I read your newsletter nearly every day and appreciate your efforts

Sales: Small ticket leasing reps, General equip. Vendor leads are provided. Great comp plan, Draw and Benefits. (6)nationally (3)in the NE Fred St Laurent freds@bwresults.com

Sales: Small to Mid-Size ticket leasing Reps. CA & others. Many Vendor leads avail. Gen. Equip.and Auto Shop Equip. Strong Commish. & Support. Adam at APetty@lvcm.com

Sales: National: 7 offices Medical & IT/ plus. Seeking professionals w/solid book of business & high ethics. Exceptional support & commissions. Expenses paid. 616-459-6800 Email: gsaulter@chaseindustries.com "UAEL"

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MBRM buys entire software intellectual property of Cygnifi (a J.P. Morgan spin-off)

MB Risk Management (MBRM), founded in 1988 and recognized pioneers in financial analytics, is pleased to announce that it has purchased the rights to use the entire software intellectual property of Cygnifi Derivative Services LLC.

Cygnifi was formed by J.P. Morgan in February 2000 to develop applications for derivatives pricing, portfolio valuation, credit risk management, and collateral management. Many of these applications have been based on software acquired from J.P. Morgan through the spin off and are considered to be "best in class." http://www2.jpmorgan.com/CorpInfo/PressReleases/2000/02012000_Cygnifi.htm

The entire collection of Cygnifi's Intellectual Property was valued at US$ 42 million at the company's formation. Subsequent to which US$ 22.3 million in first round financing was raised in August 2000, which further enhanced and expanded Cygnifi's product range. Cygnifi filed for bankruptcy protection in October 2001.

Dr. Mamdouh Barakat, President and Chief Executive of MBRM, has been at the forefront of derivative software for fifteen years. In 1988 he founded MBRM and has succeeded in building up a client base of over 1,500 institutions and 30,000 users world-wide. He believes the acquisition of the rights to the Cygnifi applications will significantly enhance the existing MBRM product range. He added, "When I was approached to acquire the rights I saw it as an opportunity to expand our presence and profile within the market. These applications will complement our existing toolbox approach and complement many of our existing initiatives. MBRM aims to enhance its existing UNIVERSAL range of software and services by integrating them with the best components from Cygnifi's systems and promoting a best of breed solution. The enhanced offerings will be fully supported by MBRM". Dr. Barakat commented that "it is intellectually exciting to be involved with the constant evolution of analytical and risk management products but the compelling challenge has always been to be remain committed to the clients' needs and provide consistent product support and enhancements which keep up to the clients' evolving requirements".

Among the intellectual property acquired by MBRM from Cygnifi are:

• Kapital Risk Management System, a portfolio and risk management application;

• Aladdin, a spreadsheet based multi-currency pricing tool;

• Cygnifi Analytics Library, the result of seven years of development;

• Sampras, a system for monitoring counter party credit exposure and risk;

• Collateral Manager, a collateral operations support system;

• Collateral HeatMap, which provides collateral managers with advanced tools for evaluating risk in a collateralized portfolio;

• Trinity, a legal information service;

• Jamshidian Swap Market Model, a leading edge, proprietary swap market model;

• BLUE Derivatives Pricer, a derivatives valuation application;

• Djinni Swaps Pricer, an interest rate swap valuation application;

• Derivates Studio Web-based Derivatives Pricer, an interest rate and FX derivatives valuation system;

• Vizz Valuation Service, a web application to manage a portfolio of flow and exotic interest rate derivatives online;

• Mondrian, a P&L and Positions consolidation system.

For further information, please contact the MBRM Press Office :

E-mail : pressoffice@mbrm.com

Dr. Mamdouh Barakat

President and Chief Executive

E-mail : mamdouh@mbrm.com

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Mortgage rates reach new low for eighth time this year

By Jeannine Aversa

ASSOCIATED PRESS

WASHINGTON – Rates on 30-year mortgages dropped to a new low this week, the eighth time that has happened this year.

The average interest rate on a 30-year fixed-rate mortgage fell to 5.93 percent for the week ending Dec. 27, down from 6.03 percent in the previous week, Freddie Mac reported Thursday in its weekly nationwide survey of mortgage rates.

This week's rate was the lowest since the mortgage giant began tracking 30-year mortgage rates in 1971. It surpassed the previous record low rate reported by Freddie Mac of 5.94 percent set in the middle of November.

That marked the eighth time this year that the rate on this benchmark mortgage as tracked by Freddie Mac hit a new low. Records that reach back earlier than Freddie Mac's put this week's 30-year mortgage rate at the lowest since 1965, said Freddie Mac spokeswoman Eileen Fitzpatrick.

Rates on 15-year fixed-rate mortgages, a popular option or refinancing, fell this week to 5.32 percent, compared with 5.42 percent in the prior week.

For one-year ARMs, rates dropped to 4.01 percent this week, the lowest level since Freddie Mac began tracking these rates in 1984. Last week's rate was 4.07 percent.

Low mortgage rates this year have been feeding a flurry of home mortgage refinancing activity. The extra monthly cash consumers are saving by refinancing their mortgages at lower interest rates is helping to support consumer spending, which has been the main force keeping the economy going this year.

The Mortgage Bankers Association of America said that refinancing activity accounted for 72.5 percent of total mortgage loan applications filed last week. That was down slightly from 73 percent the previous week.

Low mortgage rates also have been keeping the housing market healthy this year, even as other parts of the economy are struggling because of the uneven economic recovery. Home sales are on track to post a record this year.

Frank Nothaft, Freddie Mac's chief economist, called 2002 an "amazing year" for housing.

"The annual average for the 30-year fixed-rate mortgage rate this year was about 6.5 percent, the lowest annual average in more than 31 years," he said. "That was the primary factor that led to an incredible amount of home building, home sales and refinancing, all of which helped keep the economy from another recession."

This week's mortgage rates do not include add-on fees known as points. Each loan type carried an average fee of 0.6 point this week.

A year ago, 30-year mortgages averaged 7.16 percent, 15-year mortgages were 6.65 percent and one-year ARMS stood at 5.25 percent.

––

On the Net:

www.freddiemac.com

Steve Geller, CLP

Leasing Solutions LLC
20 Dike Drive
Wesley Hills,
New York 10952

"Assisting lessors and brokers in finding funding for "out-of-niche" transactions"

Very reasonable rates

No obligation if transaction is not approved. Call:

Office: (845) 362-6106
Fax: (845) 354-2803
Cell: (914) 552-0842

Check my website:
www.leasingsolutionsllc.com

Providing Solutions to the Equipment Finance Industry...

End of Year Cartoon

http://two.leasingnews.org/cartoons/usark.gif

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VebServ/SaleStream--- Dan Sullivan

I read your newsletter nearly every day and appreciate your efforts.

Regarding the VenServ / SaleStream news item, the leasing support role has been moved from SaleStream to a company owned by David Murray (sp?) in San Diego. Two existing sales people and an operations person have moved to the new company's payroll and are on-site at Ingram Micro. This small group continues to manage the leasing volume generated through the Ingram Micro Resellers.

ABB was a significant funding source but others are being used to fill the void. From what I can tell, the x-SaleStream employees have done a great job of keeping the business flowing during the transition.

SaleStream continues to have a relationship with Gateway to provide sub-prime financing for their customers. This is SaleStream's only product today.

Gresham Financial Services (Irvine, CA) is working with Ingram Micro to provide financing support to their Reseller customer base. We do not provide a leasing product but do provide a Reseller revolving credit facility and an End User financing (which is similar to the leasing product).

I left SaleStream to join Gresham in November. I left Amex shortly after the Sierra Cities acquisition.

Regards,

Dan Sullivan, dsullivan@gresham-financial.com

(Perhaps it is the same David Murry of Preferred Capital fame;

Preferred Capital, Tahoe City, California ( also known as Preferred Lease )

He and Louis Schneider were founders of this company who used plastic

“pre-approved” leasing cards, phone banks of college students, and sold

many leases to the late Advanta Leasing, Comerce Security, among

others. VenServ was also active in the same marketing venue. CapitalWerks

purchased the company from great financial difiiculty due to many factors,

including the lack of available small leasing application funders.

Preferred DID generate a fair amount of loyalty to their employees due to some of the percs: free season pass to skiing, various company-paid outings (i.e. white water rafting) and bonuses (gave away a snowmobile once...) Their former employees are not talking much as everyone was very happy.

This was the premier "application only" operation. It was not basically "internet," but by telephone and mail where there was no relationship selling, just low quote, get the customer approved, change the rate or terms, a "boiler room" operation similar to one as by Republic Leasing of Anaheim, but not as "intense," but more "turn the application around" and move on to the next one.

The approach was the same that was used by some of the salespeople at the Republic Group and Corporate Capital before they were acquired by First Sierra. Corporate Capital even issued a "credit card" to the end user, but did not check their credit for approval until an actual application was received.

The building in Tahoe City was full of little cubicles, each with a recent college graduate, none of whom knew anything about leasing, or sales for that matter. The sales program was very clever. The company bought mailing lists from D&B and other sources and sent solicitations to the prospects. The solicitation included what appeared to be a credit card and the prospect was informed that he/she had been "pre-approved" for up to $75,000. All that it would take to activate the credit line was a call to an 800 number. The system was taken almost directly from the type of letter you get from credit card companies. Naturally, when the prospect called, he had to provide a "little" additional information (again, a la credit card solicitations). Of course, there was never a "pre-approval". The prospect was "pre-qualified".

We received a Plastic Card almost every week at the various companies here at American Leasing. I am sure everyone in California has at one time or other received one of Preferred's mailers. All our advisors are aware of this company, and most said they have received the card.

The company recruited their salespeople directly from colleges, using as a lure the Tahoe ski and fun lifestyle. They did little or no selling, but followed closely the company "line". They were simply order-takers, responding to incoming calls rather than making outgoing sales calls.

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Wine drinkers gaga over 'Two-Buck Chuck'

Carol Emert, San Francisco Chronicle Staff Writer

Andy Brown, a Trader Joe's clerk, took a bottle of $1.99 Charles Shaw wine to his best friend's parents' house for Thanksgiving. The parents are wine snobs, he says, and can afford to drink just about anything.

But Brown got a surprise when he revealed the trick to his friend before dinner. "My parents already pulled that one on you," his pal says. "They served Charles Shaw at my wedding this summer."

"Two-Buck Chuck" has created a cash register tsunami at Trader Joe's, the line's exclusive retailer. Wine drinkers are stuffing their shopping carts with multiple cases, wowed by easy-drinking Cabernet Sauvignon, Merlot, Chardonnay and Sauvignon Blanc selling for the price of bottled water.

Introduced in February, the Charles Shaw label is on track to be one of California's top-selling 750-ml wines this year, and one of the top 20 brands in the country, says wine industry consultant Jon Fredrikson, who estimates sales at about 1 million cases in 2002.

Charles Shaw is easily No. 1 in terms of buzz.

Wine chat rooms on the Internet are atwitter with Charles Shaw myths -- even as the real Charles Shaw, who left the wine business in 1991, works in relative obscurity for a software firm in Chicago.

One legend contends the wine was dumped by airlines because of a post Sept. 11 corkscrew ban. Another maintains that a winery owner named Charles Shaw is ditching the stuff to reduce his assets in a divorce settlement.

The real story is that the original Charles Shaw winery was disbanded in the early 1990s after its owners divorced, and the label was sold to Bronco Wine Co., a mass-market producer in Ceres (Stanislaus County). The name fell into disuse and was resurrected at random earlier this year for Trader Joe's.

The $1.99 price is a matter of simple economics. The United States is facing an unprecedented wine glut because of overplanting during the 1990s boom years, combined with consumer and restaurant demand that began shriveling during the recession -- and seriously dried up after Sept. 11.

Bulk Chardonnay that once sold for $6 to $8 a gallon can now be had for $1 - - less than the cost of production. Grapes are withering on the vine from Fresno to Monterey because picking them would cost more than they would fetch at market.

Thus wine marketers are "buying wine way below cost and passing that along to the consumer," says Fredrikson, noting that low-end brands such as Glen Ellen were built during a similar glut in the 1980s. The surplus is expected to last another one to four years.

Bronco has been using both its own grapes and buying bulk wines from San Joaquin County, Sacramento, Lodi and Mendocino, says Bronco spokesman Harvey Posert.

Bronco has an extra financial edge -- a distributor's license, which allows it to ship directly to stores in California. But it must still hire wholesalers in other states.

Two-Buck Chuck costs around $3 outside of California -- largely because of distribution costs, says Chris Condit, Trader Joe's wine buyer.

The distributor's license "is our big advantage," says Bronco president Fred Franzia, adding that he is not surprised at the meteoric rise of Charles Shaw. "I was expecting a bigger reaction because of the quality," he says.

It is fitting that Bronco, which makes a host of low- cost wines including Hacienda and Forestville, is upending the wine world with this new venture. The curmudgeonly Franzia, who owns Bronco with family members, is known as a Wine Country bad boy.

Napa County vintners have been tussling with Bronco for years over its brands, such as Napa Ridge, that use Napa in the name but are made of grapes grown elsewhere. Bronco won a court round in the matter last week, but is likely to face an appeal.

Bronco was also in the news in 1993 when Franzia and his company were fined $3 million for misidentifying grape varietals on their labels. Franzia was forced to leave his president's chair for five years.

Another personality in the Charles Shaw story is, of course, Chuck Shaw himself. Now 59, Shaw grew up in Michigan, attended West Point and graduated from Stanford Business School in 1971.

After working in Paris as a banker and befriending people like negociant Georges Duboeuf, Shaw and his wife Lucy bought a winery in Napa in 1974 to make Beaujolais. (A 1989 Chronicle article recommended the $6.50 Charles Shaw Beaujolais under the headline "Light Reds May Upstage White Zin.")

The Shaws, who have five children, divorced in 1991 and the winery changed hands a couple of times. Bronco bought the name in 1995. Lucy Shaw still lives in St. Helena.

Chuck Shaw moved to Chicago in 1991, where he is now an executive at a software firm. A friend sent him a newspaper article about the new Trader Joe's line, Shaw says, but he didn't read it.

"It's hard for me," he says. "Gosh, I loved the wine business so much. It's hard for me to think about it."

As for the new incarnation of Charles Shaw wine, Shaw says he has tried it, but prefers drier wines. "It's well made and it is certainly an attractive value," he adds.

It is a common practice among wineries to create steeply discounted secondary lines to off-load their excess juice. Trader Joe's, which sells gourmet foodstuffs at bargain-basement prices, carries many such lines.

Condit says sales of Charles Shaw have not eaten into the rest of Trader Joe's business, in part because the glut -- which is happening around the world, not just in California -- has pushed down the prices of many wines.

Some customers seem to be drinking more because wine has become so affordable, he says. "A lot of people are trying (Charles Shaw) and realizing they can afford to have a glass every day."

Improving quality is another factor.

"The ocean of wine that's hitting the market isn't mediocre or bad wine -- that's the amazing thing," says Condit. "Everybody is using oak barrels and stainless steel refrigerated tanks -- things only superpremium wineries used to do."

As a bulk wine leader, Bronco has become the eighth biggest wine producer in California, comprising 2.6 percent of California's wine production this year. That's up from 1.6 percent, and a 12th ranking, in 2001, says Fredrikson.

Charles Shaw accounts for most of that growth, but Bronco brands such as Coastal Ridge and Forest Glen are also selling well. "People are looking for value right now," Fredrikson says.

Industry sources estimate Bronco is wholesaling cases of Charles Shaw for $17 to $20 -- with bottles and corks accounting for $6 to $7 of that -- and making $4 to $5 profit per case, with Trader Joe's getting a similar cut.

Condit declined to discuss Trader Joe's margins. Franzia says, "Everyone is making a slightly reasonable profit."

While consumers may be tempted to stock up on a 10-year supply of Charles Shaw, Condit recommends drinking the white varietals in one to two years and the reds within three.

"These are fruitier, ready-to-go wines," says Condit. "They are not Bordeaux by any means."

E-mail Carol Emert at cemert@sfchronicle.com.

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One of the top stories this year had this headline from the New York Times:

Fraud Charges For Executives At L.I. Firm

Metropolitan Desk

New York Times

ISLAND PARK, N.Y., -- Forty federal agents raided the small headquarters of a company that leases medical equipment and arrested its top officers on June 21 for what prosecutors described as nationwide bank frauds that could total $200 million.

Just 10 days of investigation into a small part of the company's dealings found $6.5 million of fraud, prosecutors said in United States District Court in Central Islip, where three suspects were arraigned. A fourth was arraigned in Boston.

Prosecutors said that the company, the RW Professional Leasing Corporation, concocted elaborate schemes using up to 100 rented mailboxes as far away as California to send phony checks, sham invoices, bogus leases and other false documents to banks in various states. Based on those documents, the banks lent RW millions of dollars to buy equipment and lease it out, prosecutors said.

The schemes included multiple loans from different banks for the same medical equipment and loans for equipment that was never bought or leased, prosecutors said.

Those arrested were RW's president and co-owner, Rochelle Besser, also known as Rochelle Drayer, 66, of Long Beach; her brother, RW's senior vice president, Barry Drayer, 62, who operated a branch in Wellesley, Mass.; another brother, Roger Drayer, 59, of Long Beach, who holds various titles; and Roger Drayer's daughter, Jennifer Tarantino, also known as Jennifer Drayer, 31, of Oceanside.

(There are several civil lawsuits brought forth by over a dozen community banks and several "discounters" who claim the same lease was sold two or three times to different lenders, including non-existent equipment and altered leasing applications. Readers who can up-date Leasing News on these activities

please contact us at www.leasingnews.org)

June 21,2002, forty FBI agents raided the offices of RW Professional Leasing in Island Park, NY, on Long Island. Those arrested were RW's president and co-owner, Rochelle Drayer Besser, also known as Rochelle Drayer, 66, of Long Beach, California; her brother, RW's senior vice president, Barry

Not arrested was Rochelle Drayer Besser's husband, Wallace, who reportedly has been ill for the past three years and has not really been active in the business since 1996, so that probably explains why he was not arrested. However, he was named as a defendant in a lawsuit filed on Tuesday, June 18th by a consortium of community banks. and arrested Barry Drayer and Rochelle Drayer Besser, Roger and Jennifer Drayer.

So far the investigation has found $6.5 Million of outright fraud with a lot of hard evidence.

Prosecutors said RW Professional Leasing Corporation concocted elaborate schemes using up to 100 rented mailboxes as far away as California to send phony checks, sham invoices, bogus leases and other false documents to banks in various states. Based on those documents, the banks lent RW millions of dollars to buy equipment and lease it out, prosecutors said.

The schemes included multiple loans from different banks for the same medical equipment and loans for equipment that was never bought or leased, prosecutors said. It is said it may go higher than $200 million, including the American Express-Sierra Cities portfolio. Vendors, brokers, attorneys, and othersare owed money. There may also be “brokers” and others to be named in the scheme.

Leasing News had following the RW Professional story since last year:

(8/2001) "A high ranking executive with Amex has verified that Amex is investigating possible problems with the portfolios of RW Professional Leasing...

"(9/2001)“-Interview with Charlie Lester. First, who is he?

After a 19 year sales and management career with IBM, Charlie settled in Atlanta and somehow got into the leasing business in 1984. In 1986, he founded Lease Pro, Inc. and operated it as a medical niche broker until 1997 when First Sierra Financial acquired most of its assets. The remaining assets were assigned to LPI Financial Services as a new corporate entity.

“-After his two-year contract was honored, he resigned and sat out his non-compete period before expanding LPI Financial into a niche broker offering working capital loans to medical professionals.”

To understand what went wrong, you need to understand how discounting a lease

and a private label program works.

Discounting leasing is when you have a lease contract with your name on it and

discount the stream of payments to a buyer ( bank, funder, syndicator) ( you may

or may not keep the residual and may discount it too, meaning present value the

stream of payments and the residual, too ). You get paid up-front, instead of the

difference between the monthly interest earned and paid. It may be recourse

or non-recourse, but it certainly will have “representations and warrants.”

Sierra Cities bought many discounters local operations and combined them

into one, calling it a Private Label Program. They offered the ability to

continue to discount plus to accumulate leases and syndicate them to the

public for a better rate of return; a better margin and more liberal credit

policy. Westinghouse, CIT, Heller, Textron, and of course, GE also

have private label programs, but Sierra Cities carried the Colonial Pacific

Pegasus program one step further. In fact, this division was making

a $20 million annual profit from its inception. What made it so successful:

Oren Hall, Mark McQuitty, Jim Raeder, Charlie Lester, Fred Van Etten,

Mike Wing and others were in leadership capacity

What went wrong?

LN. I think you should explain what the Sierra Cities private broker program

worked to understand RW Professional Leasing as a Private Label Recourse broker.

Charlie Lester: A Private Label Recourse broker has a contract with a funding source to buy deals at a buy rate 150-250 basis points lower then their non-recourse brokers. In return, the recourse broker is responsible for the collection of all monthly payments and in the event of default, to repurchase the entire lease contract. The recourse broker may also receive an even lower buy rate for handling all personal property and sales taxes.

( somehow the arrangement right before the acquistion by American Express

went from recourse to non-recourse, it is reported. )

---- this is only partial of the first of a three part interview explaining how

the private label program works, now assembled here-----

(9/2001)Open Question for American Express Business Finance "Based on extremely reliable insider information, Leasing News has been told that a former First Sierra employee would be agreeable to "give up" Depping in return for a lawsuit settlement with American Express. The question is, "Does American Express want Thomas Depping to ‘answer’ for actions he may or may not have taken?" (In reality, American Express settled with this person, Fred Van Etten,

who obviously has signed an agreement not to talk publicly.)

Another individual known to Leasing News who did not want to be named says he was employed by Sierra Cities, came into Houston for a meeting, and at a Chinese Restaurant with Fred Van Etten, Greg McIntosh, Jim Raeder and perhaps two other people, one of whom might have been Tom Depping, when the conversation of RW Professional came up. ( He specifically he did not remember

if Depping was there, but he believed Depping was aware of the Old Kent Financial deal with Barry Drayer. By the way, this person is a regular reader

of Leasing News. ).

He told the gathering he knew the company as Professional Leasing, who did

a lot of dental business, when he was at the Vanguard Division of Old Kent

Bank for eleven years, this person ripped them off for between $6 million to $10 million. Why should Sierra Cities do business with them? he asked. He was told Sierra Cities had the company and personal guarantee---and it was recourse, so Sierra Cities was allegedly protected. ( Now the case with American Express Business Finance centers on “what happened to the recourse agreement?” and was stock involved in the “arrangement?” What does Greg McIntosh know? ( He says

he knows nothing. Editor) Will Fred Van Etten talk? ( Not today?) Will Jim Raeder speak publicly why he was let go at Sierra Cities? P.S. It wasn’t about Republic Leasing. The spin doctors may have put that out, but Fred Van Etten and Jim Raeder were let go for the same reason. (Leasing News revealed some of it in Mark McQuitty’s “Whatever Happened to Republic Leasing of Anaheim. Editor).What did Oren Hall know?( Reached at his residence, he said he was retired and didn’t want to make any comment?) Will Charlie Lester write the entire story for Leasing News, naming names, places, dates? (Perhaps we should have Charlie Lester on “Meet the Leasing News Maker.”)Did it center around the Private Label Program and RW Professional? Is that why Leasing News spent three days defining private label recourse and non-recourse? Does the leasing public have the right to know to protect themselves in the future? Perhaps from a legal standpoint, do stockholders have the right to know the truth? Is fraud involved. ) How did RW allegedly get away with it with Vanguard? (He made a deal.)

Here is a ethics question for readers who are funders:

Broker calls up funding source and says, "How did you like the way I screwed

you over for $10,000,000. Was it as good for you as it was for me? Well, I

thought it was fun and now you have a decision to make---do you put me in

jail and get nothing or will you settle for $3,000,000 and give me a clean

bill of health, so I can go back to business as usual?"

To all the funding sources, what would your answer be?

(None of the funding sources responded, as they knew they would most

likely take the money. Editor )

If your company policy is to prosecute, how many fraudulent brokers, vendors or lessees have you brought criminal charges against in the past five years?

( The answer to the question: Old Kent Financial took the deal---and is reported American Leasing Express did the same thing. Not illegal, but there are many community banks and individual lessees who wish the deals had not been made. Editor )

(9/2001) Charlie Lester American Express and Private Label Programs.

http://www.leasingnews.org/docs/Private_label.htm

.(10/02)RW Professional starts suit against Leasing News for stories written

(around this time the affects of the 9-11 tragedy affected American Express,

as well as others, as well as the legal action taken by RW Professional, although

we were still collecting background information and working on several stories.)

10/2001) . There was a settlement m