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Kit Menkin’s Leasing News
www.leasingnews.org Thursday,
June 6, 2002 Accurate,
fair and unbiased news for the equipment Leasing Industry
Headlines----
Dennis Kozlowski---Delusions of Grandeur
Tyco Turmoil May Hurt CIT's Sale, IPO, Investors Say
Telemark---Seeking Information
From: Andrew Thorn athorn@nowlease.com
Leaseback Capital---Canada Need
Suggestions for Top Gun Salesman and Sales Manager
Semiconductor industry group projects recovery
Subject: Woden From: Jim Harrington jcapital@ecity.net
For the "High Brows"---Jeff Taylor on FASB
ELNA Conference August 28-30 Atlanta, Georgia
Harborside Capital/Wafra Investment Join Venture
###
Denotes Press Release __________________________________________________________________ Dennis
Kozlowski---Delusions of Grandeur by
Christopher Menkin As
a credit analyst or manager, when you start to see red flags pop
up, you should look
deeper. Such is the case with Dennis Kozlowski, whose ethics as
a president of
a major corporation should be viewed with disdain. Perhaps this
starts with a corporation who evades taxes by being located in Bermuda.
In
the recent case, reading between the lines, he resigned as president
because he
knew he had been caught, not just by the State of New York, or the
Internal Revenue
Service, but inadvertently by the Securities Exchange Commission. Here
is an excerpt from the New York Times story: “Investigators
say the funds Mr. Kozlowski used to purchase at least six of the
paintings were borrowed from Tyco through an executive loan program
that was supposed to be used for a different purpose -- helping
top employees pay taxes that become due upon the vesting, or taking
full ownership, of restricted stock awards. In
the charges of avoiding sales and income taxes: “According
to the indictment, Kozlowski and others’ agreed to generate
false documents, such as invoices and shipping documents, to make
it appear as though the art work was to be shipped out of state
and therefore not covered by New York state sales tax provisions.’
Tyco employees were allegedly told to sign false documents reflecting
receipt of the paintings in New Hampshire, only to ship them back
to New York.” Many
people in the art world said yesterday that one anomaly in the Kozlowski
transactions, which the indictment says took place from August 2001
to June 3, 2002, was the apparent use of Southern Trucking of Brooklyn.
That trucker was not known to dealers who are used to working with
a handful of well-known and heavily insured companies whose specialty
it is to ship valuable and often delicate works of art. Chris
Hanson, president of Southern Trucking, said in an interview yesterday
that he had no knowledge of having done business with either Tyco
or Mr. Kozlowski, adding that he would "have to check the records." Mr.
Kozlowski bought the paintings, which included a Renoir and a Monet,
for $13.1 million for his 13-room apartment at 950 Fifth Avenue,
the prosecutors contend. To avoid paying New York sales taxes, they
charged, he shipped empty crates to Tyco's headquarters in Exeter,
N.H., and transported paintings back and forth from New Hampshire
to Manhattan. According to the indictment, when Mr. Kozlowski bought
a Monet for $3.9 million it was delivered to his Fifth Avenue apartment,
but Ms. Berry sent a document to the dealer, Alexander Apsis, saying
that it would be shipped to New Hampshire. Altogether
he is said to have saved about $1 million in sales tax. The
indictment says his purchases came from three well-known dealers
but does not name them. Mr. Apsis and Vance Jordan, both from Manhattan,
confirmed their sales to Mr. Kozlowski. Mr. Apsis, a private dealer
who at one time ran Sotheby's department of Impressionist and modern
art in New York, works out of a Fifth Avenue apartment. "He
is unaware of any wrongdoing," said Robert Katzberg, the lawyer
for Mr. Apsis. "But he's cooperating with the investigation." Mr.
Jordan, who runs a Madison Avenue gallery, is one of the world's
leading specialists in American art. The
third dealer, Richard Green, runs a large gallery on Bond Street
in London. The gallery, one of the biggest buyers at auctions both
in this country and abroad, is no stranger to the New York art world.
The gallery exhibits twice a year at international art and antique
fairs at the Seventh Regiment Armory on Park Avenue, where its booth
has been filled with a mixture that has included Dutch and Flemish
old master paintings, British sporting scenes and Impressionist
works. People
close to the investigation said that typically, Ms. Berry would
visit a gallery either alone or with Karen Kozlowski, Mr. Kozlowski's
wife, and look at various pictures from various fields. Her purchases,
they said, were diverse and ranged from a Dutch old master to the
French Impressionists, generally second-tier work by big-name artists. Often
the galleries would send the artworks to Mr. Kozlowski's Fifth Avenue
apartment, these people said, so the couple could "live with"
the painting or sculpture for a while — a common practice,
especially when a client is spending millions of dollars. The
people close to the investigation said yesterday that Ms. Berry
had told the dealers that rather than use their truckers, she wanted
to send several works of art bought from the various dealers to
Mr. Kozlowski's house or office in New Hampshire and that it would
make sense to send them all at once with her trucker, Southern Trucking.
The trucker provided receipts for the artworks shipped, lawyers
knowledgeable about the investigation said. The
first of the Kozlowski purchases under investigation came last August
during a London shopping trip when he bought three paintings from
the Richard Green Gallery, one by Sir Alfred Munnings, the English
painter of horses and country life; another by Adolphe-William Bouguereau,
the 19th- century French academic artist; and a third by John Atkinson
Grimshaw, a Victorian painter. He paid a total of $1.98 million
for those paintings. A
spokeswoman at the Richard Green Gallery said: "We've been
aware of the investigation for two weeks and are cooperating fully.
We don't believe we've engaged in any violation of New York law."
She referred further questions to Jeremy Epstein, a partner at Shearman
& Sterling in Manhattan, who declined to comment. A
senior member of Mr. Morgenthau's office said yesterday that prosecutors
were "taking a look at other dealers and other customers." Mr.
Kozlowski's indictment became a topic of discussion yesterday at
a meeting of the Art Dealers Association of America. "I think
people learned long ago that you don't send the empty boxes —
everybody was shocked," said Gilbert Edelson, who is a vice
president of the association. He added that he had not heard "of
any other dealers subpoenaed at the moment — it's still early
days." Although
the indictment was part of a continuing look by the district attorney
at what is thought to be fairly common sales tax fraud involving
purchases of items like jewelry and furs, many of Manhattan's leading
art dealers said they were appalled. "Most
dealers and most collectors are extremely careful," said Andrew
Fabricant, director of the Richard Gray Gallery in Manhattan. "We're
talking about very wealthy clients who don't want this kind scrutiny."
And this March 30th news story: Tyco
International Ltd. Chief Executive Dennis Kozlowski and Chief Financial
Officer Mark Swartz lent $14.1 million in 2000 to Warren Musser,
a board member of former affiliate TyCom Ltd., the company said. Perhaps
this is corporate culture, where directors take care of each other.
They are
not elected by the public, and really the stockholders get to “rubber
stamp” the
choices. They are really insiders.
This
opinion is also shared by Henry M.Paulson, Jr., who Patrick McGeehan
of the
New York Times reports: WASHINGTON,—
In a rare public appearance, the chairman and chief executive of
Goldman Sachs, Henry M. Paulson Jr., called for changes yesterday
in how public companies are run, audited and regulated to help restore
investor confidence. Mr.
Paulson said faith in corporate executives was at a low and was
forestalling a recovery in financial markets. He proposed several
measures to rebuild trust, including restrictions on the ability
of chief executives to sell shares of their own companies. Tracing
the crisis back to the collapse of the Enron Corporation last fall,
Mr. Paulson said during a lunch meeting at the National Press Club
here, "I cannot think of a time when business over all has
been held in less repute." In
his speech, he was surprisingly critical of the corporate executives
and directors who make up the client base of major investment banks
like Goldman. Seldom does such a powerful Wall Street executive
take on corporate America so directly. "The
business community has been given a black eye by the activities
and behavior of some C.E.O.'s and other notable insiders who sold
large numbers of shares just before dramatic declines in their companies'
share prices," he said in his speech. He did not name any companies
on that score. Corporate
directors should require executive officers to hold their company
stock for "significant periods of time" and company insiders
should have to give back any gains from sales of their companies'
stock made less than a year before a bankruptcy filing, he said. Wall
Street firms have their own troubles, of course, and Mr. Paulson
spent a few minutes discussing conflicts of interest at investment
banks like Goldman. He said he felt compelled to speak out because
the situation had become dire. Other than the two top executives
of Merrill Lynch, which has been embroiled in an investigation into
investment recommendations of its stock analysts, senior executives
on Wall Street have kept low profiles in recent months. "I
think this speech is a month or two overdue," Mr. Paulson said. Still,
he devoted most of his speech to corporate governance and accounting
reform. In the wake of several notable restatements of company earnings,
investors have lost faith in the American accounting system, he
said. He
cited two factors: the pressure chief executives feel to report
bigger profits every quarter and the complexity of the "rules-based
approach" that underlies the generally accepted accounting
principles set by the Financial Accounting Standards Board. That
system, he said, is "ripe for manipulation" and should
be updated and simplified quickly, under the oversight of the Securities
and Exchange Commission. "If
the outcome of all we have been through in the last six months,
all the soul- searching and debate, is business as usual at the
F.A.S.B., then we will have missed an enormous opportunity for improvement,"
Mr. Paulson said. The
accounting used by J. P. Morgan Chase and some of the huge banks
that compete with Goldman has long been a pet peeve among their
investment bank rivals. Mr. Paulson reiterated that complaint yesterday,
saying that companies specializing in financial services should
be forced to carry assets and liabilities on their books at their
current market value, not at their historical cost as many do now. To
the certain consternation of many of Goldman's clients, Mr. Paulson
predicted that companies eventually would have to treat the stock
options they give executives and employees as an expense. Executives
of technology companies, among others, have fiercely fought efforts
to make companies count the value of options — a big component
of pay in certain industries — as a cost of doing business. "Ultimately,
I think options will be expensed and the accountants will win out,"
he said. "But who knows?" Mr.
Paulson also said companies, to avoid the appearance of a conflict
of interest, should not buy consulting services from the accounting
firms that audit their financial reports. As for Goldman's own conflicts
of interest in trying to serve corporations and investors who buy
their stocks and bonds, investors should trust the firm to police
itself, he said. "For
an integrated investment bank like Goldman Sachs, conflict management
has always been a core competency," he said. But he added that,
through the boom and bust of telecommunications and technology stocks,
"we have not done as good a job as we might have of preserving
and protecting the independence of our research analysts." Goldman
has made some changes in the organization of its stock research
operation, installing an ombudsman and giving the audit committee
of the firm's board oversight of research. But the firm, like Merrill
and others, has clung to the view that analysts must play a role
in helping to land investment banking assignments from the companies
that they rate. "The
major part of our effort will be to continue to focus on doing better
fundamental analysis," Mr. Paulson said. "The next time
something looks too good to be true, we hope we have the wisdom
to see it and the courage of our conviction to act accordingly." --------------------------------------------------------------------------------------------------- Tyco
Turmoil May Hurt CIT's Sale, IPO, Investors Say Exeter,
New Hampshire: Tyco International Ltd., seeking to sell its CIT
Group finance arm for as much as $6.5 billion, may get less than
$5 billion as the ouster of Chief Executive Officer Dennis Kozlowski
adds to concern about stability, shareholders and analysts said.
( Tyco paid $8.2 billion. editor ) ``This
is an absolute lack of management credibility,'' said Tom Giles,
who owns shares of Tyco, the top maker of electronic connectors
and security systems, among $1 billion in assets he helps manage
at Dean Investment Associates. ``People are afraid there's something
else out there.'' Tyco
shareholders have lost half their investment in the past three and
half years, a period during which the 55-year-old former accountant
was paid about $300 million in salary, stock options and other compensation.
Kozlowski was forced out yesterday and indicted today for trying
to evade about $1 million in New York sales tax on art purchases
valued at $13.2 million. The
charges, to which Kozlowski has pleaded not guilty, raised concern
about his personal money management and oversight of the company,
putting its future in question, investors said. Tyco has lost more
than 72 percent of its value in 2002 alone. (compliments
of www.efj.com ) _________________________________________________________________ Text
of indictment http://news.findlaw.com/nytimes/docs/tyco/nykozlowski60402ind.pdf ____________________________________________________________ Telemark---Seeking
Information Can
you get me any information on Telemark? We have been in the process
of buying
portfolios and finance companies over the last year and I have been told
by some of our people that they would be a good fit for us. We cant seem
to find them on the internet? Any information would be helpful. Thanks. Jay
Apsey, Executive VP Federated
Capital Corporation 30955
Northwestern Highway Farmington
Hills, MI 48334 248.737.1300
Ext. 500 email:
japsey@federatedcapital.com -----------------
From:
Andrew Thorn <athorn@nowlease.com> (His
auto responder)
Hello, This
is a very exciting week for me and I will be out of the office and somewhat
slow to respond. I
am competing in my very first Iron Man Triathlon. What does this
mean? It
means I will swim 2.4 miles, ride 112 miles (on a bicycle) and run
(or walk
or crawl) 26.2 miles in a race in Provo Utah. I
hope to finish in less than 12 hours I only get 17. I will be checking
in and
hope to find time to respond. Enjoy
Life, Andrew ----------------------------------------------------------------------------------------- Leaseback
Capital---Canada Have
you heard anything of Leasebank Capital Corporation in Canada? Apparently
they've opened a small ticket division, with many people from the
larger
Lessors (CIT, Heller). Please post something if you've heard. Thanks Anonymous
please Need
Suggestions for Top Gun Salesman and Sales Manager October
5, Leasing News will be hosting two panel workshops at the United
Association of Equipment Leasing Fall Conference in San Diego, California. Need
one more “Top Gun” salesman. Criteria is a W2 with at
least $250,000 a
year. Not a broker, but a salesman who works for a company and
earns at
least $250,000. We want to have him on the panel with three other
“Top Guns” to
tell us how he does it. Need
one more “Top Gun” sales manager. This is a person who
manages company salesmen,
not brokers. I have three committed and am looking for a fourth.
This
is to join a panel on Saturday morning, San Diego, October 5th. Any
suggestions will be appreciated. Kit
Menkin, Leasing News kitmenkin@leasingnews.org Financial
Services Technology Forum: Online 2002 Redefining
E-Delivery September
22-24, 2002 Scottsdale, AZ Don't
miss the unprecedented coverage on how to maximize the impact of
Internet technology. Register now! http://www.tfconferences.com/conferences/FSTF/index.html _______________________________________________________________ Semiconductor
industry group projects recovery REDWOOD
CITY, Calif. (AP) Worldwide semiconductor sales are expected to
increase 3.1 percent in 2002 and jump 23.2 percent in 2003, according
to a midyear forecast released Wednesday by an industry trade group.
The
Semiconductor Industry Association, which represents most U.S. chip
makers, said the market is now in the initial phases of recovery
after its most challenging year in history. ''Our
expectation is that the recovery will gain momentum in the second
half of the year and continue with strong growth through 2003 and
2004,'' said Dwight W. Decker, chief executive of Conexant Systems
and a semiconductor association board member. Worldwide
sales of all chips are expected to total $143 billion in 2002, $177
billion in 2003 and $213 billion a 20.9 percent increase in 2004.
Another slowdown is expected by 2005. The
growth will be fueled by increases in sales of cellular phones and
personal computers as well as other digital consumer electronics
equipment. The
Asia Pacific market is leading the recovery. Sales are expected
to increase 27 percent to $51 billion in 2002 the only region that
will see a year-over-year sales growth this year. The
Americas, on the other hand, are expected to decline 4 percent to
$35 billion in 2002 but grow 24 percent to $43 billion in 2003 and
22 percent to $52 billion in 2004. The
Semiconductor Industry Association has represented U.S. chip manufacturers
since 1977. Its members account for more than 90 percent of U.S.
chip production. On
the Net: Semiconductor
Industry Association: http://www.semichips.org __________________________________________________________________
Subject: Woden
From: Jim Harrington <jcapital@ecity.net>
Hey
Kit, Curiosity
has got the cat. Who is Woden, as in today's headline 'Woden's Day----The
Leasing God is Angry!!!'? Just
wondering because I grew up in Woden, Iowa. Jim (Wednesday
is named after Woden...much of our language comes not from the
English, but the Scand avian countries. Woden was a god of hunting. Thor
for Thursday was the god Thor...language is a fascinating as
it teaches you a lot about “history.” (I
thought of Woden for Wednesday, as it was Woden's day---and the
leasing god's being angry came from Mark McQuitty in a comment I
did not print, but definitely was appropriate. Mark said, " The
Leasing gods are angry...” He will be on the “sales manager” panel.
Republic, Sierra Cities, CapitalWerks, he has taught many salesmen
to make a lot of money. This is a first time appearance for
this leasing industry “Top Gun” and man of many talents.
Editor ) for
the “High Brows” Jeff
Taylor’s Executive Caliber.WS Leasing
Training for Leasing Professionals “Dedicated
to FASB.”
http://www.leasingnews.org/docs/Accounting_Tax_Politics.htm ------------------------------------------------------------------------------- ELNA
Conference August 28-30 Atlanta, Georgia
Ritz-Carlton, Buckhead
http://www.elessors.com/Events/f2.html
Previewed by Alan Zeppenfeld for Leasing News Picture
this!! You are invited to a banquet at an elegant mansion, with
a select number of other guests who are all important to your business
success, and your host’s main objective is to make sure that
you get ample opportunity to meet, interact, and do business with
everyone there. Can you picture that in your mind? Great!! Now
if you want to make that picture a reality, go to WWW.elessors.com
and check out the information on the eLNA Annual Networking Conference. Almost
a year has gone by since we Rode the eTrain. Kit has accepted my
mea culpa for spending so much time attending the conference presentations
last year that I was late in submitting my article and asked me
to cover it again. Being very impressed with John Semon’s
“quality over quantity” approach, I wanted to get a sneak
preview of this year’s event to see if that would still hold
true or if eLNA was headed along the “just another conference”
route. John was very candid and it was soon clear to me that here
is a man that is focused on his ideals and principles, sees himself
with a defined mission in the leasing industry, and has great passion
for the journey he is taking. “It
all begins with networking “. Although Semon spent the first
part of his career in a major corporation arena, he is now drawn
to operating primarily in the pre-IPO company environment. This
focus is not intended to isolate these companies from the large
corporations, but to enable them to have a forum to present their
products and find business opportunities through networking. Technical,
commercial finance and manufacturing companies find common ground
in eLNA because of their involvement in developing and utilizing
Internet capabilities. Semon
sees the leasing industry paradigm changing in the eLeasing environment.
While the traditional leasing environment has been made up of the
whales and the minnows, the emerging eLeasing environment will tend
to be the fast versus the slow. Another major change is that in
the past leasing companies have been very proprietary in their activities,
but success in the future will require a collaborative approach.
This presents an interesting dilemma to the presenters at the Networking
Conference as they are there to do business and make sales, but
they have the indigenous fear that they will give away their “secret
handshake” to their competitors. This year’s conference
has effectively addressed this by offering several types of workshops
and briefings so companies may chose comfortable environments for
their presentations. Although
I am not from Missouri, I still have a “show me” approach
to life. From everything I’ve seen, the eLNA staff delivers
as advertised and more. All I can say about this year’s conference
is that if you consider yourself a serious participant in the eLeasing
world, you really ought to be there!! ___________________________________________________________________ Harborside
Capital Group LLC and Wafra Investment Advisory Group, Inc. announce
Joint Venture Agreement. Harborside
Capital Group LLC and Wafra Investment Advisory Group, Inc. are
pleased to announce they have entered into a Joint Venture Agreement.
Under the terms of the agreement, Harborside will originate and
service equipment lease transactions for Wafra’s income fund.
The focus of the program will be to invest in true lease transactions,
both single investor and leveraged, with quality credits that offer
the potential for residual upside. Marketing of the program will
be accomplished through a combination of a direct end user sales
effort as well as purchasing leases in the secondary market. Wafra
Investment Advisory Group, Inc., is a U.S. registered investment
adviser that was founded in 1985. Wafra, as part of a major international
investment institution offers an extensive range of investment services
including portfolio securities management, direct equity investing,
real estate, equipment leasing and other structured products. Wafra
sponsors seven external funds and has assets in the United States
in excess of $3.3 billion. Harborside
Capital Group LLC was founded in 2000 by George J. Fry and Peter
C. Platt. Harborside is an independent equipment leasing company
that generates transactions for its own account as well as for syndication.
Harborside offers vendor sales finance/leasing programs, private
label leasing programs and Lessor/Lessee advisory services. For
further information please contact:
George J. Fry
Peter C. Platt
18 Sylvia Court
22 South Holmdel Road
Woodcliff Lake, NJ 07677 Holmdel,
NJ 07733
Phone: 201-573-0216
Phone: 732-817-1400
Fax: 201-573-8037
Fax: 732-946-7884
E-mail: gfry@harborsidecapitalgroup.com E-mail:
platt@harborsidecapitalgroup.com www.harborsidecapitalgroup.com ---------------------------------------------------------------------------------------------------
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