The Shame of MSM Capital
$1.3 Million in “Advance Rentals” Not Returned?
by Christopher Menkin
Around the end of last year, Leasing News started getting complaints for
the Bulletin Board that MSM Capital, Irvine, California was not returning “Advance Rentals.” Callers told us MSM would approve a lease in less than an hour, send out the documents, and take the check, but not fund leases. Officer Rob Pardini was mentioned often.
At first the officers Mike Cingari, formerly president of Colonial Pacific
Leasing in Oregon, and his “partner officer” Rob Pardini, denied it. It
was a mistake. (I still have all the e-mail responses from them.)
As the complaints piled up over the news few months, they started to “discover” alleged accounting errors, they told us, and in the beginning, Leasing News was successful in having “Advance Rentals” returned to applicants who contacted us.. We don’t
list on the Bulletin Board companies who return the money claimed. Both officers
of the corporation were becoming more difficult to reach. As we got more complaints, the MSM Capital telephone calls were not being returned and Leasing News was getting “stonewalled.” Readers will remember President Cingari’s comment: “Tell them I am not available.”
In May, the complaints became so numerous, they made it to the Leasing
News Bulletin Board. We found out we were no longer successful
in getting money returned, and evidently there were serious problems that
neither officer Cingari or Pardini wanted to admit. Up to this time, they
had been somewhat cooperative.
MSM Capital Corporation also known as NASBA Capital and MSM filed Chapter
7 Bankruptcy on July 31, 2002. The filing was accepted on August 1,2002
by the Clerk of the Central District, U.S. Bankruptcy Court.
During this time, ex-employees were winning past due salary and commission
claims from the previous year to almost $200,000. Leasing News printed their
stories, but it was not until we were able to obtain the over 100 page filing signed
by Michael Cingari, President, that we understood the “advance rental” game.
It appears over $1.3 million in “advance rentals” were not returned as documented
by 93 pages and 549 creditors. Not all are “deposits.” Perhaps 90 percent are. We called several of the creditors listed. They were located all over the country, mostly smaller
cities. The ones we contacted went back over a year, telling stories of signed leases, but no fundings. Creditor dollar numbers were $250, $494.58, $1,675.24, $4,536.08, $10,000, one $40,000 ( these were labeled deposits, but may have been vendor payments?) We did not verify all of them. We only sampled them, hearing stories of leases not funded. They are listed in the Chapter 7 filing as “deposits” owed to creditors. We actually don’t know the exact number of creditors with “deposit” as there is a mixture, nor did we verify they were all not “advance rentals” not returned. If
we were able to do this, we believe the dollar figure may be higher.
Labor claims were here, such as for salesman Ziya Arik, $75,000; Mark Bloom, $26,786.29; Jim Bowles, $28,855.46; Shawn Donahue, $25,381.53: $16,632.43;
Vishal Masani, $14,848.70; Mathew Swan, $27,041.00 ( there are others who
are pending, listed elsewhere in the filing. ).
Several “suppliers” are also listed, such as GE Capital/Colonial Pacific $135,000;
Centerpoint Financial Services, $23,081.76; Manifest, $8502.61;Business Insurance, $2,455; workman’s compensation insurance, $4,000. There is no estimate for personal property taxes (they stated “unknown,” evidently not paid,) sales tax, pensions or 401K plans. These are claims “to be made by the governmental agencies.”
There is no mention of “reps and warrants” on leases “discounted” or disputes
with funding sources, as perhaps they are “contingent liabilities.”
The reason the salesmen were not paid their commissions: it appears the corporation had spent the money to meet overhead.
The evidence: page 1, Statement of Affairs:
Income from operation of business:
Year to Date: $538,856 Lease fee income
Last Year: $3,912,459 Lease fee income
year before: $4,229,952 Lease fee income
The company evidently had no income to pay the salesmen for their commissions,
so they left. Claims and counter-claims were made, but the California
Labor Court to date has ruled in favor of the ex-employees, even in appeals.
MSM has lost every labor complaint. It appears the salesmen will never see
the money as assets listed are: accounts receivable, $405,000; office equipment
and furnishings, $400; and in debtor’s possession, office furniture, $250.00: total of $422,864. After attorney expenses, court costs, payments to the government for
taxes, and secured claims, you can see from the math there will be nothing left.
Who’s fault is it that the company filed Bankruptcy 7. After hearing
what appear as outright lies for over a year, it is obvious from the actual income statement filed, MSM Capital desperately needed “advance rentals” and the
salesmen’s commissions----The chapter 7 bankruptcy filing signed by President Michael Cingari gives every indication they had no means or intention of paying them.