Leasing firm in Fresno investigated.

By Sanford Nax / The Fresno Bee

A Fresno (California) leasing business that Inc. magazine recently named one of the fastest-growing private businesses is being investigated for alleged fraud and has been sued for supposedly not paying commissions and for taking deposits without performing services.

In October, Inc. magazine named EFG Leasing the 48th fastest-growing private company in the United States with a 1,449% increase in sales from 2001 to 2004.

But 2005 has been a brutal year for the company, said President Kenneth Wheeler, 61. A serious illness that keeps him away from the office most of the day, combined with the effects of two thefts and a former employee who cheated the business, plus significant changes in his industry, have crimped purse strings this year and contributed to business woes, he said.

"If you put it all together in a lump, it hasn't been a great year even though last year was a great year," Wheeler said.

EFG, which provides leasing programs for businesses, reportedly had $14 million in sales in 2004. That will dwindle to about $5 million this year, Wheeler said.

"This just changed everything," he said of a blood disease that he said keeps him from working many hours.

Fresno police say they have an open investigation into alleged fraud. Investigators would not elaborate, but a South Carolina man, William Crawford, said he filed a case after he sent EFG a $15,000 down payment in January for construction financing he never received.

"They said they had funding available. We sent them a check for a deposit, and the funding was nonexistent," he said. The down-payment check, he said, was cashed in February.

Wheeler contended the deal is still in process. Crawford was trying to finance an assisted-living center.

"But it's a real estate transaction and his is a fairly new business. It doesn't happen overnight," Wheeler said, claiming he's talked to police investigators.

EFG, also known as Equipment Financing Group, also has been sued by businesses and individuals who allege the company failed to pay commissions or down payments. In February, a judgment for $179,750 was levied against EFG for defaulting on payment obligations.

The judgment stemmed from a complaint filed by Enterprise Funding Group of Michigan, which sued EFG after EFG's lessees defaulted on payments to Enterprise.

Wheeler blamed the woes on the lessees and a former employee who he said conspired to commit fraud with employees of other businesses involved in the deals.

EFG also was sued by a Montclair-based churro maker, which claims it paid EFG an $18,000 down payment on financing it never received. California Churros was seeking financing to equip a new manufacturing plant.

"EFG has breached each and every contract … by continuously failing to provide financing to plaintiff, even after promises to have funds available by July 14, 2005," says a complaint filed Sept. 15 in Fresno County Superior Court.

Wheeler claimed the deal with California Churros is still active and said the equipment was for a plant in Mexico, which complicated matters. He said the lender wants to make sure it has first rights to the equipment if problems arise.

"And Mexico has some strange laws," he said.

But Timothy Logoluso, the Fresno lawyer who filed the lawsuit on behalf of California Churros, said the equipment to be financed was destined for a plant in Southern California. And last May, according to court files, EFG notified California Churros that financing was approved.

EFG also has been sued by a broker in Chicago who claims his company is owed almost $7,000 in unpaid commissions. The broker, Richard Asplund of Optima Commercial Finance, was in Fresno arguing his case Nov. 1 in front of Jeff Bird, a small-claims court judge.

"I've tried to call him going on 40 times," said Asplund, who requested a default judgment. "I never got him on the phone."

Bird said he would rule later.

Wheeler does not deny that people have had trouble reaching him, a result, he said, of lengthy absences from the office. "I know they have trouble getting hold of me," he said.

Wheeler said many of the complaints are coming from people who don't realize how long it can take to find financing. "I can understand people being upset," he said, "but they have to be realistic."

A large transaction can take months to conclude, he said, because many lenders have gone out of business, and because applications are carefully scrutinized.

"They are not going to sign off arbitrarily, no matter how good the deal looks," he said.

Wheeler said EFG also was the victim of two thefts that hurt the company financially. The first was a burglary in which $280,000 worth of laptop computers were taken from the office on West Shaw Avenue in December 2004.

The other happened around the same time, Wheeler said, when someone got the routing numbers off some EFG checks and forged checks worth thousands of dollars.

"All these things happening at once caused a problem. We had to take our cash flow to replace that equipment to stay in business," he said.

The reporter can be reached at snax@fresnobee.com or (559) 441-6495.