New Leadership at ELFA accepts Trebels as Member
New Leadership at ELFA accepts Trebels as Member
“In response to your query, Equipment Leasing Group of America is a member of ELFA,”
This started in June, 2010 when Mr. Trebels claimed to be a member of several groups, including being a Certified Leasing Professional on his LinkedIn profile. It was learned he was not a CLP, nor belonged to any groups, except at the time Equipment Leasing and Finance Association Chief Operating Officer Ralph Petta told Leasing News on June 9, “…this company has applied for membership. It is pending the normal approval process.”
Now under new leadership from William Sutton, President, Equipment Leasing Group of America is a member.
As stated in the previous article, “Here is the culture of leasing with a public person whose company is in bankruptcy, being sued businesswise and personally by several banks, individuals, vendors not paid, brokers not paid, disputes over residuals, security deposits spent and not held, action by the Federal Trade Commission, not counting a record number of Leasing News Bulletin Board Complaints.
“Yes, here is an industry that says it can regulate itself and has high ethics and ideals.”
ELFA Code of Fair Business Practice
"Aligned with the mission statement and objectives of the Association, the purpose of the Association Code of Fair Business Practices (the "Code") is to demonstrate to the public and business community the intent of its Members to establish and reinforce industry unifying principles for conduct and business practices that are of the highest level of ethics and professional service to customers and ensure compliance with applicable governmental rules and regulations...."
"Standard 1: Members shall conduct their business in a manner that reflects positively on themselves, their companies and the industry. Practices and actions shall be conducted with honesty, integrity and transparency.
William G. Sutton, President, Ret. Rear US Navy Admiral
ELFA Board of Directors:
IFC Credit and Rudy Trebels:
The Saga of Rudy Trebels Claiming to be a CLP
Classified Ads---Senior Management
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Involuntary Chapter 7 BK filed against Schwartz
Charles K. Schwartz, President of Allied Health Care Services, Orange, New Jersey, who's company on August 20, 2010 was forced into a involuntary Chapter 7 Bankruptcy, and who on September 17, 2010 was arrested by the Newark Division of the FBI on charges of $87 million fraud charges, now has an Involuntary Chapter 7 bankruptcy proceeding filed against him as an individual for $6,427,789 by Key Equipment Finance, Superior, Colorado, Kingsbridge Holding, Lake Forest, Illinois, Republic Bank, Oakbrook, Illinois, who where the three who field an Involuntary Bankruptcy Chapter 7 against Allied Health Care Services, Orange, New Jersey for $7,911,744.
Over 24 federal and state cases were filed against Allied and many included Schwartz as personal guarantor. De Lage Landen filed against Allied but not Schwartz, but also in Donner Medical, the supplier of the alleged non-existent equipment: LPV 102 medical respirators.
In the Chapter 7 Involuntary filing against Charles K. Schwartz, a motion was made to appoint a Trustee, filed by Nicola G. Suglia on behalf of Commonwealth Capital Corp. A hearing is scheduled for October 4, 2010 at 10:00 AM at MS - Courtroom 3A, Newark. Others have joined the motion.
The major difference between an involuntary and voluntary Chapter 7 is brought by the creditors and requires the debtor to liquidate assets to pay off the creditors ((other distinctions can be seen in footnote (1))
Other creditors are joining the latest action against Charles K. Schwartz as an individual. His alleged wife was not named in the filings. Reportedly when he signed the $15 million note with Sun National Bank, Vineland, New Jersey, and then reportedly collateralized it with his real estate and other assets, his personal residence was not included, according to an inside source.
His wife, said to be his third, according to a reliable source, also did not sign any lease or loan agreements and was not an officer of the corporation nor according to records, did not receive a salary from the company (several who visited the offices said she was present during the time they visited.) Whether the personal residence and wife's assets will remain protected is yet to be seen.
(In a side note to this story, according to a well informed source, while Schwartz was granted bail with $2 million in real estate as collateral and detention to his residence wearing an electronic monitor, he remains in jail as of September 25, 2010.)
The 2008 personal federal income tax returns were filed by Charles K. Schwartz and Laurie Ann Michaels. Perhaps as Charlie Chan would say, “Ah-So! You make numba one mistake:”
For the Federal Internal Revenue Service, Schwartz shows he made $861,031 wages from Allied and $597,524 profit from Schedule C “horse boarding” company called Sugar Mountain, LLC at 86 George Hill Road, Branchville, New Jersey 07826 ), seven rental property income and depreciation, and a schedule K income loss from Allied Health Care Services of $786,116.
New Jersey state income tax shows $11,868,022 in income for the taxable year.
One filing shows what he really made, the other after taking deductions on equipment that supposedly did not exist. While Charles K. went out of the way not to involve his alleged wife or “their” personal residence in the signing of notes or leases, Laurie Ann Michaels appears on the federal state income tax filed in 2008. This may or may not interest the FBI, but it mostly likely will be brought to the attention of the IRS.
The Involuntary Chapter 7 allows Leasing News to bring up the questioning of Schwartz’s personal tax returns, as Leasing News has copies of the 2007 and 2008 (IRS could not find a 2006). 2009 was not filed at the time.
Depreciation for 2008 was $1.8 Million:
March, 2010 comment:
March, 2010 comment:
Leasing News also has the Donner Medical Tax returns as part of assistance asked in understanding an application. In March, the same conclusion that the FBI made in its criminal complaint was realized comparing the Allied and Donner Medical tax returns:
"This verifies that this is nothing more than a shell corp. receiving a 3.19% commission for being the face of an invoice. ...I can then verify that he is using his own rebuilt full depreciated units. Conservatively there are about 2000 units in that group. He invoices Donner for 97% and Donner adds his commission so that the unit price is $5000. For each unit. Allied takes the profit for the “sale” to Donner. This accounts for the big profits on Allied’s P & L and ends the mystery of where they get the units. However, tax wise Allied is now in Recapture territory and any use of MACRS are out of the question."
As noted in earlier stories, several banks as well as Leasing News itself through a source verified the business and personal federal tax returns supplied with the various applications with the IRS.
They agreed, as did Sheldon Player’s at Equipment Acquisition Resources, where the bankruptcy trustee is after taxes paid on non-existent equipment. It may be completely different here, as Schwartz was able to write off quite a bit with his business and personal tax returns as evidenced by the 2008 federal income and state income taxes that he and Laurie Ann Michaels filed.
In the meantime, the many lawsuits have been advised of the Involuntary Chapter 7 (Including De Lage Landen, the only one so far who has named Bruce Donner and his company, Donner Medical, the supplier of the equipment and also appearing to be the main witness to the alleged fraud, according to the criminal complaint filed by the FBI.)
(1) Definition United States Court Involuntary Chapter 7
Chapter 7 Involuntary Bankruptcy filing:
AtHome Appointed to take over Allied HIPPA Accounts
The Allied Health Care Service, Inc. Involuntary Chapter 7 Bankruptcy proceedings has moved into the phase of declaring AtHome Medical to maintain and service the "equipment" at $5,000 a month, as well as having "...the authorization to bill customers or their insurance providers for use of the equipment during said interim period."
While the FBI alleges $87 million in non-existing equipment, there is equipment as noted by lease inspections, although not at the customer’s location, as well as employees who are maintaining units. Reportedly patients are required to have two units, one as a "back-up" and more serious patients, three, one for when service is needed, usually every nine months.
During the course of discovery of Allied by Leasing News, bankers could not believe what Leasing News was reporting:
"I went out to New Jersey a couple of summers ago to do a site visit and meet Chuck. There is definitely a business there. He gets reviewed statements from a fairly large accounting firm in New York. According to the statements, he has been highly profitable over the last 5 years or more. "
"I have talked to Allied’s accountant this morning. He confirmed that there are no business personal properties taxes in New Jersey (or New York. editor) and that about five years ago they began treating all leases at Allied as Capital Leases (not according to his 2008 federal tax return. editor.) He also was surprised and indicated that at least two banks have done field audits of the company and that they have seen evidence of insurance payments coming into the accounts not just income from leases. You indicated that Sheldon Player had audited statements, but they were from “Joe’s” accounting. The firm, Friedman LLP, providing the statements for Allied is in the top 20 firms in NYC area."
The president of a regional bank who was so alarmed by Leasing News original reports, decided to personally visit Allied in March of this year, to do a personal audit, and told Leasing News by email after the visit:
"Eobs and checks didn't have serial numbers (and wouldn't). Saw all deposits for 4 month period (bank statements) and a large number of the EOBs/check stubs from that period. Deposit dollars were consistent with a $40+ million revenue company and were from all the big insurance companies as well as Medicaid Medicare. Spoke with 10 or more different employees in two offices, some of whom have worked there 30 years. Everyone had a consistent story.
"I'm still researching the equipment end. The machines look newer and more modern in person than on net. Lifecare was purchased by Respironics which was purchased by Phillips, who reportedly still makes them. Have a hospital exec we know checking that end.
"Again, I'm not saying that it's not possible that there is a fraud on top of the regular business, but they would have to be frauding the insurance companies too. I feel much better after seeing what I saw. "
How this affects the employees and their large pension fund, let alone employment, as it appears AtHome is now taking over the responsibilities, is not known at this time.
Perhaps the best reaction on Charles Schwartz being arrested for the alleged $87 million fraud by the FBI comes from Daniel G. Flagstad, Co-Chief Executive Officer, Kingsbridge Holdings, LLC, Lake Forest, Illinois, who's bank was one of the three to file against Allied as a corporation and against Schwartz as an individual.
Corporation 7 appointment of AtHome:
2010 NAELB Eastern Regional Meeting Atlanta, Georgia
The conference was attended by approximately 80 to 90, I don't have a final count but the attendance was a little lighter than last year. The bright spots, we had more funders in attendance and that is a positive sign. The brokers in attendance were mostly veterans who seem serious about the industry and forging stronger relationships with our funders.
Like other groups the our attendance is down because of the economy and there is positive dialogue without funding sources to aid the broker community both with better dialogue with the membership and incentives to attend the conferences for all the associations as they need the contact and relationship.
Several of the attending brokers added their sources to the Broker Exchange and the webpage will be updated this week.
As a whole it was a positive experience for all and the end was a broker funder session which was an excellent exchange of ideas. I think some of the ideas presented will increase the attendance at the Western Conference in Costa Mesa. Stay tuned as we work with the sponsors.
November 12-13, 2010
To make hotel reservations by phone - Contact (714) 540-7000 or (714) 438-4923
Top Stories---September 15--17
Here are the top ten stories opened by readers:
(1) Russ Hindin Passes Away
(2) Is Rudy Trebels a member of ELFA?
(3) First Federal Financial Services is “in business”
(4) Leasing Companies Out of Broker/Discounting Business
(Tie) (5) Funder/Superbroker Looking for New Broker Business
(Tie) (5) Sales makes it Happen---by Kit Menkin
(6) Leasing Companies Report "Uncertainty" to ELFF
(7) Top 10 Best Small Cities for Business and Career
(8) August Leasing Business "half full"
(9) Leasing 102 by Mr. Terry Winders, CLP
(10) The Famous Leasing News “The List” ---August
Leasing Industry Help Wanted
Please see our Job Wanted section for possible new employees.
Leasing Document Closing Procedure
What do you say to a lessee when they sign the lease? In other words what do you highlight about their obligations when you know they have not completely read the lease agreement?
Do you just say thanks and beat a hasty retreat.
Proper closing procedures are the most important training a leasing company can give its sales staff and the one most often ignored.
In today’s world of confusing lease agreements the courts are beginning to make the presenter of the contract responsible to explain the nature of the lessee’s commitment prior to their placing a signature on the agreement.
Many lessees are asked to just sign here and there, and don’t even get a contract until signed by the lessor; while some may make a photocopy, and it is recommended this be the procedure, the contract often requires the signature at the lessor’s place of business.
Ignorance has become a justifiable defense in court when a small business is unable to understand your agreement and the lessee thinks they have signed a fancy loan document. This is happening more often when the entity is a proprietorship, partnership, or small individual corporation. Courts are viewing more and more documents in the consumer phase of law rather than commercial.
In addition, the economy has seen more than a few vendors and lease salespeople who have misrepresented the true meaning of a fair market value lease or the correct tax position of a bargain purchase option lease.
There is a correct way to close a lease.
The things that need to be explained at closing are the non-cancelable clause, the insurance requirements, the requirement to maintain the equipment and return it in good shape, and the options at lease termination.
You might expect the signer to already know about making lease payments on time but in today’s world of changing grace periods the late charge issue needs to be explained, especially if you have raised your late charge above the standard of 5% or have eliminated your grace period prior to assessing a late charge.
If you have a 90 day notice period prior to termination, you need to explain the consequences for failure to do so. These may seem like small issues but covering them upfront can most of the time eliminate harsh emotions from your lessee due to misunderstandings. It seems strange when the Lessor is a bank but that is where the most misunderstandings occur and where the lessee’s goodwill is most cherished.
You might also explain the billing procedure, invoicing or ACH and always obtain the name of the person that makes the payments to avoid sending the invoice to the wrong person and delaying payments. Also it is smart to send a completed copy of the lease documents to the lessee after the Lessor has signed them with a return receipt requested. Even UPS or next day Federal Express (talk to your attorney about this. ) Many times in court the lessee’s have complained that they never received a completed copy of the signed documents thereby questioning uncompleted blanks in their copies.
How many complaints have you seen in Leasing News where the lessee claims they never got a copy back of the “real” purchase option they received.
As important, a lessee should never, never, never be asked to sign lease documents with blanks not filled in. It makes the contract unenforceable. Don’t have them sign the “acceptance form” in advance. You will have the whole contract thrown out of court if that is discovered.
I bet many salespersons do not read out loud the following statement placed just above the signature line and then ask them to initial it:
“Lessee acknowledges that it has received a copy of this document as executed by Lessee, with all blanks completed. Lessee acknowledges that it (a) has READ THIS DOCUMENT, HAS CAUSED THIS DOCUMENT TO BE EXAMINED BY LESSEE'S REPRESENTATIVES OR ADVISORS; (b) is thoroughly familiar with the transactions contemplated in this document; and (c) together with Lessee's representatives or advisors, if any, has had the opportunity to ask such questions of representatives of Lessor, and receive answers thereto, concerning the terms and conditions of the transactions contemplated in this document as Lessee deems necessary in connection with Lessee's decision to enter into the Lease, this Schedule, and any other schedules and/or supplements.”
You company should not overlook the fundamental of having the contract explained to the lessee upon its signing.
Mr. Terry Winders, CLP, has been a teacher, consultant, expert witness for the leasing industry for thirty years and can be reached at firstname.lastname@example.org or 502-649-0448
He invites your questions and queries.
Previous #102 Columns:
(This ad is a “trade” for the writing of this column. Opinions
As predicted, the small banks in the State of Washington were in significant troubles, primarily due to overexpansion, loans in construction and land development. The 127th bank to fail, the ninth in the State of Washington, is North County Bank, Arlington.
The four branches with 45 full time employees were closed with Whidbey Island Bank, Coupeville, Washington, to assume all of the deposits. Branches were located in Arlington, Lake Stevens, Marysville, and Snohomish. The acquisition expands Whidbey Island Bank's operations to 30 full-service branches located in six counties in Northwestern Washington.
As of June 30, 2010, North County Bank had approximately $288.8 million in total assets and $276.1 million in total deposits. Whidbey Island Bank will pay the FDIC a premium of 2.0 percent to assume all of the deposits of North County Bank. In addition to assuming all of the deposits of the failed bank, Whidbey Island Bank agreed to purchase essentially all of the assets.
The bank was founded on April Fools Day, 1999. Net equity dropped almost in half from June 30, 2009 to 2010: $25.8 million to $12 million while non-current loans jumped in the same period from $27.8 million to $45.3 million.
May 11,2010 the FDIC issued a "Prompt Corrective Action Directive" and then declaring on June 14,2010 basically declaring the bank was undercapitalized and noted a deteriorating situation and inability of directors and bank officers to turn it around," making several restrictive directives. The writing was on the wall. Current investors were looking at losing it all, and new investors appeared quite apprehensive.
The bank had lost $350,000 June 30, 2009 but found a loss of $2.9 million June 30, 2010 following charge offs of $4.4 million in construction and land development, $915,000 in loans secured by nonfarm nonresidential property and $385,000 in loans to individuals. Tier 1 risk-based capital ratio 3.00%.
The FDIC and Whidbey Island Bank entered into a loss-share transaction on $221.9 million of North County Bank's assets. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $72.8 million.
The two branches of Haven Trust Bank Florida, Ponte Vedra Beach, Florida were closed with First Southern Bank, Boca Raton, Florida, to assume all of the deposits. The bank established August 26, 2006 was the 24th to fail in Florida this year. It had a branch in Ponte Vedre Beach and Saint Augustine.
Five of the eleven founders also held management or board positions at Haven Trust Bank, Duluth, Georgia, although not related by charter, the Georgia bank was closed December 12, 2008. Both banks sought brokered deposits at high rates and reportedly marketed primarily Indian and Middle East small business owners.
First Southern Bank has five banking locations: one in North Palm Beach and one each in East and West Boca Raton in Palm Beach County, and one each in Coral Springs and Fort Lauderdale in Broward County. J. Herbert Boydstun, chairman and CEO of First Southern Bank believes: “Through its expansion into Ponte Vedra Beach and St. Augustine, First Southern Bank is ideally positioned in a region of the state with a significant concentration of the small businesses and entrepreneurs expected to drive the local and statewide Florida economies going forward."
As of June 30, 2010, Haven Trust Bank Florida had approximately $148.6 million in total assets and $133.6 million in total deposits. In a year from June 30, 2009 it had 21 full time employees to 17 full time employees June 30, 2010 and within the same time period bank equity had gone from $10.3 million to $3.3 million with $18.7 million in non-current loans, with the previous year loss in the same period of $7.1 million to a loss of $3.2 million June 30, 2010 following a charge off of $1.4 million in loans secured by nonfarm nonresidential property and $1.1 million in construction and land development. Tier 1 risk-based capital ratio 2.47%.
The FDIC and First Southern Bank entered into a loss-share transaction on $127.3 million of Haven Trust Bank Florida's assets.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $31.9 million.
List of Bank Failures
Atlanta, Georgia ---Adopt a Dog
"BIO: Buster Brown is a 6 year old purebred male golden retriever. He was surrendered by his family who dearly loved him but had to find a better home for him. Due to the family having to move in with relatives and Buster Brown living outside except if it rained, they knew he deserved a better life. Buster loves children having lived with various ages 13, 9 year old twins and a 10 month old baby. He loves other dogs as long as they are not mean to him! He is indifferent to cats, can take them or leave them. Buster is a big love bug who could stand to loses a few pounds so we know he did not miss any meals at his former home. Buster would love an active family with kids who will spoil him rotten."
Application and procedure:
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Adopt a Pet
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Head of failed mortgage firm gets nearly 20 years in plea deal
iPhone 4 Orders Exceed 200, 000 In China
Tax break for self-employed
In Week 3, the Cowboys Finally Get It Together
Falcons just turned into team we expected last season
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Janikowski misses last-second FG, Raiders lose 24-23
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Patriots survive shootout with Bills
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$4k worth of grapes stolen from Red Mt. vineyard, Washington
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This Day in American History
1514- The Spanish crown granted explorer Juan Ponce de Leon the title Military Governor of Bimini (an island in the Bahamas) and Florida. With this title and the implied permission it contained to colonize those regions, Ponce de Leon sailed for Florida in 1521.
Slowly as in an underwater dance
As the ball leaves his hand, the action stops —
of sadness or longing we sometimes feel
Written by Conrad Hilberry, published in
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