CMC Throws in the Towel

San Diego Tribune Union Story on Commercial Money Center DON BAUDER      San Diego Union Tribune

Commercial Money Center closes

Escondido's Commercial Money Center, which wrote unconventional leases for businesses with sub prime credit, closed its doors Friday.

The company, founded by Mark and Ron Fisher of North County and Sterling Hirtle of Henderson, Nev., had been expelled by both the San Diego Better Business Bureau and a major trade association.

The headquarters was technically in Las Vegas for tax purposes, according to Bill Hanson, former head of marketing.

In Nevada records, Hirtle is listed as president, and Mark Fisher of the Escondido operation is secretary and treasurer.

Kit Menkin of the Santa Clara-based Leasing News said that offices in Escondido, Las Vegas and Florida have all been closed. His newsletter reported on Friday that the company still had a remote chance; yesterday, the publication said, "Commercial Money Center throws in the towel."

CMC represented the last company doing "last-ditch finance," Menkin said. A small business with a poor credit rating and a need for unusual equipment would get to CMC through a broker. CMC would own the equipment with financing from a bank, backed by a surety company's guarantee. CMC would lease the often-bizarre equipment, such as a cat crematorium, at an extremely high rate, Menkin said.

According to former marketing head Hanson, the most employees the company ever had was 128. Because it hadn't funded any deals for eight months, that number had dropped, he said. "We sent over $1.5 million back to customers," he . said.

Late last week, top management "just felt they couldn't keep the doors open longer," Hanson said.. The company paid back salaries and such items as vacation pay, he said.

The surety companies that were supposed to guarantee the leases have not been able to do so, partly because of the damage that Sept. 11 did to the industry, Hanson said. Others, too, blamed the demise on surety companies.

But the company has had deep problems of its own: In late January, it was expelled from membership in the San Diego Better Business Bureau. Late last year, it was expelled from the National Association of Equipment Leasing Brokers for alleged ethical violations.

Gerry Wilson, president of the San Diego BBB, said there have been 10 complaints in the last year alone, some of which went unanswered. Consequently, the company has an unsatisfactory record.

In late January, the company was expelled from the BBB for "failure to eliminate the underlying causes of complaints concerning the difficulty in receiving a refund, non-receipt of funding and difficulty in contacting the company," Wilson said.

According to Leasing News, the company was expelled from the NAELB in November of last year because of a complaint by a member for ethical violations. That same month, Mark Fisher, chief operating officer, explained in a letter, "The NAELB thought the ethically appropriate response to their inquiry was for Commercial Money Center to incur further losses. We respectfully disagreed. The result has been expulsion from their organization."

The broker making the complaint "continues to submit deals to our company," said Mark Fisher's letter.

Ty Hanson, a member of the marketing department and son of Bill Hanson, said the flap revolved around a cattle deal in which the lessee wanted his money back. "We had spent the money on insurance," said Hanson, and the company's position led to a standoff with the NAELB.

"Most of their business was arranged through brokers," said Menkin. "They would have very unusual equipment like tank cars that carried explosives or volatile fuels, high-risk, esoteric stuff." Interest rates were extremely high, he said.

American Capital is a full-service equipment lessor in Laguna Niguel. It shipped some of its sub prime business to CMC, according to official Jeff Beier. Beginning in the middle of last year, the company said it would fund deals, but then never did, Beier said.

Then early this year, the company said it would return deposit checks. "My customers personally have not received the checks," Beier said. "We have lost a couple of relationships with our vendors."

Hanson said that not all the refunds have been sent out.