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Kit Menkin’s Leasing News Accurate, fair and unbiased news for the equipment Leasing Industry Headlines---- Leasing Co-Op---May Change the Face of Equipment Leasing New Century Bank---Community Banks Beware!!!! Former President of PinnLease May Be Hit for Over $6.7 Million ELA Proposed Amendment to Ohio Up-front Sales Tax Apology to Pat Roberts re: G.O.L.F. Handicap Lease Finance Mike Price pays nearly a half-million in yacht tax-evasion case Poll: Most Americans think tax cuts generally benefit `someone else' “The Hard Truth” by NY Times Thomas L. Friedman Monday—Meet the Leasing News Maker----the founders of the first Leasing Co-Op. ------------------------------------------------------------------------------------------ Leasing Co-Op---May Change the Face of Equipment Leasing As We Know It Perhaps the first leasing co-operative has been proposed, which will change the leasing industry as we know it. It may alter all the non-profit leasing associations and the way business is being done in the equipment leasing industry. American Leasing Alliance and MainStreet Cooperative Group announced plans to launch a nationwide cooperative owned by independent equipment lease financing companies. This will not be a “funding source” or “super broker” but a powerhouse of leasing discounters and brokers. The cooperative, OneWorld Leasing, Inc., will serve as a marketing and loan syndication company for small- and medium-sized companies in the industry. The cooperative expects to have 7 founding members and plans to have 500 member businesses by the end of 2003. There is no limit to the size of the co-op, and there may be several “co-ops” per niche in the leasing industry, with other benefits for members due to group purchasing “power.”. “ We will not offer warehousing or funding of leasing transactions,” David Stearns, CEO of American Leasing, says, "OneWorld Leasing will become a true leverage play for the smaller leasing company concerned about industry consolidation, super brokers, better lease-loan rates and a level playing field. “ We will be able to go to a major funder and say we represent 500 leasing brokers. We want a better buy rate than you are offering for our business. “ If we represent 2,000 brokers, I am sure any funder will give us a better rate...We may start off only with 500 brokers, but I am sure we can obtain many advantages for our co-op members.” Unlike lease consolidation plays, the members will own this, yet continue to be independent." Stearns will initially serve as incoming Chairman of the OneWorld Leasing board. MainStreet's Richard Selby will serve as interim CEO during the cooperative formation period. Six to nine months after launch, a leasing industry veteran will be identified to lead OneWorld. “ We have a list of over 6,000 leasing brokers, “ he said. “ This is very similar to other cooperatives we have put together. We go to the supplier and say we have these many members, what can you do for us. “It is similar to going like going to a supplier of drywalls, “ he explained. “We have group power buying that any supplier should be interested in, and as important, benefits to our members. “This also applies to other things we can do for members, including Airborne discounts, Dun and Bradstreet discounts, health insurance discounts, and whatever the members of our co-op would like us to help them with. “ According to Selby, "of all of the cooperatives I have seen being launched in the last decade, OneWorld Leasing is a 'home run' in terms of industry dynamics and syndication opportunities. We are proud to launch this together with American Leasing Alliance. They truly are an industry champion. OneWorld Leasing will benefit its members in many ways, both financially and operationally," Selby added. Selby stated that he has been involved in eight new “co-ops.” They are very similar to agriculture co-ops, where growers combine their product together and sell to at a “group price.” American Leasing Alliance, based in the Chicago suburb of Lake in the Hills, Illinois, is an emerging leader in the equipment lease finance industry. The company reportedly specializes in structuring lease financing for production, income-producing and business-essential equipment. MainStreet Cooperative Group, based in Tempe, Arizona is a leading cooperative service company. MainStreet focuses on developing member-owned cooperatives in various industries and also offers consulting and business services to cooperatives within its network, which is approaching $3 billion in aggregate revenues. How this will affect non-profit leasing associations is not known at this time. Common co-ops are agriculture groups who affiliate to obtain a better price. The concept is similar to One World Leasing. American Leasing Alliance is not related to American Leasing of Santa Clara, California. Brokers on the National Association of Equipment Leasing Brokers (NAELB) Listserve have been talking about “banding together” for a “better rate” and “service”. In fact, it is one of the things on the agenda to see if the association wants to get involved in such a “co-op” at their Orlando, Florida Conference April 11 Both Stearns and Selby will be available for your individual questions at “Meet the Leasing Newsmaker:” on Monday, April 11, 11am, Pacific Daylight Savings Time. David Stearns will be attending the National Association of Equipment Leasing Broker convention, Equipment LeasingAssociation convention, and National Equipment Leasing Broker Association. Monday, April 8th, “Meet the Leasing Newsmaker.” 11am, California Daylight Savings time Contact:
David J. Stearns, Richard
W. Selby, -------------------------------------------------------------------------------------------------- New Century Bank---Community Banks Beware!!!! Not made public yet but in the end it will come out: the reason for this bank failure. Federal Reserve Board action of February 10, 2000. Paragraph 6: “ The bank shall not, without the prior written approval of the Reserve Bank, originate or acquire any lease contracts , other than those for which the Bank is contractually obligated in writing as of the date of this Directive.” New Century Bank was allegedly formed by the owners of The Bancorp Group and the lease portfolio of The Bancorp Group was transferred to New Century Bank as soon as the bank opened. Within a matter of weeks the bank auditors declared that the leasing portfolio did not meet their minimum standards and mandated that the majority be charged off. Things got ugly between the actual bank officers and the Bancorp people, a reliable source told Leasing News. This was reportedly crippling. The bank was attempting to sell the remainder of the leases but hadn't found any takers. “ There has been a trend for lessors and discounters to apply to community and regional banks. For thirty years, or longer, RMA-The Risk Management Association ( formerly the Robert Morris Association ) has consistently put equipment leasing and financing of personal property in the high risk arena. *** The Bancorp Group and the lease portfolio of The Bancorp Group was transferred to New Century Bank as soon as the bank opened. Within a matter of weeks the bank auditors declared that the leasing portfolio did not meet their minimum standards and mandated that the majority be charged off. Things got ugly between the actual bank officers and the Bancorp people. This was crippling. The bank was attempting to sell the remainder of the leases but hadn't found any takers. “ Macomb
County bank taken over by FDIC
SHELBY
TOWNSHIP, Mich. (AP) -- New Century Bank has been taken over by the
Federal Deposit Insurance Corp. New
Century, which is located in this Macomb County community, is the
eighth bank in Michigan to fail since 1970 and the first since 1998,
FDIC spokeswoman Roberta Valdez stated. The
bank failed because it didn't have the proper level of capital, Valdez
told The Detroit News. Depositors
are insured for up to $100,000 in each account. Seventeen of those
depositors have money in the bank that is in excess of $100,000, she
said. Anything more than $100,000 in an account could be paid back
to depositors in increments, after assets are liquidated. Depositors
with accounts of up to $100,000 will be paid fully by check for each
account. . New
Century has $19 million in assets and $18 million in deposits owed
to 311 people. On March 28, 2002, New Century Bank, Shelby Township, Michigan was closed by the Michigan Commissioner of the Office of Financial and Insurance Services. The Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed. The FDIC
has assembled useful information regarding your relationship with
this institution. Besides a checking account, you may have Certificates
of Deposit, a car loan, a business checking account, a commercial
loan, a Social Security direct deposit, and other relationships with
the institution. The FDIC has compiled the following information which
should answer many of your questions. Bank
fails in Shelby Township
SHELBY
TOWNSHIP -- New Century Bank was shut, placed in receivership
and taken by the Federal Deposit Insurance Corp., freezing depositors'
money until next week. Leasing News is attempting to obtain more information from the State of Michigan Bank Commission. The Federal Deposit Insurance Corporation has directed us to the appropriate person. While there is a trend for lessors and discounter to approach community and regional banks. equipment leasing is a very difficult industry, as evidenced by the Leasing News List: Former President of PinnLease May Be Hit for Over $6.7 Million PinnFund was doing leasing business out of Carlsbad with PinnLease. But it was a relatively new venture and investors, while they had been approached, had not put money into it yet. The Receiver in the case filed a lawsuit against Tommy Larsen, related companies and a law firm, in bankruptcy court. It's a preference that may climb to $6.7 million. Leasing News is seeking Mr. Larsen’s response to the Bankruptcy Receiver. Filed February 28, 2002, it is public information and now available to Leasing News. It pertains to Tommy Larsen as president and CEO of PinnLease from June, 1999 through March, 2001. Leasing News had attempted to contact Mr. Larson for his response, which we would gladly publish. It involves not only himself, but “CopyFax”, which shows payments over $3,9995,502, which claims he was the owner while he was CEO of PinnLease. It also claims “ fraudulent, non-existent or sub-standard service or products,” stating it receive more than $1.4 million in “direct payments.” The claim also alleges $108,200.999 in transfer of assets, plus $1,000,000 in compensation above his contracted salary of $180,000, plus non-payroll of $419,940.87, not including $713,292.97 in American Express Credit Card payments from 1999 to 2001. ” Plaintiff alleges that T. LARSEN received within one year of PINNFUND filing bankruptcy, the following preferential payments in excess of $508,273.2---an an amount well beyond his exorbitant salary (see Exhibit “F”): a.1. Cashier Checks: $50,000 b. Non-Payroll Checks $13,264.88 c. American Express Charges $424,592.83 d. BMW Financial Payments: $10,315.56 total of $508,272.27 This is a 19 page filing. Mr. Tommy A. Larsen is definitely due his day in court. In this country, everyone is innocent until proven guilty, and we will print any comment he or his attorney would like to make. ________________________________________________________________________ You
may quote any or all without our permission. We are free. No advertising,
banners, or special interest. Please send to a colleague. We are
trying to build our readership. We support all non-profit equipment
leasing associations.
___________________________________________________________________
ELA
Proposes Amendments To Ohio Up Front Sales Tax
Legislative
amendments to the Ohio upfront sales tax provided below were drafted
following joint meetings with Ohio policymakers involving ELA, the
American Automotive Leasing Association (AALA) and National Vehicle
Leasing Association (NVLA). Some
are technical amendments that might gain support in the short term,
as they are revenue neutral. These amendments would define the due
date of the tax payment as when the lessee is required under the contract
to make an initial payment. Also, it would make tax due only on the
incremental change in the tax base when there is an add-on to existing
leases for new equipment or equipment upgrades. The Department of
Taxation is at least neutral on these issues and state legislators
are somewhat receptive. The
second set of amendments labeled Equity Issues are more ambitious
requests dealing with re-financings, rolls, bankruptcy and early terminations
not supported by the Department of Taxation and questioned by many
legislative leaders during the current budget shortfalls as they oppose
granting credits. Nonetheless,
it is inequitable for Ohio to collect tax a second time on a lease
contract that was previously subject to tax. ELA will continue to
pursue these equity issues. Policymakers should not assume lessors
have accepted these losses. In
a separate effort, the Ohio Vehicle Leasing Association joined other
state groups in replacing the one-ton carrying capacity standard for
trucks with a criterion that will apply the upfront tax payment to
vehicles having a gross vehicle weight of 13,500 pounds or less. ELA,
AALA and NVLA had maintained a 6,000-pound gross vehicle weight benchmark
as more appropriate but were opposed by the Ohio Department of Taxation.
The changes in Sub. H.B. 405 as enacted by Sub. H.B. 524 are effective
90 days after signing by Gov. Bob Taft and include a lengthening of
the minimum term of a lease from at least 28 days to at least 30 days
in length. Proposed
Technical Amendments to HB 405 HB
405, as passed, accelerates the collection of sales and use tax on
certain leases entered into after January 31, 2002. The following
proposals are meant to clarify the existing law. ORC
5739.01(H)(4) (with proposed technical amendments to address issues
1 and 2 below)
The
sales tax applies and is due in the period that the initial lease
payment amount is due, regardless of the time when the payment is
paid or property delivered. ORC
5739.01(H)(4)(i) When consideration on an existing lease is increased
as a result of additional equipment, tax shall be due only on the
incremental increase of lease payments relating to the equipment added
to the original contract, in the month that the revised payment is
due. Issue
1 – When should the tax be collected - Lessor’s regularly
deliver products without any initial lease payment being due. This
is typical in the case of equipment that needs to be assembled and/or
tested on site. Once the equipment is set-up AND meets the specifications
set forth in the contract, the lessee will sign/execute a certificate
of acceptance. At this point a lease payment becomes due, but not
before. Therefore, we propose that the law be clarified to read that
the tax becomes due when the lessee is required under the contract
to make its initial lease payment as follows: Proposal
1 - …sales tax shall be calculated by the vendor on the basis
of the total amount to be paid by the lessee under the lease agreement.
The sales tax applies and is due in the period that the initial lease
payment amount is due, regardless of the time when the payment is
paid or property delivered. Issue
2 – Add-ons to existing leases – Lessee’s prefer to
keep their leased assets consolidated on one lease for ease of administration
and efficiency of scale. It is not unusual for a lessee to add new
equipment to or upgrade equipment that is the subject of an existing
lease contract. The law is unclear as to the base on which to calculate
the sales tax due on that new equipment. We believe the original intent
of the law was to calculate the tax at the time the first lease payment
becomes due on the base that is determinable at that time. When additional
equipment is added to the original lease, tax should only be due on
the incremental change in the tax base. This avoids double taxing
the same transaction. Therefore, we suggest the following subsection
language be added to clarify the existing law: Proposal
2 – ORC 5739.01(H)(4)(i) When consideration on an existing lease
is increased as a result of additional equipment, tax shall be due
only on the incremental increase of lease payments relating to the
equipment added to the original contract, in the month that the revised
payment is due. Proposed
Equity Amendments to HB 405 HB
405, as passed, accelerates the collection of sales and use tax on
certain leases entered into after January 31, 2002. The following
proposals are meant to provide equity to Ohio based lessees in the
form of credits. Credits
– as a result of the changes under HB 405 there are many instances
where certain changes to a lease contract could potentially trigger
a new obligation to collect tax on consideration that was previously
subject to tax. The following proposals are meant to provide equity
to the current law by allowing for credits in cases when the original
taxable value of the lease is subject to tax more than once. Issue
1 - Refinancing where payment amount is revised to reflect a change
in term or interest rate, but requires a new contract: Proposal
1 - Where a new lease occurs as a result of a re-financing of a current
lease previously subject to the tax imposed by Section 5739.01(H)(4)
or 5741.01(G)(6), credit will be allowed up to the amount paid on
the original lease, provided that the parties to the lease agreement
and the underlying property remain unchanged. Issue
2 - Re-structuring where multiple lease schedules are combined into
a single schedule combining equipment, revising term and rental payment,
which requires a new contract: Proposal
2 - Where a new lease occurs as a result of a re-structuring of multiple
current leases previously subject to the tax imposed by Section 5739.01(H)(4)
or 5741.01(G)(6), credit will be allowed up to the amount paid on
the original lease agreements, provided that the parties to the lease
agreement and the underlying property remain unchanged. Issue
3 - Termination due to loss of the leased property or loss due to
a lessee default under the terms of the lease: Proposal
3 - Where the lease is terminated prior to the agreed period of the
lease as a result of the property being destroyed or rendered unable
to fulfill the purpose of the original lease, a credit will be allowed
for the tax paid that is attributed to the periods that would have
been due subsequent to the loss. Issue
4 - Early buyout of lease: Proposal
4 - In the event of a termination of the lease due to an early buyout
of the property by the lessee, a credit will be allowed for tax paid
that is attributed to the remaining lease payments, against the tax
due on the purchase price of the property, provided that the sale
is at fair market value. ----------------------
Apology to Pat Roberts re: G.O.L.F. Handicap From: Bill Clark <bclark@leaselo.com> To: perts1@aol.com, kitmenkin@leasingnews.org I admit my lesson has been learned. Thanks to the readership I have a better understanding of a system I thought I already understood. I am guilty of rusty thinking Pat. Fortunately my game isn't as rusty. I'll have to bring my thinking up to the playing level. Thanks again to those who sent me where to find handicap resources and keep mine on line as well. Handicapped but teachable Bill Clark Lease
Finance Mike Price pays nearly a half-million in yacht tax-evasion
case
from the Seattle Times:
Finance
executive Michael A. Price has paid $442,661 in restitution and penalties
after he pleaded guilty last July to attempting to evade about $280,000
in state taxes on a 73-foot yacht, the state Department of Revenue
said. The
founder and former chairman and CEO of Tacoma-based T&W Financial
Corp. agreed to pay the taxes, penalties and interest owed to the
state for taxes on the custom-built yacht He also was sentenced to
30 days of community service by King County Superior Court Judge Charles
Mertel. In
charging Price with a felony last summer, prosecutors said he claimed
he paid $690,000 for the yacht, rather than the $3.2 million it actually
cost. Price
was charged with submitting paperwork to the Department of Licensing
stating he had paid $53,820 in sales tax on the lesser amount when
in fact no sales tax was ever paid. The falsified paperwork enabled
Price to dodge more than $280,000 in sales and watercraft excise taxes,
prosecutors charged in papers filed July 5. Price
resigned in January 2000 as chairman and CEO of publicly traded T&W
Financial, an equipment leasing company that subsequently went out
of business. Prosecutors
said Price falsified paperwork to show that he had purchased the boat
from a T&W Leasing Co., which they said was fictitious. In fact,
he had contracted with Tacoma and Anacortes firms to build the boat
for him, according to the charges.
April 1 Edition--- Kit, I loved this addition, I am still laughing! Thanks, Brenda Bailey :-}} thanks Barry Marks Bsmblik@aol.com Poll: Most Americans think tax cuts generally benefit `someone else' By Will Lester, Associated Press, WASHINGTON (AP) After receiving 86 million tax rebate checks worth almost $40 billion in the past year, Americans still have doubts about who gains, an Associated Press poll says. In fact, four in five think cuts generally benefit someone else. Respondents also favored congressional candidates who support a balanced budget over those who prefer tax cuts, according to the poll conducted for the AP by ICR of Media, Pa., a few weeks before the annual mid-April deadline for filing taxes. ''I don't think tax cuts are helping any of us very much,'' said Betty Perry, a 75-year- old retiree from Spokane, Wash. ''I don't know if we ever see them.'' The number who said tax cuts generally benefit somebody else, 80 percent, is higher than the 61 percent who said in a September 2000 survey that they felt that way about ''targeted tax cuts.'' During the presidential campaign, George W. Bush repeatedly said tax cuts should include everyone, and the administration worked hard to draw the public's attention to last year's mailing of tax rebate checks. The public also is decidedly more sympathetic to congressional candidates who place a higher priority on balancing the budget than they do on cutting taxes with three-fourths preferring the budget-balancers and only a fourth supporting the tax- cutters. ''As the (baby) boomers get toward their older years, Social Security and Medicare are going to become more important to us,'' said Dave Tipple, 52, a graphic designer from Columbus, Ohio. ''If we keep deficit spending, it will put all that in jeopardy.'' Congressional leaders apparently are aware of public sentiment on the issue. GOP leaders expressed worries this winter about the reaction of voters in November if lawmakers do not pass a balanced budget. Both parties are looking for approaches that would balance the budget, while dealing with numerous spending pressures. A year ago, a third of Americans thought their taxes would not go down at all as a result of the tax cuts proposed by President Bush. More than half say now their taxes will not go down at all even after Congress passed tax cuts. The telephone poll of 1,008 adults was taken March 22-26 and has an error margin of plus or minus 3 percentage points. Half the Republicans polled say they expect their taxes to go down, while a third of Democrats and about four in 10 independents feel that way. Republicans were three times as likely as Democrats by 27 percent to 8 percent to say tax cuts were aimed more at them and not someone else. Just over one in 10 independents felt that way. ''They're going in the right direction if they're cutting taxes,'' said 42-year-old Monique Maddox, an insurance agent from Cumming, Ga., who usually votes Republican. ''If it's a true tax cut, it would help people.'' Lee Long, a 29-year-old highway department worker from Sparta, Mo., said he wants politicians to strike a balance between cutting taxes and balancing the budget. ''I think they've got to do both,'' he said. ''They've got to keep the budget in balance, but they've got to help the people now and then.'' Six in 10 expect to get a tax refund this year, about the same number who expected one in AP polls in recent years. Additionally, just over half said they were unwilling to give up deductions to simplify the tax system, while a third were willing to give up some. About six in 10 adults from ages 18 to 44 were willing to give up deductions, while just over four in 10 adults over 45 were willing to make the trade-off. ''I would trade some deductions if they gave me the option,'' said Tipple, the Ohio graphic designer. ''A flat tax would be the best thing that ever happened.'' Despite efforts to give everyone a stake in tax cuts, the public apparently still has doubts about who's getting the most help, the poll suggests. ''There always seems like there is a loophole for people who really don't need the tax cut,'' said Christina Ledbetter, a retiree from Franklin, N.C. The Hard Truth By THOMAS L. FRIEDMAN New York Times A terrible disaster is in the making in the Middle East. What Osama bin Laden failed to achieve on Sept. 11 is now being unleashed by the Israeli-Palestinian war in the West Bank: a clash of civilizations. In the wake of repeated suicide bombings, it is no surprise that the Israeli Army has gone on the offensive in the West Bank. Any other nation would have done the same. But Ariel Sharon's operation will succeed only if it is designed to make the Israeli-occupied territories safe for Israel to leave as soon as possible. Israel's goal must be a withdrawal from these areas captured in the 1967 war; otherwise it will never know a day's peace, and it will undermine every legitimate U.S. effort to fight terrorism around the globe. What I fear, though, is that Mr. Sharon wants to get rid of Mr. Arafat in order to keep Israeli West Bank settlements, not to create the conditions for them to be withdrawn. President Bush needs to be careful that America doesn't get sucked into something |
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