April 13, 2001





       Colleagues Applaud Bob Rodi "Revisit to Ethics and Standards"

        National Association of Equipment Leasing "Listserve"

         LiveCapital On Line Credit

          Countrywide Bank Joins On Line Fray

             eLeasing Reaction


            Old Frauds Remembered




Bob Rodi hit the nail on the head in his call for a standard set of ethical rules for our entire

industry - one to be adopted by ELA, NAELB, UAEL and EAEL! ( Equipment Leasing Association,

National Association of Equipment Leasing Brokers, United Association of Equipment Leasing

Brokers, and Eastern Association of Equipment Lessors--note there is also the Mid-American

Association of Equipment Lessors, a growing association, and perhaps they do not

have a formalized set of rules. editor )


I will point out that the post-funding disclosure obligation he mentions IS required by many

funding agreements: failure to disclose can result in repurchase by the broker. Generally,

funders have considerable leverage in protecting themselves by contract.


As to the other example Mr. Rodi raises, I am disappointed, but not shocked to learn that many

in our industry would continue to do business with a clearly unethical broker or funder. As with

so many things, the penalty will grow from the practice: the guy who is steals from the vendor

or lessee will steal from you eventually.


I have seen pit bulls trained to be pets, but never pit vipers.


Anyway, Mr. Rodi is right on target and UAEL has indeed promulgated a fine set of ethical

standards. NAELB has pledged to push for higher ethical standards and has incurred the wrath,

threats and other slings and arrows from those it has forced out. Let's do all we can.


Barry S. Marks, Esq.



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       Bob Rodi raised very thought provoking questions. None are easy to answer,

particularly because the line between ethical and non ethical behavior can

be unclear. It's funny how most of us would trust ourselves to judge others

fairly but would not trust a group of our peers to judge us.  Bob's

revelation about funding sources more than happy to accept business obtained

through unethical practices was no surprise to me. I have had many lenders

tell me that they didn't care how the business was generated as long as the

sources portfolio performed and the documentation was enforceable. This puts

those of us who self apply ethics at a disadvantage because many of the

unscrupulous Lessor/Brokers also get competitive advantage from the lenders

with lower cost of funds and volume influence on credit decisions.  The

funding community can have more influence on ethics than any Association

standards could ever have. They are the "enablers" who often  sponsor

unethical practices.  Recently, we have seen many lenders tighten the

standards for maintaining relationships with their sources. The lenders know

that there is less risk doing business with ethical companies and they even

apply this knowledge when the economy slows and portfolios sour. Sadly, this

behavior is motivated by economics not ethics as Mr. Rodi pointed out.

Another issue I don't remember hearing about is the acceptability of interim

rents. I think most funders are exploiting this well hidden lease clause for

tremendous gain. In my opinion, this is one of the most unethical practices

in our industry. I would like to hear comment about what others think about

interim rents.  While it is true that some of the loudest whiners about

ethics are motivated by sour grapes from tough competition, it is also true

that many of the complaints have merit and we should (as an industry) try to

find an effective way to deal with these issues. Perhaps we should look at

some accountability applied to funders for enabling unethical behavior as

well as applying ethical standards to them.



Jeff Rudin

Quail Leasing




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Regarding Bob Rodi's recent discussions on standards and ethics, and the

tireless and probably thankless efforts of Victor Harris and all the other

people over the years dedicated to seeing a meaningful set of standards in

place, it seems to me that for all the recent rhetoric, very little has

changed over the years.  The facts are that the UAEL has no jurisdiction

over what is legal and the membership knows that.  And it cannot regulate

morality and the membership knows that as well.  Bob Jacobson III said it

best back around 1986 when he wrote an article at my request for the

Standards column in Newsline.  The Standards lack teeth and will continue to

until they are 1, adhered to, and 2, enforced.  The members who violate the

Standards know what they're doing, and they don't care because they see the

reward as being greater than the risk.  Not just the potential reward

against the threat of risk, but the actuality of it.  The leasing industry

is, and always has been, one which attracts competitive people.  Done right,

it can be very lucrative, but not without the fear, and often the actual

loss of a good deal in which a broker or lessor is heavily vested.  Done

wrong, the offsets reduce the impact of those losses and may compensate

financially for a lack of business acumen.   So the survivor attitude

becomes, "So what?  No one will know what I've done, and if they do, they

can't prove it, and if they can, by the time they do, I'll have either made

things "right," or filed bankruptcy."  Here is the simple criterion for the

standard for doing business, any business: Am I doing the right thing

because I'm afraid of getting caught, or am I doing the right thing because

it's the right thing to do.  As far as those who are doing the wrong things,

no Standards or codes of ethics in the world will change their behavior

whether under threat of expulsion from an association whose largest revenue

source is its fees, or by slow removal of their fingernails.


Now you ask, if I'm right, why did we codify the Standards in the first

place, and why are intelligent people worried about how they read and how to

enforce them.  The answer is because the Standards are the aegis for

survival of those who do the right thing for the right reason.  It's the old

story, we don't put locks on our doors to keep out the honest people.



Hal T. Horowitz

Account Executive

Search West

340 North Westlake Blvd., Suite 200

Westlake Village, CA 91336

Pho: 805-496-6811 xt. 231

Fax: 805-496-9431

Pager: 818-318-9900




"It is my mission to collaborate with my clients in order to further their

success by identifying professionals of uncommon ability to whom my clients

might not otherwise have access and who will make a valuable contribution to

my clients' goals."


Workplace consultants Beverly Kaye and Sharon Jordan-Evans for their book, "

Love-'Em or Lose 'Em: Getting Good People to Stay," asked 8,000 people why

they stayed at a company.

"Money wasn't the No. 1 reason---it wasn't even No. 2.  In our most recent

survey, it crept into the No. 3 spot, "Beverly Kaye said.

"What matters most to the employees we surveyed is that their work is

exciting and challenging," Sharon Jordan-Evans said.  " The second is that

there is the opportunity for career growth, learning and development.  Fair

pay and benefits were third.  Working with good people is No. 4, and having

a good boss is No. 5.  Money and perks may work to recruit employees, but

neither will make an unhappy employee stay."



              ( Note: The signature message on Hal's e-mail is the correct way

   to do it. An excellent example.  It has everything you need, plus a great

   quote. If you don't want to read it, you don't have to.  And by the way,

   the new AOL version 5 allows you to add a "signature" to your e-mail on

   AOL. Go to the icon on the top, the letter, "Mail Center," go to "Set-Up

   Email Signature."  It is that easy. editor )



National Association of Equipment Leasing Brokers "Listserve"


It is my understanding the board of directors will be undertaking an active discussion

of "Listserve" at their New Orleans Conference this May. One of the most recent things

they have done to this service for their members is to post this notice at the

end of each message, almost like a "signature:"


----- PLEASE NOTE -----

The NAELB maintains this ListServe as a benefit for members only.  It is for the exchange of

ideas and any distribution of the contents of this ListServe to non-members is not sanctioned.

Advertising, profanity and  obscenity are prohibited.  Members post at their own risk and facts

or opinions posted are not reviewed, sanctioned, screened or endorsed by NAELB. Users agree to

indemnify NAELB and hold it harmless from all demands, damages, causes of action and all costs

thereof that may be incurred by NAELB.. Users are responsible for any alleged defamatory or

other injurious postings. Users shall not knowingly make false or defamatory statements or use

the ListServe to settle personal grievances.





This year's Saturday night event at the Spring Education Conference is

going to make the history books!  Join in the fun at Rawhide, an 1880's

Western Town.  You'll feel as though you've taken a step back in time to

the rough-and-tumble days of the Old West!


Main Street bustles with the excitement of thrilling shootouts and zany

street shows (you never know......you may just know some of the

characters!) For supper, UAEL attendees will enjoy steaks cooked over a

mesquite fire while experiencing the splendor of an Arizona sunset as the

campfires pop and whistle.  Start practicing the 2-step and line dancing

because after a hearty Wild West meal we are going to dance to a live band

'til the cows come home. Or, you can simply enjoy the twinkling stars of

the night sky.


So don't forget to bring your Western gear to this year's conference.  You

may just win the "Best Dressed Cowboy or Cowgirl" contest!


Call today to make your room reservations at the Doubletree Paradise Valley

Resort at(480) 947-5400 and don't forget to ask for the UAEL group rate!


Register online at www.uael.org!


See you in Scottsdale!

Joanie Dalton - Managing Director

UAEL - United Association of Equipment Leasing

520 Third Street, #201

Oakland, CA  94607

(510) 444-9235 x27 or (510) 444-1346 fax






   Old Frauds Remembered


The Lila fraud occurred in Pennsylvania maybe 12 years ago ( multiple

double financing of large Xerox copiers where the lessee and vendor were

working together) and the Philip Morris one happened to a lessor in

Virginia I believe, perhaps 10 years ago, in which a former Philip Morris

employee, who purported to still be employed by them, contacted a lessor

that he knew and dealt with when he worked at Philip Morris, to finance a

"secret" project that Philip Morris was working on for a special cigarette.

Only he could be contacted regarding the lease and the financing involved

in this case. If I remember right both the lessor and initial bank funding

source went along with this scenario and when the bank brought in another

lender to help fund the transactions, that other lender contacted Philip

Morris to verify signatures, documents etc. only to find out that they were

fraudulent.  I am not sure if I have all of he facts correct in these cases

but perhaps some other "old timers" like me might remember more of the

stories on these two. (Steve Geller might remember them also - not that he

is an old timer)




              +               +                +


Not that I am that old, but as I remember the story on Philip Morris was

they were working on a top secret smokeless cigarette project and the bank

in Virginia took it away from its leasing subsidiary because it would be a

prestigious account to land. The bank booked the deal and the leasing

subsidiary looked good because they did not.  I believe it was this deal,

which was syndicated out to a number of banks in which a junior auditor did

some very basic due diligence (that each bank thought the others did) and

found out the fraud. It was over $300 million, as I remember.  I may be confusing

the last part of this with OPM orthe Lila/Rhino copy deal.  Fred's recollections are pretty

good. - Steve



              +                    +                 +


( I remember one from Reno, Nevada, over ten years ago.  This fellow went into a major

Nevada bank with lease documents from IBM, but it was a secret project to do with

the internet and everyone was "hush-hush."  He showed him signed papers, even had

a telephone number for him to call at IBM.  The bank leased him the equipment, which

never existed, made a few payments with IBM checks ( from the same bank where

he did the lease), went to several other banks using the first lease

as creditability, and paperwork, and built a Ponzi payment system, until he felt

what he wanted to get and split.  They never caught him.  He may have been

the same one for the Phillip Morris scam. editor  )


                +                  +                   +


  Perhaps the biggest fraud comes from the dot.com leasing companies.  I really

liked your eLeasing report, as it was about time someone said, "Hey, the Emperor

is not wearing any clothes."


   Izzy Finster








I was just reading the article about the elease companies.

We may old but we still understand the principal of relationship selling.

I us the web site as a way for companies to reach me then the rest is plain

old fashioned selling


Mike Barrett

Dumac Leasing


P.S. I'm a Utahn now a Santa Rosan and Sonoman that lives 68 miles North of

SF And that has nothing to do with Napans


 ( the counties of Sonoma and Napa are competitive about the wine they produce.editor)




       Giving due credit to small business On Line


LiveCapital provides real-time financing for small biz e-commerce transactions

by John Evan Frook, B2B Business Magazine


Figuring you can't complete a sale if the customer can't pay for it, Autodesk Inc. and iVesta

Financial Solutions L.L.C. recently signed deals with LiveCapital, which will provide real-time

credit financing for the small and midsize businesses who arrive at these two exchanges.

"For small-business, these services are perfect," said Rajeev Agarwal, director of the

commercial banking practice at TowerGroup, Needham, Mass. "They streamline the borrowing process


and encourage purchasing. There is no doubt [real-time credit financing for e-marketplaces] is

an emerging market."


Although LiveCapital claims it can handle business purchases between $10,000 and $10 million, it

is unreasonable to expect real-time b-to-b credit systems to handle such large transactions,

Agarwal said. That's because large commercial lending in the millions-of-dollars range is

largely based on relationships, and not procured during a single buying session. However, as a

small-business instrument, such real-time financing has the potential to add liquidity to

corporate Web sites, private exchanges and other Internet markets, Agarwal said.


The Autodesk and iVesta deals are significant to LiveCapital, San Mateo, Calif., because the

company is attempting to claim the mantle as a leader in b-to-b e-commerce financing, Agarwal



Mike Grossman, CEO of LiveCapital, said his company's greatest challenge is to convince

corporate finance departments to consider providing Internet b-to-b credit. "The financial

implications of our services are profound, but, more often than not, companies have grown

accustomed to the way they handle credit," Grossman said. "Change is hard."


Giving credit to b-to-b


For Autodesk, a San Rafael, Calif.-based developer of software used by architects and engineers,

the notion of Internet b-to-b credit seems promising, said Jan P. Berger, Autodesk corporate



It is not unusual for an architectural firm to order products ranging from $5,000 to $50,000, so

a credit card or purchasing card purchase is out of the question, Berger said. By signing with

LiveCapital, Autodesk will be able to create lines of credit with business buyers at the moment

they are considering a sale, he said.


"We wanted to give the customer the choice of getting external credit from a third-party

institution, and to get it instantly," Berger said. "The choice between a loan or line of credit

is within the shopping cart experience, and it means that if a customer buys $40,000 worth of

software from Autodesk, we get paid within 48 hours."


In tapping LiveCapital, Autodesk does not have to negotiate with each financial institution it

offers credit through. Instead, LiveCapital takes on the risk of the relationship with lenders,

Berger said. That means Autodesk could forego a complex contract that would cover the

responsibilities of the bank, Autodesk, a third-party credit provider, Autodesk's hosting

company and the customer. The financing relationship is simplified to be between the customer

and LiveCapital, Berger said.


The iVesta deal is notable because of the clout of the partners. A joint venture between John

Deere Credit and CoBank, Iowa-based iVesta will introduce LiveCapital as a b-to-b financing

instrument to farmers and other agribusiness buyers. Deere Credit currently has 500,000 lending

accounts and manages a portfolio exceeding $12 billion. LiveCapital competes with such companies

as eCredit.com Inc. and PrimeStreet Corp. for these types of lending services.



Countrywide Credit to Diversify, Offer Online Banking


 Financial services: The move will help it compete with major loan-origination rivals. But

luring clients will be tough.


By JENNIFER OLDHAM, Los Angeles Times Staff Writer

     Moving to strengthen its online offerings and diversify its services, Countrywide Credit

Industries said Thursday that it will use a charter gained through its acquisition of an East

Coast bank to offer banking services over the Internet.

     Acquisition of the bank charter puts Countrywide on a more level playing field with major

banks, its chief competitors in the mortgage origination business. But analysts said the

mortgage lender's banking Web site will face tough competition from Bank of America and Wells

Fargo, which host the most popular banking sites online.

     Expansion of Countrywide's financial services was made possible by the Federal Reserve

Board's approval this week of a request by Effinity Financial Corp., a Countrywide affiliate, to

acquire Treasury Bank. Countrywide plans to change the bank's name to Effinity Bank and move its

charter to Effinity's headquarters in Alexandria, Va.

     The acquisition of Treasury Bank's charter will allow Countrywide and Effinity to offer

checking, savings and other banking services through a proprietary software system to

Countrywide's 3 million customers. The online banking Web site will debut later this year.

Countrywide currently is one of the top mortgage lenders on the Internet.

     The move into online banking is part of a push by the 32-year-old mortgage lender to

diversify its services to compete in the highly fragmented mortgage industry. The company now

derives a third of its earnings from services outside mortgage banking.

     "This will provide our customers an ability to get all their financial services in one

place," said Clarence Simmons, president of Countrywide Financial Holding Corp. "Banking is one

of those core relationships that allows us to tie together all the other services we provide."

     Analysts said it's difficult to make money in the volatile mortgage business, where loans

are a commodity in a market that's largely dependent on swings in mortgage interest rates.

     "There's no pricing power. Countrywide can't all of a sudden mark up their mortgages

because their mortgages are better than Bank of America's--they wouldn't get any business," said

Michael McMahon, an analyst with Sandler O'Neill & Partners in San Francisco.

     But Internet analysts say it will be tough going for Countrywide to attract customers to

its online banking services--even customers who already have their mortgages serviced by

Countrywide but do their banking elsewhere.

     About 11% of U.S. households do some banking online, mainly to check balances, transfer

funds or pay bills. Those services are starting to appeal to an audience outside of the early

adopters, said Catherine Graber, a senior analyst at Forrester Research.

     Even so, people who bank online are loyal to their service providers, with 83% of consumers

who responded to a Forrester survey saying they had no intention of switching banks.

     "It's going to be a real uphill battle for them," Graber said. "Customers don't switch

unless they're miserable with their service provider or they move."

     In addition, Countrywide will face a preference by consumers who bank online for providers

that also have bricks-and-mortar branches.

     "The bulk of consumers who are banking online are also doing so at existing

bricks-and-mortar banks," said Greg McBride, a financial analyst at Bankrate.com. "This

indicates that while consumers enjoy the convenience of banking online, they prefer to be able

to walk into a local branch and deal with someone face to face."

     Countrywide's strength is its ability to remain competitive as the nation's largest

independent mortgage originator, McMahon said.

     The Calabasas-based firm generated $61.7 billion in mortgages last year, which gave it 5.7%

of the market and made it the nation's third-largest mortgage originator, according to Inside

Mortgage Finance Publications Inc. But the firm was the only company of the top five loan

originators that was not part of a major U.S. bank.

     Countrywide's major competitors are all banks that purchased mortgage originators as part

of a consolidation wave sweeping the mortgage loan industry in the last decade.

     Countrywide's stock fell $1.27 to $44.20 on the New York Stock Exchange on Thursday.


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