Balboa Capital Loses Decisively
to Put Regents Capital Out of Business Right Now!
by Christopher Menkin


Balboa Loses TRO Because It Had No Facts to Support Allegations of Theft of Customer List. Papers Contain Revelation That Balboa Paid a 1% Bounty If Its Salesmen Stole Competitors Customer List.


Pat Byrne’s Balboa Capital, Irvine, California, is back in the news, trying to shut down Regents Capital with a restraining order. The actual lawsuit calls for a jury trial, which could easily be two years down the road. The attempt then is to close Regents Capital before it can get established. The lesson is obvious to not only punish those who left, but who might leave, or want to disclose inside information on the culture of Balboa Capital. The ex parte Temporary Restraining Order was denied, but a hearing for Preliminary Injunction is scheduled for April 24, 2014 at 2:00pm is scheduled before Judicial Officer Kirk Nakamura.

Balboa Capital on March 11 introduced 249 pages for an ex parte TRO. The pages basically state Regents Capital contacted a few customers. (1)

The Application for ex parte TRO and Preliminary Injunction contains no factual support for the conclusion regarding the assertion that Regents Capital took customer lists. One would think that if Balboa Capital’s CEO Patrick Byrne had actual proof, as opposed to conjecture, you could assume that there are no facts, and it didn’t happen.

That the Judicial Officer denied the motion, leads me to three conclusions: First, there is no factual basis for this suit and it simply filed out of spite. Second, the idea that a salesperson could download or physically take customer lists from 1998 is just silly. It would take a moving van and presumably Chief Operating Officer Robert Rasmussen and President Phil Silva would have been watching this all happen. Third, this is just a vendetta.

Knowing that he certainly would be sued by Byrne and company, as that is the practice of this company since inception, Don Hansen, president of Regents Capital appears to have taken serious steps to make sure he was taking no files or customer documentation, and obviously was following an attorney’s advice in the careful manner he resigned and left employment. As to contacting a few Balboa Capital customers, Hansen explains it well enough to get the TRO denied.

It’s no secret to Leasing News readers that Balboa Capital has a practice of obtaining information and customer lists from companies where the new hires come from; as noted in previous Leasing News articles regarding Direct Capital and TimePayment (2a).

In a rebuttal against a preliminary injunction, Hansen gives further insider testimony to Balboa Capital practices of obtaining customers lists from competitors:

“(10) During my employment and pursuant to my compensation agreement, if I brought in new employees who brought with them their "books of business", also known as their customer list from their prior employer, I would receive additional compensation in the form of 1% of gross margin generated by "Books of Business" salespeople for any such salespeople that I brought in. Thus, Balboa incentivized employees to get individuals to join Balboa and take their prior employer's customer list with them. This is one way the company has grown.”
(3a, Page 4)

There is no doubt that since this was the practice of obtaining customer lists and other information from a competitor, Balboa Capital suspected Hansen would be doing the same with his new company.

Here is an excerpt of Hansen’s ten page response, where he addresses contacting a few Balboa Capital customers:

“(2) I began working at Balboa Capital Corporation ("Balboa") in August 1994 as an Account Executive. In 1997, I took the position of Vice President of the Commercial Finance Division. I was in this position when I resigned.

“(3) Balboa is a lending company that specializes in equipment leasing, working capital loans and franchise financing. Balboa was created when Patrick Byrne and his co-worker Shawn Giffin together left one equipment financing corporation to start their own competing company. Balboa has grown to have over 150 employees.

“(4) As the Vice President of the Commercial Finance Division, I was responsible for management and oversight of the Commercial Finance Division. At the time of my resignation in December 2013, there were approximately 20 employees in the Commercial Finance Division including Dennis Odiorne, Kirsten Merza, Chelsea Haines, Javier Enriquez, Kevin Kutter and Travis Power. I worked closely with each of these individuals. Our division focused on middle market customers — namely, companies with annual revenues from $10 million to $250 million. In my experience, personal relationships are very important in this industry. During the last few years of my employment, the number of middle market transactions constituted approximately 20% of Balboa's deals while the remaining 80% were small ticket transactions (loans of $150,000 or less).

“(7) During my almost twenty years of employment with Balboa, I have reviewed thousands of applications from thousands of different companies for thousands of different equipment leasing loans and working capital loans. Some of these applications were converted to transactions and many others were not. I would not be able to remember the name of every company who submitted an application that I reviewed while working at Balboa.

“(8) At no time during my employment at Balboa did I have any formal written customer list or excel spreadsheet with information regarding all of the customers I worked with. There was a database on which information relating to leads/prospective customers and actual customers was kept but I was unable to run a list from that database due to Balboa's security measures.

“(9) During my time at Balboa, the company has publicly announced customer information in places such as video testimonials that are posted on Balboa's website, YouTube, Twitter, LinkedIn, and Facebook. These can be found at http://www.balboacapital.com/testimonials/. The company "likes" its customers on Facebook, therefore a list of all customers Balboa "likes" is shown to anyone who visits Balboa's Facebook page. Similar to Balboa's "likes" on Facebook, it also frequently tweets on Twitter different companies to connect with and to follow on follow Friday ("#FF"). Many of these companies Balboa publicly asks people to follow on its Twitter page are customers of Balboa. Similarly, on Balboa's LinkedIn page, it has 1,541 followers as of March 11, 2014, many of whom have been Balboa customers. Balboa also has a Google+ page on which it is connected to 1,707 people/companies in its circle as of March 11, 2014, many of whom have been Balboa customers. In addition, Balboa frequently releases press releases when it reaches financing deals with customers. Through all of these means, Balboa publicly advertises the identities of many of its customers.

“(11) I am not aware of Balboa using any specialized marketing techniques or strategies to target potential customers that are markedly different from those techniques and strategies used by other companies in the industry. Balboa is a member of the same trade groups and receives industry magazines, like many other companies in the equipment financing business. Through these groups and publications, we share ideas.” (3a)

Hansen’s ten page statement is below along with the statement of Tiffany Brosan as noted below (3a, 3b). There was no “hard facts” in the complaint for a Temporary Restraining Order by Balboa Capital. Certainly there is more to follow as both sides reveal what really goes on, including perhaps previous officers and employees. (4a, 4b). The statements from Balboa Capital are in footnote (1) as well as the original complaint (2, b).

Leasing News has sought a statement from both main parties but has not received one. All these records are from the Orange County Court Reports, Case Id: 30-2014-00705733-CU-BT-CJC

Case Title: BALBOA CAPITAL CORPORATION VS. REGENTS CAPITAL CORPORATION

  1. ex parte TRO

  1. EX PARTE APPLICATION - OTHER FILED BY BALBOA CAPITAL CORPORATION ON 03/11/2014
    http://www.leasingnews.org/PDF/EXPARTEAPPOTHERFILEDBALBOA.pdf

  1. DECLARATION IN SUPPORT (OF EX PARTE) FILED BY BALBOA CAPITAL CORPORATION ON 03/11/2014
    http://www.leasingnews.org/PDF/DECLARATIONREEX-PARTEFILEDBALBOA.pdf

    (c) PROPOSED ORDER (TRO) RECEIVED ON 03/11/2014.

    PROPOSED ORDER (OSC RE PRELIMINARY INJUNCTION) RECEIVED ON 03/11/2014.

  1. http://www.leasingnews.org/PDF/PROPOSEDORDER(TRO)RECEIVED.pdf

(e) MOTION FOR PRELIMINARY INJUNCTION RECEIVED ON 03/11/2014.
http://www.leasingnews.org/PDF/MOTIONFOR
PRELIMINARYINJUNCTIONRECEIVEDON.pdf

(f) DECLARATION IN SUPPORT (OF MOTION) RECEIVED ON 03/11/2014.
http://www.leasingnews.org/PDF/DECLARATIONINSUPPORTOFMOTION.pdf

(g) PROPOSED ORDER (ON MOTION) RECEIVED ON 03/11/2014.
http://www.leasingnews.org/PDF/PROPOSEDORDERMOTION.pdf

(h) DECLARATION RE: EX-PARTE NOTICE FILED BY BALBOA CAPITAL CORPORATION ON 03/11/2014
http://www.leasingnews.org/PDF/DECLARATIONREEX-PARTEFILEDBALBOA.pdf

(2) Balboa Capital Sues Regents Capital
They Are After Salesmen Who Left
http://leasingnews.org/archives/Mar2014/3_12.htm#balboa

(b) Balboa Complaint
http://leasingnews.org/PDF/BalboaCapitalComplaint_3122014.pdf

  1. (a)Declaration of Don Hansen
    http://www.leasingnews.org/PDF/DeclarationofDonHansen.pdf

    (b) Declaration of Tiffany Brosan
    http://www.leasingnews.org/PDF/DeclarationofTiffanyBrosan.pdf

  1. (a) Opposition to Restraining Order
    http://www.leasingnews.org/PDF/OppositiontoTRO.pdf

    (b) Declaration of Don Hansen and Dennis Odiorne
    http://www.leasingnews.org/PDF/DeclarationDonHansen
    andDennisOdiorne.pdf