head of global corporate and investment banking, has put his Mediterranean-style Pacific Heights mansion on the market, and bank spokespeople confirmed yesterday he is in the middle of moving back to Charlotte. The move breaks a 1998 promise made by former chief executive Hugh McColl to keep the high-profile division headquartered in San Francisco, as a trade- off for relocating Bank of America's headquarters to Charlotte in the aftermath of its takeover by McColl's NationsBank in 1998. It also cements the consolidation of the bank's power structure in Charlotte. Jobs, executives and control over most business operations, including consumer banking, have shifted from San Francisco to Charlotte, New York and other locations. Many of the functions of the global banking unit are performed out of New York, including corporate finance and mergers and acquisition advising. As long as Brown worked out of San Francisco, the city officially remained the headquarters for the division. His departure makes the transfer of power complete. To some in the investment banking world in the San Francisco, the move underscores the point that Bank of America has long since ceased to be a San Francisco institution. Brown's departure makes San Francisco just another regional outpost in Bank of America's sprawling empire -- on par with any other city where the former NationsBank swept in and took control of the hometown bank. "I think this was inevitable," said Sandy Robertson, a co-founder of Robertson Stephens, the investment bank that was purchased by BofA but later disgorged in the merger because of NationsBank's acquisition of Montgomery Securities. "It's a Charlotte bank, it's not a San Francisco bank, and most of the Bank of America people are gone. I'm not at all surprised. I think it was always an illusion, from the very beginning." Brown's move also breaks a pledge Brown himself made just last year, when asked if BofA was intending to eventually shift investment banking leadership away from here as well. "I'm here and I'm staying," Brown told The Chronicle last year. Few, if any, inside the bank think Brown's move will affect operations at the investment bank unit, which still employs about 1,200 people in San Francisco and has major operations centered in New York. No sweeping movement of employees is planned, although BofA said last week it will lay off about 600 people throughout its worldwide force because of a downturn in the corporate finance industry. Georgie Shields, a spokeswoman for BofA's investment banking unit, said the bank's new chief executive, Ken Lewis, wanted the top executives from each major business line close to him in Charlotte. "While Ed Brown manages a global business and travels a lot, he's a couple of time zones and a couple of hours away by plane from Charlotte," she said. "So it made sense for him to relocate to Charlotte, and that's what he will be doing." An item in the "Bids & Offers" column of the Wall Street Journal last week described Brown's home as "quite a pad," with a fireplace in the master bedroom, a wet bar and Sub-Zero refrigerator in the library and a wet bar in the billiard room. The asking price for Brown's house: $14.75 million. It was rumored yesterday that the house had already sold, but bank officials were unsure and the broker, Malin Giddings of Cendant Corp., did not return calls seeking comment. How Brown came to live in the house is quite a story. Bank of America gave him a $6.2 million interest-free loan to buy and fix it up. The compensation was disclosed in a proxy filing by the bank earlier this year. The house was purchased in October 1998 for $5.4 million. Shields, of BofA, said the proceeds from the sale will repay the bank's loan, but it was unclear who will pocket any profit on the sale. Brown, who was in Charlotte, could not be reached for comment. Brown, a longtime NationsBank corporate banker, moved to San Francisco in 1998 to serve in the investment banking division under Michael Murray, one of the few former BofA executives to retain a senior leadership position in the wake of the merger. After Murray retired, Brown assumed control of the division and appointed former NationsBank people exclusively to be his deputies, while slashing the authority of premerger BofA officials. E-mail
Christian Berthelsen at cberthelsen@sfchronicle.com. _______________________________________________________________- __________________________________________________________ ### ############################### ###################### Willis Lease Finance Updates Status of Exposure to Swissair Bankruptcy SAUSALITO, Calif--Willis LeaseFinance Corporation (Nasdaq:WLFC) and its affiliates, reported potential increased exposure resulting from the financial troubles of R Technics, a subsidiary of the bankrupt Swissair Group. SR Technics announced over the weekend that it is experiencing liquidity problems and will require additional funding very shortly to remain in operation as a result of the bankruptcy of Swissair, its primary customer. As reported earlier this month, WLFC is currently leasing five engines, valued at approximately $43 million, to SR Technics, a major maintenance and overhaul provider. "The engine leases with SR Technics account for approximately 9% of our revenues so far this year," said Charles F. Willis, President and CEO. SR Technics has asked for financial assistance from the Swiss government, regional authorities and commercial institutions currently working with its parent. "We are hopeful that efforts currently underway to find a solution to SR Technic's liquidity problems will ultimately be successful, but we cannot predict when and if this might happen or what form it might take. In a complex situation like this there can be no assurances that everything will proceed smoothly. Accordingly, it is impossible at this time to quantify the extent to which WLFC may be effected. It remains an evolving situation and we are monitoring it very closely," said Willis. Willis Lease Finance Corporation leases spare commercial aircraft engines, rotable parts and aircraft to commercial airlines, aircraft engine manufacturers and overhaul/repair facilities. These leasing activities are integrated with the purchase and resale of used and refurbished commercial aircraft engines. #### ######################### ####################### |
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