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Bulletin Board Complaint
American Equipment Finance LLC, Warren , New Jersey

The role of Leasing News is to see if a complaint can be resolved between the parties. When it cannot, the next step is to consider if it is a legitimate complaint for the Leasing News bulletin board.

Leasing News does not state who is right or who is wrong, but tries to present both sides fairly and leaves the matter for each reader to decide the merits of the complaint.

This one is from Phasset USA Inc. dba Alpha Granite, Austin , Texas . He sent in a 35 page fax including a cover letter. After reading it was sent by fax for a response.

From Richard Baccaro:

"I have reviewed the customer's complaint, and I am satisfied that AEF did exactly as we approved in writing.

"AEF closes approximately 400 transactions per year, and has not had a customer compliant to date since our inception; which is something that we are very proud of. We take our credibility in the marketplace seriously and believe this complaint to be more of a semantics issue rather than a leasing issue.

The Lessee submitted an application for credit in the amount of $189,500 on or about 1/19/05

"A. On 2/21/05 AEF's Proposal dated 2/18/05 was accepted by the Lessee; with a finance amount of $170,550 (IRR of 12.85% including advance payment)

"B. On 2/25/05, our funding partner MFR rejected the proposed finance amount of $170,550 and asked for a larger down payment.

"C. On 2/28/05 AEF faxed a lease Approval with the new terms and conditions including a larger down payment reducing, in effect the financed amount to $151,600. (IRR of 11.69% on the new amount, at lower interest rate, including advance payment)

"D. On 3/1/05 the Lessee accepted the Approval

"E. The lease commenced on or about June 2005 with MFR, as approved."


Richard A. Baccaro
Managing Member

The complaint from Denis Phocas, CEO, Phasset USA Inc dba Alpha Granite, Pflugerville, Texas concerns the third proposal, dated February 28, 2005, not the first proposal, and what transpired during the course from the first proposal to the third proposal, and the making of the contract with Machinery Finance Resources, Farmington, CT.; specifically $7,400.

AEF Proposal #1 called for a 62 month lease at $3,700 plus sales tax with two payments in advance. There is a sentence in it that also states, "All money paid to American Equipment Finance is non-refundable."

"AEF's policy is to refund 100% of a customer's deposit when we fail to secure financing for a client. We have never, and will never keep monies when we cannot provide financing….unlike many companies in the industry. However; we do not refund or re-negotiate terms once all parties agree to move forward, and the transaction is funded as approved which is the case with Alpha Granite."

Richard A. Baccaro

Proposal #2 is a fax from Steve Shavazian at AEF stating "CNC Lease Approval."

Part of the fax states:

"This is a much better approval than originally proposed and benefits you in the long run.

"a. The bank lowered your monthly payments $500 per month saving you approximately $30,000.00 over the 60 month period (a great savings.)

"b. The bank does require an additional 10% equity into the deal. A total down payment to Brembana of $37,900 (20) of which you have already paid $18,950."

At this point, Denis Phocas states he thought AEF was the leasing company who made the decision, but was going through their "bank." It is after the third proposal he discovers or realizes that AEF is not the provider of the funds, but a broker on the transaction.

The Alpha Granite complaint centers around the third proposal they were asked to sign:

"Rentals: The lessee will make 62 payments as follows:

1 @$7400 (Already paid)
2 37,900 to CMB (already paid $18,950)
60 @ $3,207.00 plus sales tax."

"On February 28, 2005 I signed a Lease Approval indicating that I agreed and accepted the terms.

"Thereafter we were told to deal with MFG (Machinery Finance Resources) who sent a complete lease to us to sign. Please note that we were never told at any time that we were being referred to another leasing company. It was always referred to as 'Our Bank' and therefore we always thought that we were dealing with American Equipment Finance.

He states that he was leasing to conserve cash and putting more money down was not his first choice, and he never was told the $7400 was a commission for AEF.

There are e-mails and other correspondence to the parties from Denis Phocas, with several responses, as he attempts to find out where the $7400 was applied.

One dated March 24, 2006 from Steve Shabazian at AEF, "Denis the $7400 advance rentals were applied toward the financing in a present value of money calculation to lower your monthly payments, and buy down the rate along with reduced equipment cost.

"The 60 monthly payments of $3207.00 are what were remaining on the 62 month term after applying the 2 advances of $7500."

Len Baccaro of AEF e-mail on May 12, 2006: "Denis, we have repeatedly told you that this money was our 'fee' for doing this financing. We have a signed document from you showing that you agreed to pay us this. I have no idea why you keep asking the same question over and over again. Do you have the document?"

In requesting a copy of the document from American Equipment Financing, they replied:

“There was one proposal dated 2/16. Then we sent an approval on 2/28 which altered the terms of what was previously proposed. The approval that the Lessee agreed to and executed was how the deal was funded. “

Here are the rest of the documents, other correspondence, plus a copy of the lease itself sent by fax to American Equipment Finance (this is a large download, please have patience):

Leasing News asked each party for a statement. Mr. Bacarro's was at the beginning. This is from Mr. Phacos:

“The first lease proposal clearly stated that a down payment of 10% ($18, 950.00) and 2 monthly rentals @ $3700.00 totaling $ 7900.00 to be paid in advance. The lease consisted of 62 monthly payments and stated that there would be 60 payments remaining. Please note Dionissios Phocas signed this but American Equipment Finance (AEF) did not.

“There is no mention of any application toward financing in a present value…………… or a ‘fee”………………. in the first agreement. Please note the following comments made below by two different people in the same company referring to the same finance deal.

“Steve Shebazian states in writing:

"'Denis the $7400 advance rentals were applied toward the financing in a present value of money calculation to lower your monthly payments, and buy down the rate along with reduced equipment cost.'

“Len Baccaro states in writing:

"'Denis, we have repeatedly told you that this money was our 'fee' for doing this financing. We have a signed document from you showing that you agreed to pay us this.

“'There is no agreement that indicates that we agreed to pay a fee for doing the finance!'

“After discussions with Steve Shabazian ,it was bought to my attention that it was not possible to finance the machine with a 10% down payment and that 20% was required. He went ahead and quoted me this comment.

“‘The bank lowered your monthly payments $500 per month saving you approximately $30,000.00 over the 60 month period (a great savings.)'

“It is quite obvious that by applying more equity to the deal (i.e $18,950.00) the monthly payments will automatically lower. By telling me that I am going to save $30 000.00 is by no means factual, this in fact is misleading and inaccurate.

“The second lease approval that includes the additional 10% deposit breaks down the rentals as follows:

“'The lease will make 63 monthly payments as follows:
“'1 @ $ 7400.00 (already paid)
“'1 @ $ 37 900.00 to CMS (already paid $ 18 950.00)
“'60 @ $ 3207.00 plus tax
“'The $ 7400.00 is 2 payments @ $ 3700.00
“'The $ 37 900.00 is the deposit
“'And of course the 60 @ $ 3207.00 payments.'

“Please note that the first 2 payments of $ 3700.00 are not equal to the 60 payments of $ 3207.00. If we are going to define the number of payments that need to be made, we need to make the payments equal or at least we need to define them clearly and consistently throughout the deal. If you look at the whole process from start to finish there is a total lack on consistency.

“Finally if we take into consideration the Lease Contract from Machinery Finance Resource we see that this contract has no relation to the lease proposal presented to me from AEF.

“Firstly this has a 61 month lease @ $ 3207.00 per month with a $ 1.00 buy out. As I have said before we were instructed by MFR to pay the first installment of $3207.00 in advance and then we had 60 payments left to honor the lease.

“I have been repeatedly asking AEF where has $ 7400.00 been applied as this was the first 2 payments of the first lease proposal pertaining to a down payment of 10%.

“Machinery Finance Resource has clearly stated that they have not received the $ 7400.00 and clearly state that they are not aware of any monies paid to AEF for this piece of equipment and are not aware of any documentation other than their contract. The contract we have with MFR is a fully comprehensive contract that consists of 61 payments only and not 63. We are not making monthly payments to AEF yet we have signed a Lease Proposal with AEF. Who are we dealing with AEF or MFR?

“If AEF was unable to finance our equipment why did they just not tell us that and refer us to MFR. Furthermore if they want to charge us a fee to do this they should have presented this to us in the first place.”