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February, 16, 2001 Headlines---- Lyons Credit Correction to Yesterday's Story Lyons Credit:-) Still Seeking New Business You Heard It Here First:-( eLease Bites the Dust Sierra Cities--Houston Chronicle Story--Quotes "Leasing News" J.D.R. Complaint Backfires????? What is Your Opinion? $100 Million Office Equipment Leasing Conviction, Newark, New Jersey Lafayette, Indiana Loan Indictment--Trailer Tractor Industry and THE "DINOSAUR" RESPONDS -to Mr. Bob Rodi a "pompous ass" ----------------------------------------------------------------------------- eLease Bites the Dust eLease closes down. One of the first active aggregate funders told their funders they are "out of business." There are other eLease companies that are on "auto pilot" or barely making their current overhead, let alone return on investment. It appears there will be other eLease companies to fall, and Leasing News is working on an article. Most of the eLease companies do not want to talk, particularly about their failure to attract leasing business.editor. -------------------------------------------------------------------------------------------- New SierraCities buyer is American Express By TOM FOWLER Staff Houston Chronicle Just one month after canceling an acquisition by one suitor, Houston's SierraCities has found a new buyer in financial services giant American Express. New York-based American Express said it plans to purchase the financial services and technology company for $107 million in cash, or $5.68 for each of the 18.9 million shares outstanding of Sierra-Cities. That's less than the $133 million that Web site developer VerticalNet offered in its failed acquisition bid last year, but SierraCities President and Chief Executive Officer Tom Depping said the American Express deal is much more likely to end successfully. "Our employees will have a very, very good place to work after this, and our shareholders will get a very good value from it," Depping said. Depping said SierraCities will change its name but its operations should remain in Houston. He expects the number of employees to stay the same, but his role will most likely change after the transition is made. "I'll be staying on at least through transition," Depping said. Shares of SierraCities jumped by $1.45 to $5.51 on Wednesday. SierraCities , formerly First Sierra Financial, was started to streamline small-business lending through an online credit application processing. At first, the company set up direct data hookups between its office and business customers, such as computer companies needing to quickly process credit applications for financing or leasing. Later, it adapted its technology to process those transactions over the Web as that medium gained popularity. While it developed solid technology, its focus on offering equipment leasing credit to small businesses helped build up a portfolio of more than 100,000 customers and $1.5 billion in business. Kit Menkin, publisher and editor of Leasing News, a Santa Clara, Calif.-based industry newsletter, said the combination of SierraCities and American Express will be good news for small businesses looking for equipment leasing in an increasingly tight credit market and bad news for competing leasing companies. Many small businesses use equipment leasing as a way to add resources quickly, Menkin said. In the past year, however, many of the companies that provided financing for those smaller leasing amounts have gone out of business or merged, making for a tighter credit market. "The demand from small businesses is still there, but the money has not been," Menkin said. The announcement comes one month after SierraCities canceled a plan to be acquired by VerticalNet, based in Pennsylvania, an owner of Web sites designed as business-to-business communities. ----------------------------------------------------------------------------------------------- Lyon Credit Correction---"Still Seeking New Business" Some of the information I received about Lyon Credit / United Capital after I left appears now to be totally incorrect and, although told to me as the "gospel truth" by people who I thought I could trust and knew what they were talking about, appears now to be totally erroneous. The company is still seeking new business and has booked new business generated in 2001. Although their operations have been scaled back quite a bit and their credit standards are higher, they still are soliciting and booking new business in addition to managing the existing portfolio. It appears that operations are being restructured, not forced out of existence as I was led to believe by outsiders who embellished the story of the current status and management to perhaps meet their own personal agendas. As such, my final "fork" comment was inappropriate and the rest of the story still remains to be written. I sincerely apologize for passing on the mis-information as the "facts" about the current status from those whom I previously trusted when, indeed, the information was only their perception and interpretation of rumors. Ronald J. Brodt ronbrodt@nationalecapital.com **************************************************************************** ********************* (Personal Note to Kit: I have found out that I totally blew it as to the current status. I trusted the people giving me information as to what was going on after I left and their stories seemed plausible. Unfortunately the people whom I spoke with were not privy to what was really going on and, as such, it appears now they related as absolute truth rumors and their personal interpretation of what they thought was going on with regard to the company and the parent company's relationship with management. Each time I scrolled through your list of companies which were out of business and I noted Lyon Credit, I thought to myself, that was not the end at 9/99. There was time after that which was not accounted for and maybe I could fill in the gap. My mistake. I should have left well enough alone. Ron) (Personal Note to Ron: Your information I could not get confirmed or denied by Lyon Credit. I think most of it was correct, and hopefully we have corrected all information today. We would be glad to print any news about Lyon Credit and their performance in our industry. editor ) ------------------------------------------------------------------------------------------------- J.D.R----U.S. Capital, Santa Barbara " Customer Complaint" We printed in "Customer Complaints" a letter from JDR Leasing, acting as a super broker, evidently, not being able to contact U.S. Capital. We have other complaints from brokers and other "Super Brokers", who are caught in the same predicament as J.D.R. There are several brokers who would like us to publish complaints against the "super brokers" who lead them to U.S. Capital. Here is an example: To: Kit Menkin/Leasing News Fr: Michael Wagner Re: JDR Capital I wanted to make the entire broker/lessor community aware of a situation that recently happened to our company with respect to JDR Capital in the hopes of saving others, similarly situated from potential lawsuits and damaged reputations in dependence on promises made by JDR. JDR referred one of our packages to a company called U.S. Capital Corporation in Santa Barbara, California and issued Dimension Funding a hard copy approval on JDR letterhead. We knew that JDR was going to give this package to U.S. Capital Corporation because they asked us to sign a non circumvention agreement. Dependent upon JDR's approval we issued our purchase order to the vendor in question. Soon after, we received word from JDR that they had never funded even one transaction with this company and that the funding of our deal was indeed problematic. When I brought this directly to Mr. Don Forman's attention he told me in so many words that it wasn't really their problem and if Dimension felt it needed to file a lawsuit to take my best shot. We will of course do this but in the interim we have a vendor relationship which is damaged and an invoice that is unpaid. This took place late last week. Since then JDR has been non responsive in committing to fund this transaction other than to say they were trying to get this "syndicated" but weren't sure they would be able to do so. The implication is clear and they still take no responsibility with respect to the hard copy approval they issued. Should anyone have any questions regarding this situation please let me know. In any event consider yourselves warned. Prior to release of this memo, be advised that it was forwarded to JDR for their comments. Michael Wagner > 949-250-0585 x222 > 949-250-0585 (fax) <mwagner@dimensionfunding.com> There are other issues involving JDR Capital, that we have been researching, complaints about commissions and that JDR Capital was laying off employees as they were having difficulty placing accounts with "tax liens, collection accounts, and numerous leasing inquiries, which was not a problem for them in the old days when they simply wanted volume." Where the responsibility lays with this is both a legal and ethical one. As an electronic newspaper, we try to present the news fairly, as accurate as possible, and bring all sides into the story so the reader can make up their own mind. What is your opinion? Kit Menkin.editor. ------------------------------------------------------------------------------------------------- A Lot of Very Good People in the Leasing Employment Market Do you realize that with the layoffs of some great leasing people like, Mark Speros, Kaye Lee, Steve Geller and many others, someone or some company could startup a funding source with the kind of people that could really make it work. It is sad to see such quality and experience possibly leave our industry. Just some food for thought. name with held ( I believe Mark is at Landmark today.** Steve Geller is active as a lease consultant. And Kaye Lee and Jane Hackworth, don't know at this time. Jane was going to take some time off, get married, and return when the leasing business was back ( this August? )Kaye is probably playing golf in Southern California along with Ron Wagner. But you comment is well taken. editor.) **He's in charge of the Broker Division at LFC / Landmark Financial Corp. in Denver area - phone is 800-430-9713 Ext. 23. ----------------------------------------------------------------------------------- ------------------------------------------------------------------------------------- To: Kit Menkin From: Suezy Proctor Subject: UAEL Funding Retreat in Seattle This is a friendly reminder to mark your calendars for the UAEL Funding Retreat in Seattle. The event is Friday, February 23rd at the Washington Athletic Club in Seattle at: 1235 6th Avenue. The Schedule is: 7:45 Registration 8:15-9:00 Town Hall Meeting 9:00-noon One on One Appointments with Brokers & Funders Noon-1:30 Lunch 1:30-3:00 Either Article 9 & FTC Ruling or Wild World of Credit & Scoring 3:00-4:30 Repeat Sessions You can contact the UAEL office for Registration at 510-444-9235. Hope to see you there!!! Suezy Proctor Suezy Proctor <Suezyp@finpac.com> Broker Relations Manager, NW Region Financial Pacific Leasing, LLC ---------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------ 3rd Brother Admits Role Lease Scheme ( This may make it as a TV series.editor )
NEWARK, N.J. (AP) - A third brother in a family that operated a now-defunct brokerage admitted Thursday to a role in cheating its customers of more than $100 million through schemes that included selling them investments in fictitious office equipment leases. Peter Goettlich's guilty plea means there is unlikely to be a trial regarding First Interregional Equity Corp. of Millburn. Charges remain only against his father, firm founder and owner Herbert Goettlich, 80, who has Alzheimer's disease and was found incompetent to stand trial by a prosecution psychiatrist. Peter's brothers, Richard and David Goettlich, had already pleaded guilty and agreed to testify against him. The Goettlich family was accused of siphoning some $20 million from its business operations from 1988-97 to support a posh lifestyle through "a massive and long-running fraud" against their customers, Assistant U.S. Attorney Amy S. Winkelman said. Richard, who was company president, and two employees pleaded guilty in November 1998, and agreed to cooperate with investigators. That led to the March 2000 indictment of his father, along with David, a broker, and Peter, the firm's lead trader. David Goettlich, 43, of Florham Park, pleaded guilty Feb. 1. Peter Goettlich, 46, of Livingston, pleaded guilty to three charges, conspiracy to commit securities fraud, conspiracy to commit tax evasion and tax evasion. On the last count, he admitted that he got more than $600,000 in income in 1993, but did not report a substantial amount, resulting in about $260,000 in unpaid tax. He faces about five years in prison when sentenced July 9 by U.S. District Judge William G. Bassler. First Interregional dealt in municipal and government bonds, and its affiliate, First Interregional Advisors Corp., sold the office equipment leases. Some of the 1,750 investors in equipment leases were "close family friends" of the Goettlichs, and some invested millions of dollars, believing they were buying the rights to the revenue stream from leases for office equipment such as copiers, authorities have said. To maintain the illusion that clients were getting revenue from these leases, they sold more fictitious leases and made payments with that money, Richard Goettlich has admitted. The brokerage was shut down in March 1997 after the FBI learned of massive shredding, and raided its offices. The Securities and Exchange Commission filed civil charges and had company accounts frozen. Almost all of 3,000 to 4,000 bond customers of First Interregional Equity Corp. have been fully compensated. Customers who bought the leases, however, are not expected to recoup their entire investment, under a settlement pending in U.S. Bankruptcy Court here.
------------------------------------------------------------------------------------------- Monon fraud suspect enters plea agreement By The Associated Press
LAFAYETTE, Ind. — One of three men indicted on fraud charges in connection with the financial dealings of Monon Corp. has entered a plea deal in hopes of receiving a lenient sentence. As a result of his guilty plea, Michael A. Peterson, 47, could be forced to testify against officials of the former semitrailer maker. Peterson, an insurance broker at Rhode Island-based Peterson & Associates, pleaded guilty in U.S. District Court in Hammond to six counts of wire and mail fraud. In the plea agreement, which was made public Friday, Peterson admits helping Monon Corp. executives Thomas J. Rosby and John M. Franklin obtain more than $9 million in fraudulent loans in 1996 from A.I. Credit Corp. and Anthem Premium Finance Co. Peterson could face up to five years in prison and a fine up to $250,000 on each of the six counts. Federal prosecutors agree to recommend leniency in exchange for the guilty plea. Rosby, who was president and chief executive officer of Monon, and John Franklin, its executive vice president and chief financial officer, are each charged with nine counts of mail or wire fraud and one count of conspiracy. They are scheduled to make initial court appearances Wednesday. Rosby, 57, of Indian Wells, Calif., and Franklin, 46, of Melbourne, Fla., allegedly misrepresented how many trailers the company was making, allowing Monon to borrow more money than it was entitled to, according to an indictment. The document also shows Rosby and Franklin borrowed money for the stated purpose of paying for workers’ compensation insurance but instead used the money for other things. The indictment alleges Monon obtained nearly $44 million for Monon Corp. under false pretenses between March and October 1996 — including more than $9.9 million in fraudulent loans from A.I. Credit and Anthem Premium Finance, and $34 million in loans from Congress Financial Corp. in Chicago. ------------------------------------------------------------------------------------------------- THE "DINOSAUR" RESPONDS -- http://www.leasingnews.org/archives.htm My Dear Mr. Rodi: Judging from your UCC filings, among other things, your circle of customers isn't big enough to travel anywhere near mine or anybody else's. But maybe I'll put a few people on the phone anyway to call them and see how impressed they are with the "given" of your excellent customer service in the context of my perceived lower rates. Of course, when I ask them, they will probably tell me that your "full disclosure" policies clearly spelled out to them the net effect of advance rentals, interim payments, documentation fees, prepayment terms, notification requirements on their purchase options and whatever else on the net yield of their lease. If that is in fact true, you would most likely be the only lessor in North America who actively supplies that information. Or maybe you're just referring to all the small print in the terms and conditions of your lease as "full disclosure." How silly of me to overlook that possibility. I also find it interesting that you would criticize the "dotcom business plan" since you were the guy getting up at UAEL meetings a year ago and telling everyone how that was the future and how your company was going to be taking advantage of the internet in a big way. By the way, genius, the jury is still out on the on-line leasing concept, even if some of the early "dotcoms" stubbed their toes. It took people 20 years to get used to using ATMs instead of having the "personal service" of live tellers. Today, most of those people won't step into a bank unless it's absolutely necessary. I'd suggest waiting a few years before writing this particular obituary .... but I'm a dinosaur, what do I know? For your edification, I do not harbor a grudge against you over some sales seminars that I didn't even know you were against, rather I harbor a grudge against you because you are a self anointed profit and a hypocritical pompous ass. If I remember correctly, you were one of the driving forces behind "encouraging" funding sources to fill the association coffers with (here's that nasty term again) "Fee Income" for funding symposiums in obscure cities with little UAEL membership. I wonder how much disclosure they got on the projected attendance in Baltimore. As for your reference to the UAEL Standards, which as CLP's we both subscribe to, it is a red herring at best, and you know it. Most of those "Standards" deal with protecting funding sources from broker misstatements and the rest make general pronouncements about integrity and respect for competition. Hallelujah, praise the Lord and Bob Rodi! And, finally, I did not misuse the term "guerrilla" in my last communication, but I may have inadvertently left a syllable off when I referred to you as a "pompous ass" above. Ken Goodman, CLP Dinosaur Extraordinaire kendg <kendg@email.msn.com> www.leasingnews.org
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