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Leasecomm Goes Down---CEO Sells $500,000 Stock Before the News --- Brokers, Vendors,Lessees Left Holding the Bag---Again!!! by Christopher “Kit” Menkin Leasecomm, a wholly-owned subsidiary of MicroFinancial, Inc., a publicly-traded company on the NYSE, has called it quits, laying off a reported 90 employees, not funding deals in house, honoring approvals given, and cutting off all communications with broker. The company has written over 500,000 leases, funded more that $750,000,000, specializing in the micro ticket marketplace, they state on their website (they were one of two or three leasing companies that went as low as $1,000 for a lease—Marlin Leasing is then left as the major player in this micro ticket marketplace.). Microfinaical states on their website they have 300 employees, so this would be almost 1/3 their employees let go (without notice---who’s next?). November, 2000, Leasecomm launched LeasecommDirect 3.0, the latest version of its proprietary, internet based leasing technology." The online technology provided full service leasing, allowing its dealer base to submit lease applications, obtain credit decisions within minutes, and print completed lease agreements. It also provides reporting and analysis tools, personalization based on the user's position in that company and an enhanced user interface. Built upon a year of investment and development efforts, LeasecommDirect 3.0 is available exclusively to vendors using Leasecomm leasing programs. " the press release said. "Leasecomm is committed to the continued development of e-business solutions that improves the speed, ease of use and overall productivity of our leasing services" said Elaine Shuttleworth, Director of Internet Development. "Prior to the new release, nearly two-thirds of our 20,000 monthly applications were fully processed automatically on-line, so we have already had significant experience and success in the on-line world" said Peter Bleyleben, President. "LeasecommDirect 3.0 will continue to strengthen our technology leadership position in the leasing arena by providing increased efficiency and functionality for our customers" Mr. Bleyleben added. They were looking to the internet and automation of the process to not only bring them more business, but cut processing costs. Their website promised: “Leasecomm Direct is the full service online leasing programs that lets you: • Submit lease applications 24/7; • Obtain credit decisions within minutes; • Print completed lease agreements; • Review online status reports; • Make a tax inquiry; • ...and much more! Leasecomm Direct is available exclusively to dealers and vendors using Leasecomm leasing programs. Leasecomm-approved dealers: please signup for Leasecomm Direct membership. Not a Leasecomm-approved dealer yet? Apply now to become one! “ The company in November signed an agreement to acquire a major portion of the assets of Resource Leasing Corporation, Herndon, Virginia. Insiders evidently knew something was going wrong. About two weeks ago, insiders evidently knew something was wrong with the company. September 25, 2002, Leasing News reported: “Microfinancial/Leasecomm Stock Continues Dive/Insiders Sell Their Shares” http://www.smartmoney.com/eqsnaps/index.cfm?story=insiders&symbol=MFI Microfinancial insider Chief Executive Officer Brian E. Boyle (and controller of other accounts )sold over $500,000 in market value of his stock in September, according to Smartmoney.com, and over a $1 million since the first of the year. By late Friday, October 11, their stock had dropped 34%, after they announced the closing of their subsidiary Leasecomm. http://finance.yahoo.com/q?s=mfi&d=v1. Leasing News has been writing for over a year about the many complaints about Leasecomm’s business practices, which an internet search can bring up http://www.copernic.com,), with this one perhaps the best example fromLauren Stephens of LaurenStephens.com. who claims she was “...was ripped off by LeaseComm for over $1,900!” Copy of Class Action Suit filed against Microfinancial/Leasecomm http://www.socialaw.com/superior/994177e.html The parent company. Micro Financial, set off a internet audio and written press release, trying to put the “spin”, but the main complaint appears to be the manner of the closing. Leasing news has copies of the memo's to brokers, dealers, but first, from the street, the reaction from some of the fifty e-mails Leasing News received (thank you for sending to us, and letting us know what was happening. editor): “Leasecomm went out today. Nothing will fund, not even deals that "verbaled" within the last 2 business days. No approvals will be honored. The reason given was that ‘credit and funding has been laid off, there is no one who can physically fund’ “OUCH! Naturally, we have purchase orders out all over the place. “This business is turning out to be a lot of fun. Michael Berg Bison Commercial Leasing -- “Not good news for LeaseComm. They aren't answering any questions about transactions at all. Some approvals with delivered equipment are at risk here so I have to wonder why no one is answering any calls or voice mails. When you call their main numbers you get 15-20 minute hold. I haven't stayed on any longer yet. Thanks for any information you can rustle up.” BILL CLARK Equipment Leasing Options 513-755-2822 voice 513-755-2334 fax bclark@leasELO.com -- “Just wanted to let you know - Leasecomm Corp in Mass- just closed their doors- not funding any transactions at this time. Leaving a lot of us in Limbo.” Cindy -- “You probably have already heard this, but word out on the street is that Leasecomm is finito. This is terrible, especially in the manner they are closing down.” Jim Fleming nationalbusinesscredit@yahoo.com --- “Just got word from one of my superbrokers that Leasecomm is out of money and has pulled the plug! They are also not honoring any approvals or fundings. Awesome since I have a deal there ready for funding! Have you heard anything?” Thank you, George Meyer Account Executive GMCapital Ph: 877-462-2748 Fx: 650-553-9515 George@GMCap.com --- It appears that Leasecomm was not a member of any leasing association ( EAEL was the only one we could not verify ). It is interesting to note, none of the 35 brokers who sent us an e-mail asked Joe Bonnano’s Question: “Is the company a member of NAELB?” The legal counsel for the National Association of Equipment Leasing Brokers for years has “warned” members that they should do business with funding members of their association, where they pool reports, poor information, and have abilities to assist in many situations. An overwhelming number who sent information to Leasing News, are members of the NAELB, but obviously did not ask “Joe Bonanno’s Question.” To my knowledge, NAELB is the only leasing association that has an active standards and ethics committee, takes quick and positive action, and does not look at it as a “body count,” but solving disputes, and most important, protecting members. In various articles and investigations, NAELB’s advocacy of broker members is excellent. ---- Letter to Brokers/Dealers: Dear Leasecomm Dealer, As you likely know, the current lending environment has been very unfavorable and this economic trend has caused our core Microticket financing business to become unattractive and economically unfeasible. Therefore, it is with much regret that I must inform you that effective today, Leasecomm has indefinitely suspended all new loan originations. Our intent is to re-enter the Microticket marketplace and focus on a better credit quality lessee once appropriate financing becomes available. Although I cannot say with certainty what the timeframe will be, I am hopeful that new financing can be in place in the near future. I recognize this decision may present you and our other valued dealers and their families with challenges in the days, weeks and months ahead. With that in mind, I assure you this decision was made as a last resort. Leasecomm tirelessly pursued and evaluated all avenues of opportunity to continue our Microticket financing as recently as today. We will be contacting you with any and all new developments as soon as they become available. In the meantime, please do not hesitate to us at 1-800-229-5327 with all inquiries, as opposed to contacting your dealer representative. I also like to take this opportunity to thank all of you for your dedicated service and commitment to our Leasecomm and I certainly speak for everyone at our company in saying we hope to be working with you again soon. Sincerely, Richard Latour President ############# #################
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