Kit Menkin's Leasing News

      Thursday, September 19, 2002

  Accurate, fair and unbiased news for the equipment Leasing Industry

     Wednesday’s Leasing News posted  at 1:15pm PDT




    e-Mail Removal Form:  \



Pictures from the Past


Matt Shieman, President

Matsco Financial Group

Emeryville, California





Help Wanted ads


Classified Ads:


Credit:Atlanta,Irvine, Portland, Scottsdale-.     "UAEL"

 Please e-mail Resume to: including salary range, industry strengths, and desired location


Credit: Tustin, CA        "UAEL"

Credit/Documentation: Tustin Calif. Looking for credit and documentation person. Full or par- time available. Will train. Contact Barbara 714- 573-9804 or Email


Credit: New York, CT      "ELA" 

Looking for Credit people who are willing to relocate for the right position. We have different opportunities for each skill set.



Customer Service: Marshall, MN   "UAEL"

New Customer Service Management position to supervise a team of representatives regarding current accounts and invoicing questions. Ensures correspondence handled efficiently and in timely manner.


Documentation:Atlanta,Irvine, Portland, Scottsdale-.     "UAEL"

-Please e-mail Resume to: including salary range, industry strengths, and desired location


Funding: Atlanta,Irvine, Portland, Scottsdale-   . "UAEL"

Please e-mail Resume to: including salary range, industry strengths, and desired location






Alert--Hiram Communications-- Alert

    Top Reasons to Lease Study

      CIT Group Financials

         "Top Gun" Eric Sidebotham

           News Stories we are working on---

 eLNA Drops The "e"- The Lessors Networking Association

  Explosion in Refinancing Leaves Lenders Swamped

   Banks call neighbors to locate debtors--Wells Fargo

     Reaction to "I Regret Sitting for the CLP Exam Next Month"

       CVB Financial Announces 52nd Consecutive Cash Dividend

         Kozlowski Can't Make Bail???? Sell One of Your Van Gogh's

          Amtrak Chief Proposes More Cuts---Truckers Happy!

             News Briefs---



    Silicon Valley Security Expert & CEO Says Government Can Secure Internet



### Denotes Press Release




Alert--Hiram Communications--- Alert


Please advise all Leasing Companies to beware of a vendor who goes by the name of "Hiram Communications".  Address is: 6217 St Clair Avenue

                 Cleveland, OH  44103

                 ph: 216/426-9100


There is no such vendor and they are using cell phones to operate a phony business.  The applications submitted have phone numbers that refer you to a cell phone voice mail.  We even caught the guy pretending to be a bank for a bank reference by answering his cell phone in his car as Dollar Bank in Cleveland. Another app received had a Sterling Bank listed as a bank reference.  When called it was of course a cell phone and some guy named Brian answered the phone as Sterling Auto Sales. 

The supposed sales manager/owner is someone named Mike (no last name). 

Hiram Communications e-mail address is :


Recommend all small ticket lenders beware of this vendor.


( Name With Held )





Top Reasons to Lease Study


In Case You Missed this Free Report---Excellent say our readers:




CIT Group Financials

$1,993,500,000 Loss


Stock Report:




  "Top Gun" Eric Sidebotham




  Eric with his daughter Riley, 1 ½ years old at the time the picture

   was taken. She is two years old today.



                               Eric Sidebotham:


I'm a Southern California native and attended California State Long Beach,

graduating with a degree in Business Finance in June of 1992.  Upon

graduation, I made contact with Balboa Capital via an on-campus interview.

That was the beginning of my career in equipment leasing that now spans ten



Specific to Balboa Capital, I was hired as an account executive and

completed a comprehensive sales training program.  In the beginning, my

compensation was comprised of a modest base salary and a commission program

that increased progressively based on performance. 


During my tenure at Balboa Capital, I set company records for gross margin

production, residual income, and customer satisfaction.  I wrote over 2,000

individual leases personally and my personal income grew well into the

six-figure range.   As would be expected, this income was derived

principally from commissions paid upfront on commenced lease transactions

and on realized residual income. 


In April of 2000, I realized a lifetime goal of becoming a small business

owner when I started Genesis Commercial Capital with two partners.  Despite

the recent challenges of the equipment leasing industry and the U.S.

economy, we've built a consistently profitable business with 15 total

employees and a bright future.  As a partner at Genesis Commercial Capital,

I remain actively involved in selling small ticket leases.  Additionally, I

am the acting sales manager and get involved with all business matters, no

matter how big or small.  My compensation is now completely dependent on the

profitability of Genesis Commercial Capital.


Eric Sidebotham




Joining Eric will be:


Jim Raeder

Ignacio Sanchez

Richard Shapiro

Tony Sherwin



     October 5, 2002  San Diego United Association of Equipment Leasing

             Annual Conference and Exhibition  "Top Gun"


             45 Exhibitors---Including Larry Grant at Transportation Alliance Bank

                (This fellow is hot!!!)


 Leasing News will present two workshops

 9:45am  "Top Gun Salespeople"

11:00am "Tom Gun " Sales Managers


"Top Gun" Salesmen continually earn over $250,000 a year, according to

their W2. Get a clear picture of how they got started, what

propels them each step of the way to becoming a "partner" and

also earning the profits and net worth of the company.  What makes

them different, how do they approach sales,  none have appeared

in a conference workshop before.



News Stories we are working on:


MSM Capital, Irvine, CA

   93  page bankruptcy filing lists $1.25 million owed to creditors for deposits.

Are these “Advance Rentals” or “Security Deposits.”   MSM Capital

was not returning Advance Rentals for over a year, according to complaints

Leasing News received.  Also the reason for their demise: earnings.  The

BK filings signed by president Mike Cingari speaks for itself; no defense.

for not paying personal property taxes, employees, funding sources, and

keeping advance rentals for over a year.



American Medical Capital, Southern California,

Looks like Tony Rico not only stiffed brokers, vendors, but received over

$1.4 million in fundings that “disappeared.”  Creditors include Sovereign,

Heartland, Citicorp. We are trying to get statements. So far they aren’t talking.



In up-dating our “eLease” section, there are four companies having

major cash flow problems. One barely made it through June, and

needed the new funding.  Two have recently changed their name and

direction, for good reason ( lack of income), another with “finance” in its

name is reportedly having some real serious problems, one major software

company who changed presidents this year may be going under sooner

than they expect, and as we try to get some confirmations, we will be

up-dating this section.   Two years ago there were almost three

dozen. We haven’t been putting them on the list as we have been

only mentioning leasing companies. We hope to beat one with their “press release” announcement. Direct from “insiders” worried about their next job—not gossip.


Several superbrokers are not returning advance rentals, telling the applicants

they don’t have the money---they spent it.  We are about to break news with

two of them, maybe this week. Times are getting tougher and more and more

brokers/superbrokers are getting “desperate.”


We get hackers. We get listed as Spam.  Companies don’t like

us telling the truth or “making” super brokers and lessors return

advance rentals or being listed on our Alert or Bulletin Board.

We are up, then down, but you can always read Kit Menkin’s Leasing News at We post Monday through Friday ( except for Holidays).


We hope to move to a Unix Sun Cobalt computer with new software, under

its third day of testing before we migrate. 


If e-mail comes back, or I don’t respond, you can always reach me at

(since AOL first started 1989 or 1990, always there; reliable.)  I prefer as I don’t use the instant messenger and may not

check messages until at home.




### ######################################################


eLNA Drops The "e"- The Lessors Networking Association


 (Network Newswire) Atlanta, GA -, Inc. has completed the merger between the eLessors Networking Association (eLNA) and The Lessors Network. Effective immediately, the eLessors Networking Association has changed its name to the Lessors Networking Association (LNA) to more accurately reflect the networking culture of its membership, programs and events. (Another example of the demise of eLease

companies.Editor )


The Lessors Network is an equipment leasing portal, facilitating free access to news, information, products and services from different Internet sources. The Lessors Network web site has been rated as one of the most highly trafficked equipment leasing sites on the Internet and is expected to provide LNA members extraordinary exposure and access to a global audience., Inc. is now accepting bids for the URL,


About The Lessors Networking Association (LNA)


The Lessors Networking Association (LNA), the only industry association to actually limit membership and event attendance, represents an elite group of senior business executives from the equipment leasing and technology business sectors.


(It also is the only “privately owned and operated” network association. Editor)


############## #############################################



Explosion in Refinancing Leaves Lenders Swamped


By Sandra Fleishman


Washington Post Staff Writer


It's official: America is in the middle of the biggest mortgage-refinancing wave ever.


Driven by record-low interest rates, an "unprecedented" number of people have applied to refinance during the past eight weeks, the Mortgage Bankers Association of America said yesterday.


The "massive wave" of applicants "now surpasses the refinance wave that we experienced last October and November," the time of the previous high, said Phil Colling, an economist with the association.


The boom is saving homeowners money but stretching the resources of the lending industry and such related industries as appraisers, title companies, surveyors and even messenger services.


Some homeowners looking for loans complain of not getting calls returned. Bankers, brokers, title firms and surveyors say they are doing their best, working longer hours and adding temporary staff.


Surveys by the mortgage bankers and other groups that follow the lending industry have found rates at or near 40-year lows for several weeks, with 30-year loans available for around 6 percent. A tenth of a percentage point shift in the interest rate on a $100,000, 30-year loan means a difference of about $7 a month in the payment.


"We're definitely stretched," said Charles N. Vance, area manager for Wells Fargo Home Mortgage Inc., which is tied with Washington Mutual Inc. as the nation's biggest originator of home loans.


"Everything in the whole industry is backed up," said Jonathan Levy, vice president of Professionals Title & Escrow Co., based in Rockville.


While most firms are trying to hire and train new workers, industry players said they are benefiting this go-round from advances in computer technology that speed up processing and approval.


"In some cases, you can get an approval right off the laptop," Vance said.


New loan programs also allow borrowers to skip some steps in the refinancing process.


For instance, if existing Wells Fargo customers have good credit and want to refinance without taking out any cash, many are eligible for a "TimeSaver Refi," which does not require an appraisal or a full credit check.


The mortgage bankers group expresses the number of refinance applications as an index, rather than as a raw number. The group reported yesterday that the refinance index for the week ended Sept. 13 was above 4,000 for the eighth consecutive week.


That's the same number of weeks as during last fall's record boom. But the index this time has exceeded 5,000 for six of the last eight weeks and went above 6,000 two weeks ago.


In 2001, the index exceeded 5,000 only three times. (The index and the group's other loan-application indexes equaled 100 in March 1990.)


Mortgage industry players say one difference in this boom is that borrowers have jumped back into line again and again as interest rates have dropped because of the availability of "no cost" loans.


"Several borrowers have been back to me seven times over the last two years to refinance because they are in programs where the lender is paying for it all," Levy said.


Demand is so high, he said, that settlements are being held all month. In the past, borrowers tried to close near the end of the month to save on interest. Levy's Rockville branch is doing 10 to 20 closings a day.


The good times for borrowers will continue as long as the economy remains sluggish and there are no signs of inflation, Colling said.


Even if interest rates go lower, he said, he doesn't see how loan applications could increase, "because there are just so many applications that companies can take."


He added, "There are only 24 hours in a day, there are only so many people taking applications out there, and companies can only hire so many temporary people to help."


Bureau of Labor Statistics data show dramatic growth in the mortgage banking and brokerage industry. Preliminary estimates for August show 377,000 employees -- about 2,000 more than estimated for July and 17,000 more than in April. A year ago, the total was 335,500.




Banks call neighbors to locate debtors


Concord woman files a police complaint about the action by Wells Fargo


By Janet Adamy



Sally Johnson thought the call she got from Wells Fargo last month was a hoax.


After confirming that Johnson lived next door to one of the bank's customers, a Wells Fargo

representative politely asked her to ask her neighbor to call the bank. The representative wouldn't say why -- just that the matter was urgent and private.


Johnson refused. Suspicious that the caller wasn't really from Wells Fargo, she called the bank's main toll-free number. Even the person who handled her call didn't think Wells Fargo would do something like that, Johnson said.


But the call turned out to be legitimate. The practice is a standard way of tracking down elusive debtors that Wells Fargo, Bank of America and independent debt collection agencies have used for several years.


The banks say they enlist neighbors as a last resort when they can't contact customers who are not paying their bills. They stress that they don't tell the neighbor they're calling about bill collection because that is prohibited by federal and state law.


But Johnson and privacy advocates say the calls are an infringement on both parties' privacy, as well as an unfair imposition on neighbors.


"I think they were trying to get me to work for them without being paid," said Johnson, a Concord resident. "I shouldn't be knowing that the Wells Fargo bank wants to talk to these people."


Even though the Wells Fargo caller insisted he wasn't a bill collector, the call made Johnson wonder whether her neighbors had debt problems.


One consumer advocate questions whether calling neighbors falls within the scope of federal and state laws that govern bill collection. Under the Fair Debt Collection Practices Act, bill collectors are allowed to call a third party to confirm or correct the debtor's location.


"I don't think going over to give you a message fits that rule," said Linda Sherry, a spokesperson for Consumer Action, a San Francisco-based consumer advocacy group. The federal act -- it mirrors state laws governing debt collection -- doesn't directly address having a neighbor relay a message from a collector.


But Ron Sargis, legal counsel for the California Association of Collectors, said that as long as the collector is using the neighbor to help locate the debtor -- perhaps the customer isn't responding to letters -- it stays within the scope of the law.


Enlisting third parties to be "junior debt collection agents," however, probably falls on the wrong side of that act, he said.


Calling neighbors is not something that banks and collection agencies do often. Sargis estimate that only about 2 percent to 3 percent of collection accounts necessitate a call to a neighbor. But with 54 million accounts assigned to debt collection in California annually, according to Sargis' research, that's about 1 million neighbor calls each year.


Part of the reason collectors seldom use the tactic is because it costs money to find and call neighbors.


The banks would not detail how they find neighbors, but consumer advocates say they probably use reverse directories that organize phone numbers by address or information brokers that private investigators and attorneys use to find people.


Wells Fargo said it only uses databases of public information.


The banks would not detail what the threshold is for resorting to a neighbor call. They did say they don't do it often.


Not all banks do this. Washington Mutual doesn't ask neighbors to relay messages, a spokesman said. And Citibank said it only asks neighbors to verify the customer's address and phone number, but doesn't ask them to deliver messages, a spokesman said.


Debt collection isn't the only time banks rely on neighbors to find their customers. A Wells Fargo representative said the bank may use it to find a person who has received an inheritance.


"It's kind of similar to if you've got a FedEx delivered and you're not home," said Wells Fargo spokeswoman Donna Uchida. "Sometimes they leave it with a neighbor."


Wells Fargo and BofA would not give details on how effective the neighbor calls are. They also offered few specifics on the number of complaints they generate. A Wells Fargo spokesman said that information is proprietary, but that Johnson's complaint was the first he was aware of.


A BofA spokeswoman said the department that handles the practice doesn't track complaints, but that she suspected neighbors may not be happy about getting the calls.


Johnson was so upset when Wells Fargo called her that she filed a complaint with the Concord police alleging the bank invaded her privacy. And she doesn't understand why Wells Fargo couldn't use one of its own workers to pass the message along. There's a bank branch located one-quarter mile from her home.


"They're all over the place," she said.




Reaction to Jeff Taylor:


" I Regret Sitting for the CLP Exam Next Month"


   from the $4,000 a Day Lease Trainer Popular Newsletter

“Lease Training for the Leasing Professionals”



Jeffrey, I received your newsletter this morning. I enjoy receiving it and

 find it informative and  very worthwhile publication. As the current

 President of the CLP Board of Directors, I took an exceptional interest in

 your article on the CLP program and feel compelled to make a few comments.

 How can you regret something you've yet to experience? The Lease

 Professionals Handbook is only one source of information. One of the

 problems the Foundation faces is the "fear factor" of taking the test and

 your article feeds that mentality. We openly admit that the test and the

 educational material is outdated and needs to be improved. We are not

 perfect in any way but it is the start of something good which I and many

 feel strongly committed to. A major task of the Foundation is underway in

 re-writing the test. We are currently gathering all the lease education

 material we can for our "library" so the Foundation can be a more complete

 reference source. We would be extremely fortunate to have you be a part of

 the test re-write project and invite your participation. In many

 conversations over the years with ELA, their position has been "when the

 program becomes accepted by more people and the industry, we will become

 involved". There are many people working hard on that effort. We look

 forward to you being a Certified Lease Professional and thank you for your

 support. Coincidentally, I also received an email this morning from Cliff

 McKensie on the CLP program. Please note his message.


 James R. Lahti, CLP

 Affiliated Corporate Services, Inc.

 1550 Waters Ridge Road, Lewisville, TX 75057

 972-221-7335, Fax: 972-221-7336


 Austin Area Office: 10804 Ridgeway, Suite 100, Jonestown, TX 78645

 512-267-5445, Fax: 512-267-5443



 From: "Cliff E. McKenzie, CLP" <>

 To: "'Jim Lahti'" <>; <>




 Thank you for your time in getting the meeting set up.


 In regards to CLP, I would like to share:


 Certified Leasing Professional (CLP) is the only title in the entire

industry of finance that recognizes those few people who have strived to

be  the best in the leasing industry.


 As the head of a FinanciaLogic, Inc. a company that sets atop 4 major

credit arms/financial relationships, it is important that those major companies

 believe that they have hired the best person possible to lead their sales

 effort and be entrusted with the greatest asset - their customer base.

The CLP provides that certification.


 In addition to FinanciaLogic, I also lead FinanciaLogic Consulting

Services, Inc..  This company provides expert review and testimony as to what is and

 what is not a lease.  These services usually terminate with depositions

and  trial.  As a CLP, the courts consider me an expert in my field.


 The question I would ask anyone in our industry that does not have the CLP

 is simple.  In competition, will the prospect believe you have all the

same talents as someone who has been certified?


 Passing thought, is your accountant a CPA?


 Thank you for your work on CLP program,





I think that my friend Jeff Taylor is getting pre-examination

jitters, just as every taker of the CLP examination has gotten.  In the

two years that the CLP Foundation has been in existence much has been

accomplished by many dedicated volunteers.   We are in the process of

updating the examination, we are looking into an updated and modular

study guide and we are formulating new education programs.    I really

do not believe that Jeff is sorry he is taking the exam.  I do know that

he will feel better after he has completed it.  The major reason that

potential candidates do not follow through and sit for the CLP exam is

fear, fear of taking the test, fear of failing and fear of the resulting

embarrassment.  The examination has been and will continue to be a full

day affair is to test the candidate's ability to react under time

pressure, the same pressure that is felt meeting with a customer to

close a transaction and being asked to explain the lease terms, tax and

accounting consequences and payment calculations.  Those candidates who

do not pass are more prepared and usually do much better the second time

around.  The CLP Foundation offers a mentor program whereby a candidate

can take the examination confidentially with the assistance of a mentor.

We do not think CLP is for everyone, just those who are proud of their

achievements in the leasing industry, interested in furthering their

education and those who want to be recognized for the excellence that

the CLP confers.   


Steven B. Geller, CLP

Leasing Solutions LLC

20 Dike Drive

Wesley Hills, New York 10952


fax 845-354-2803

cell 914-552-0842







As a former CLP (I am no longer in the leasing industry) I was interested by

your article.  When the CLP exam was first instituted by WAEL, I felt

privileged to have been qualified to sit for the first battery of exams and

was among the first eight CLPs so designated.  It feels like that was back

in 1890, though I think it was actually 1980.  I remember acing the

selection on lease law and collections as I actually wrote that part of it.

The following year, those of us who passed the exam were asked by WAEL to

conduct workshops on various topics and to assist in re-writing the exam.

Jeff Wong and I worked on the sections mentioned above.


Back then I wore my CLP designation on my sleeve (at first figuratively, and

then literally after Ken Goodman had cufflinks designed for us).  I

participated on the CLP committee and eventually made a contribution to the

Leasing Professional's Handbook (first addition, so I don't know if my

chapter is still in the current edition.)  For years the designation meant

little to any except those who either held it or those who desired it.  It

was very ego-satisfying.


Today there are many more than eight CLPs, many of whom include my old

cronies and most of whom are very active in the industry.  I had hoped the

designation would have come to mean something, but from the sound of your

letter, I'm not sure it tests much more than one's ability to recall various

facts, and many of those having less meaning and being less topical.  Still,

I wish you the best of luck in taking the exam.  I believe that in order for

some things to evolve, they require the assistance of those who have vision,

and they are often the ones who can say, "This cow is not sacred.  I can

change it."  As a CLP, you can help make the designation more meaningful.  I

believe that people who care about their profession should be as active in

that profession as they can afford to be.   I receive your newsletter and I

know (aside from the money incentive) people train other people because they

are passionate about what they do.  I believe you are that kind of a person.


As a recruiter working in the financial arena, designations make a

difference.  When I introduce a candidate with a designation, whether it's a

CLP, a CPA, a CMA, a CFA, or any of several others that apply to their

trade, I tell them to wear that badge proudly.  So long as it has not been

smeared, it is a major accomplishment, if for no other reason than to show

that we can deal with the pressure of sitting through a tough exam long

after we though we'd taken our last.


Good luck,


Hal Horowitz



To learn more about the CLP Foundation, please go here:





CVB Financial Corp. Announces 52nd Consecutive Cash Dividend


( Golden West Financial is a specialty finance company, which provides auto leasing, equipment leasing and real estate loan brokerage services.)


ONTARIO, Calif.--CVB Financial Corp. (Nasdaq:CVBF) announced a fourteen-cent ($0.14) per share dividend for the third quarter of 2002.


The dividend was approved at the regularly scheduled board of directors meeting on Sept. 18, 2002. It will be payable on Oct. 17, 2002, to shareholders of record as of Oct. 2, 2002.


"This is our 52nd consecutive quarterly cash dividend. It reflects the continued superior performance of CVB Financial Corp.," stated D. Linn Wiley, president and chief executive officer of CVB Financial and Citizens Business Bank. "We are pleased to be able to provide our shareholders with this cash return on their investment."


CVB Financial, with $2.8 billion in assets, operates Citizens Business Bank, the largest bank with headquarters in the Southern California Inland Empire region. The bank's Wealth Management Group based in Pasadena, Calif. has nearly $1 billion in assets under administration.


The company recently completed the acquisition of Western Security Bank and the acquisition of Golden West Financial Services. Western Security Bank was a single unit bank located in the Toluca Lake area of Burbank, Calif. They had $149.2 million in total assets, $138.6 million in deposits and $95.4 million in loans at the time the transaction was completed on June 28, 2002. Golden West Financial is a specialty finance company, which provides auto leasing, equipment leasing and real estate loan brokerage services.


Citizens Business Bank specializes in serving business and professional clientele through 32 business financial centers in 25 cities in the Inland Empire, Los Angeles County, Orange County and the Central Valley areas of California.


Shares of CVB Financial common stock are listed on the Nasdaq under the ticker symbol of CVBF. For more information, visit the company's Web site at




CVB Financial Corp., Ontario


D. Linn Wiley, 909/980-4030


SOURCE: CVB Financial Corp.


############# ############################################# 



Kozlowski Can't Make Bail???? Sell One of Your Van Gogh’s


AOL News Wire


(Sept. 18) - Former Tyco International chief executive L. Dennis Kozlowski, who allegedly used company funds to buy a $15,000 umbrella stand and a $17,100 traveling toilette box, cannot make bail and could be sent to jail Thursday.


Kozlowski was indicted last week for massive fraud. His lawyers told Manhattan Supreme Court Judge Michael Obus that Kozlowski is flat broke and cannot access bank accounts because they are frozen.


Earlier, Tyco revealed it paid for a $6,000 shower curtain, a $2,200 wastebasket and many other expensive items for Kozlowski's New York City apartment.


Tyco accused Kozlowski of recklessly tapping company funds, including more than $1 million for his wife's birthday party in Sardinia last year. The event's planners called for gladiators and an ice sculpture of Michelangelo's David with vodka streaming from his penis into crystal glasses, according to Tyco's filing.


Other unauthorized expenses Kozlowski allegedly incurred include a $6,300 sewing basket, a $445 pin cushion, a $1,650 notebook and $5,960 for sheets.


At last week's arraignment, the judge released Kozlowski on a $100 million personal recognizance bond that was to be secured by $10 million in personal assets. Tyco's former chief financial officer, Mark Swartz, was released on a $50 million bond, secured by $5 million in personal funds.


Lawyers for Swartz also said he couldn't make bail.


Both men were ordered to come up with the necessary funds today or face time at Riker's Island, one of the nation's toughest jails. The island near LaGuardia Airport in the East River is the largest U.S. penal colony.


Kozlowski's lawyer Stephen Kaufman said Kozlowski's ex-wife had agreed to post her $10 million home in Greenwich, Connecticut, but lead prosecutor John Moscow objected, saying the house could be the result of the former CEO's alleged criminal actions.


Moscow said the defendants must come up with assets that were not gained from their alleged criminal conduct.


Prosecutors froze $600 million of Kozlowski assets "mostly cash and securities," Moscow said. That means the defendants cannot use this money as collateral toward their bail.


Tyco is in the process of seizing most, if not all of Kozlowski's assets, including a $17 million Fifth Avenue apartment, a $7 million Park Avenue apartment he turned over to his ex-wife, a $5 million Nantucket home and a $30 million compound in Boca Raton, Florida.


Details from the company's internal investigation, authored by a committee headed by attorney David Boies, were contained in a filing to the Securities and Exchange Commission.


The SEC alleges that Kozlowski, Swartz, and former general counsel Mark Belnick treated Tyco as their private bank, "taking out hundreds of millions of dollars of loans and compensation without ever telling investors."


Swartz's lawyer disagreed with the SEC's contentions.


"Mark Swartz never received a penny from Tyco that was not fully authorized," said his attorney, Charles Stillman. "Today's report does not change that fact."


Belnick, charged with falsifying business records to cover up $14 million in improper loans from Tyco, was released last week on an unsecured personal recognizance bond of $1 million.


In 2000, Kozlowski had Tyco authorize nearly $96 million in unapproved bonuses for 51 employees to offset relocation loans for employees moving to Florida.


"Forgiveness was offered to some people who never moved ... and people who did not even have a Tyco mortgage, Tyco said.


Patricia Prue, Tyco's senior vice president of human resources, questioned the program, but Kozlowski assured her the board had authorized the payments, Tyco said.


Kozlowski and Swartz allegedly received about $50 million as part of the program, which was purportedly paid out from the proceeds of Tyco's successful initial public offering of TyCom, its undersea fiber-optic cable network, documents show.


Only a few weeks after the Florida loans were improperly forgiven, Kozlowski introduced another unauthorized bonus program that cost Tyco more than $55 million, Tyco alleges. Sixteen executives, including Kozlowski and Swartz, participated, Tyco said.



Amtrak Chief Proposes More Cuts

Budget Plan for '03 Ends Freight Service

  (Good News for Truckers)


                     USA Amtrack Present Routes


                             (more cuts ahead)


By Don Phillips


Washington Post Staff Writer



Amtrak President David L. Gunn says he has developed a fiscal 2003 budget that calls for more personnel cuts, an end to freight service and an eventual end to state-subsidized trains unless the states agree to cover all of their operating losses.


The plan, which calls for $1.2 billion in federal subsidies, reflects movement by Gunn and the Bush administration -- whose relations have often been strained -- toward common ground on stabilizing the railroad for the next year or two while they prepare for later decisions on the passenger train's long-term future.


Federal officials say they still want changes in an organization that has never made money in its 31-year history and long been criticized as inefficient. But Deputy Transportation Secretary Michael P. Jackson, who represents the administration on Amtrak's board, says the administration will work with Congress to be certain that Amtrak avoids another cash crisis similar to the one that left passenger-train service within days of a nationwide shutdown in July.


"I don't think there'll be a fight over having enough money to survive," said Gunn, who has met with Jackson and other administration officials in the past few weeks.


Gunn is scheduled to present the detailed budget to the Amtrak board of directors today and Friday.


He said that it will force Amtrak to delay many worthy projects, such as major track work on the Northeast Corridor. All new projects will be delayed or killed, including a plan backed by Florida Gov. Jeb Bush (R) to restore passenger-train service to his state's east coast through Daytona Beach. "All of that expansionary stuff is gone," he said. He would not predict how many of the projects would be revived.


Gunn said he will insist, however, on continuing with a program to rebuild wreck-damaged passenger cars. More than 100 passenger cars have been sitting around for years, earning no revenue, because there was no money to repair them.


With anything less than the full $1.2 billion requested, "We're dead. It's over," Gunn said during an interview and in a meeting with Washington Post editors and reporters.


All long-distance trains will continue to operate under the budget. Gunn said that the future of the long-distance train is a political decision for Congress and the administration but that he will not object if Congress sets financial performance guidelines for those services, with those that do not meet the standards being discontinued unless the states want to contribute.


"I don't mind having to be held to some standard," he said.


The budget will reflect at least two major changes to Amtrak's strategy, he said.


First, money-losing express freight service will end, although Amtrak will continue to haul mail, which is profitable. Express service, which involves adding freight cars to Amtrak trains, was supposed to help Amtrak become operationally self-sufficient. Instead, it has been a financial drag, delayed passenger trains and angered the freight railroads that Amtrak depends on to operate long-distance trains.


Second, he said, over the next two years, states that subsidize certain Amtrak routes must guarantee coverage of all losses. The state-subsidy program began many years ago to help states establish passenger service that Amtrak would not otherwise operate, but in most cases -- except in California and perhaps Washington state -- Amtrak still loses money.


Jackson said in an interview that the administration will continue to nudge Amtrak toward basic "reforms" that would eventually lead to more efficient operations and franchising out some current Amtrak service. But he said the administration wants Amtrak to be sufficiently funded in the short term as well as through next year -- since it is unlikely the fiscal 2003 transportation appropriations bill will be passed before the fiscal year begins Oct. 1.


Without an appropriations bill, Amtrak and other transportation programs would have to be funded by a temporary "continuing resolution." But in that event, Amtrak would receive funding only at the monthly rate of the administration's $521 million fiscal 2003 budget, meaning it would face another cash crisis within weeks.


"The administration wants to work with Congress to find an appropriate continuing resolution mechanism to allow Amtrak to operate until the fiscal 2003 budget is passed," Jackson said.


Administration sources said no "reforms" will be tied to the continuing resolution, and the administration's requests for fiscal 2003 will not be extensive. They said the administration will ask that the bill clear the way for private enterprise to operate some Amtrak routes as an experiment, to determine whether competition could lead to more efficient service. Such service could then be set up in fiscal 2004.


Gunn said he still considers franchising unrealistic because Amtrak has the "gene pool" to operate passenger trains, particularly an operation like the Washington-Boston Northeast Corridor. "We are the only game in town when it comes to an electrified railroad," he said.


Meanwhile, Amtrak appears to be emerging from the chaos caused by mechanical problems with its Acela high-speed trains, just as it is entering internal personnel chaos.


The Bombardier-Alstom consortium that built the Acela trains has completed temporary repairs on enough of them to allow a return to full service on weekends and nearly full service on weekdays. Gunn also said passengers returned to the Acelas almost as soon as the trains were back on the track.


Amtrak estimated the service problems, involving cracked shock-absorber brackets, cost it $9 million in revenue in August.


Meanwhile, Gunn has ordered further cuts in management staff by Oct. 1. Partly because of those cuts, Chief Operating Officer Stan Bagley retired suddenly on Monday. And Kevin E. Lydon, general manager of Amtrak's commuter operations in Boston, said he was fired when he refused to cut personnel.


Bagley was well respected within Amtrak and had emerged as Gunn's top lieutenant. But sources said he and Gunn could not agree on laying off significant numbers of operating managers.



####  #####################################################


Silicon Valley Security Expert & CEO Says Government Can Secure Internet




For $2 Billion Investment; Calls for Internet 'Cyber Shield'


SANTA CLARA, Calif.,  -- Ken Xie, founder and CEO of Fortinet, issued the following statement in response to the National Strategy to Secure Cyberspace Report:


The technology necessary to detect and eliminate viruses and other cyber attacks from all of the Internet's main US access points can be deployed for an estimated $2 billion. This technology, which exists today, can enable the entire Internet infrastructure to be scanned for viruses continuously in real time without negatively impacting network performance.


The result of such a federal investment in an omnibus "Cyber Shield" blanket security program will be a stronger, healthier economy -- not only for the telecom sector that includes the carriers of Internet traffic and the service providers who enable Internet access, but for all businesses and organizations that rely on the Internet.


The Internet is the primary mechanism by which cyber attacks are launched and spread. If the Internet itself had a mechanism to automatically scan and reject malicious viruses and worms, their ability to spread and cause damage would be severely curtailed or eliminated entirely.


Numerous individuals and companies have been victimized by cyber attacks, suffering unforeseen expenses and losses. Many of those companies successfully attacked were not unprotected, however. In fact, most of these organizations were compromised despite installing conventional antivirus and firewall products on their computer systems.


Our vulnerability to widespread damage from computer viruses and worms is not due primarily to inaction or under-investment in conventional antivirus technologies by individuals and companies. Rather, the problem stems from the fact that today's threats -- which are transmitted over widely connected, high-speed networks -- are able to spread and do damage at unprecedented rates of speed and replication. In addition, because of the intolerable degradation in network performance caused by conventional antivirus technology, which is strictly software based, many individuals in corporations, government, academia and at home disable their antivirus software altogether.


The Internet and the computer networks connected to it are super highways inherently vulnerable to rapid propagation of cyber attacks. These attacks are able to easily out-maneuver conventional antivirus infrastructure, which was developed in an era when floppy disks and "sneakernet" represented the predominant modes of infection. However new technology -- such as high-speed, network-based virus scanning using specialized microchip information processors -- has improved the performance of antivirus scanning by over 100 times. This makes it possible to stop threats in the outer network itself before they reach individual and corporate computers connected to the Internet.


I encourage the federal government to consider the available options for implementing a comprehensive Cyber Shield strategy that enhances cybersecurity in a manner consistent with the national response to bioterrorism, airline security, and other key elements of our critical national infrastructure.


About Ken Xie


Ken Xie, founder -- president and CEO of Fortinet -- has over 15 years of technical and management experience in the networking and security industries. Xie was founder, president and CEO of NetScreen (Nasdaq: NSCN), the leading supplier of firewall appliances. He was also founder, president and CEO of Stanford Infosystems, and the lead security architect with Healtheon (now WebMD) and with Philips. Xie has B.S. and M.S. degrees in Computer Engineering from Tsinghua University in China, and earned an M.S. degree while completing work towards a doctorate in Electrical Engineering at Stanford University.


About Fortinet


Fortinet, the premier provider of network protection systems and the only ICSA- certified ASIC-based antivirus solution, enables enterprises and service providers to improve the security of their networks, reduce misuse and abuse, and better utilize network resources without compromising performance -- at dramatically lower costs. Fortinet is privately held and based in Santa Clara, Calif. The company's web address is .


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News Briefs----


Weak economy kills electronic trade show

CHICAGO (AP) The organizers of COMDEX Chicago, at one time one of the largest technology trade shows in the nation, announced Wednesday the show's cancellation because of declining interest.




West Coast port managers claim slowdown, say lockout is option

LOS ANGELES (AP) West Coast ports headed toward the brink of a major labor stoppage Wednesday as negotiators for shippers and terminal operators accused dockworkers of staging a work slowdown and threatened to retaliate by locking out workers at all 29 ports.





Trade deficit declines as exports rise to highest level in 11 months

WASHINGTON (AP) The U.S. trade deficit declined to $34.6 billion in July as exports of U.S.-made cars hit an all-time high and exports overall rose for a fifth straight month, an encouraging sign that better days may be ahead for manufacturing companies, the hardest hit sector in last year's recession.

Commerce's trade report:




Sun announces Linux-based computer line it says will be low-cost

SAN FRANCISCO (AP) Sun Microsystems is attempting another swipe at Microsoft's desktop dominance with a new line of Linux-powered computers for the workplace that the company says will be low cost. (We bought one for use as our mail server: $1300 and the size of a fat lap top.)






FASB-IASB to form group to harmonize accounting standards

NORWALK, Conn. (Dow Jones/AP) Financial Accounting Standards Board, which sets U.S. accounting guidelines, and its European counterpart, the International Accounting Standards Board, Wednesday agreed to form a group to harmonize their rules.




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"Top Gun"

October 5, 2002 Saturday

Leasing News--Two Workshops
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