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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 made between Barry Drayer and Old Kent for a situation very similar to the latest situation,
except in this case, Old Kent for a lower dollar amount “forgave”
the situation. “I was the one who originally found the fraud when I was
the litigation manager for Old Kent.
I was not involved in the final settlement but I know how it
was done and their attorney's can try to do their best to save the
name of RW Professional Leasing but there efforts will be fruitless.
“If anyone ever called
me to do business with RW or their principals I would have no problem advising them to stay
away. It's poor business people like them that give brokers a lousy name
in this industry. A lot of lenders lost a lot of money because of their scam
and in turn cut off all their brokers as a result. They need to get out of the leasing industry. “That is just my opinion.” Regards, Susan M. Adamatis 10/2002) Practical Ethics---If Crime is Not punished, Does
it Cease to be a Crime? Special Report Written by Kit
Menkin and Charlie Lester If a tree falls on a desert island, does it make a sound
when it falls? This is an old college question, and many of us had fun trying
to justify our answer. Does fraud exist, if it never is prosecuted? If crime is never punished, does it cease to be a crime? When do we hear the sound of a tree, if we are not there? On September 4, 2001, Leasing News began publishing question
and answer articles with Charlie Lester, President of LPI Financial,
Atlanta, Georgia, formerly President of Lease Pro, who sold his company
to Sierra Cities in 1997. Charlie
is also the senior member of the Leasing News Advisory Board. The three day interviews concerned private label recourse programs,
the procedures, the process, the pros and cons, and is available on-line
at: http://www.leasingnews.org/archives/September01/9-04-01.htm http://www.leasingnews.org/archives/September01/9-05-01.htm http://www.leasingnews.org/archives/September01/9-06-01.htm On September 7, 2001, we asked: 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 have reason to want Thomas Depping to
“answer” for actions he may or may not have taken?’" Those at the Chinese restaurant meeting heard about Professional
Leasing, who did a lot of dental business when he was at the Vanguard
Division of Old Kent Bank for eleven years. He said this company ripped them off
for between $6 million to $10 million. He asked, “Why should Sierra
Cities do business with them?” He
was told Sierra Cities had the corporate and personal guarantees---and
it was recourse, so Sierra Cities was supposedly protected.
Now, the situation with American Express Business Finance
centers on “what happened to the recourse agreement and the personal
guarantee?” and was stock involved in any
“arrangement?” they
can protect themselves in the future?
Perhaps from a legal standpoint, do American Express stockholders
have the right to know the truth if American Express paid too much
for Sierra Cities due to hidden problems”. Did American Express fail
in their job of due diligence before acquiring Sierra Cities and did
they cost their stockholders millions? We have been asking these questions. . (2/2002) American Express Business Finance Major Loss? (Would one of
the portfolio letters be “R”? ) A well informed source tells Leasing News that one of the
portfolio’s sold to American Express by First Sierra has a loss of
$16 million now. This is getting large enough to be footnoted in the
Security Exchange report. (2/2002) Finance Team of America, Weston, Florida informs
RW Professional they will not longer be referring business. “FTA has serious
concerns regarding Professional Leasing’s business practices. We have
attempted for the last five months to get straight answers in regards
to our transactions( customers) that are in funding as well as delays
in credit review and structures. “In addition, our commissions are well past due for months
now and we have tried to work with your company on a payment plan
for the past due amounts that add up to a six figure sum...Many doctors
are being billed without receiving their funds and some are asking
questions about the description and structure of their transaction
on their monthly statement; vendors have not been paid up delivery,
Financial Institutions have not been paid regarding payoffs and Sub-Broker’s
commissions have not been paid due to PLS not funding Finance Team
of America its commissions due.” (3/2002) I am getting complaints that RW Professional is not making
payments on leases, the bank they assigned leases to is now asking them for payments direct, stating that RW Professional is
not paying them. I am told the New York State Banking Investigator is looking
into this. I am not going to pass this around the entire board; however,
the bank involved is Blue Stem Bank in New York. Was that the bank you had been talking to who had leases with RW Financial? (4/2002) “He also says that he filed a complaint with the FBI in Albany
and they have bumped him up to a level 2 investigation-whatever that
is, but he thinks it is a higher level and the FBI means business.
$20,000,000 at Amex, $15,000,000 at community banks and pretty soon,
you are talking real money.” (5/2002) “Finance Team of America (Eric Castro, Bob Castro, Mommy
K.C. Castro and all the other members of the Castro clan (Fidel
was fishing and could not attend) today in Weston, FL ...unloaded with three hours and a two inch thick file
they have been building, including letters from Amex to lessors/debtors
saying they realized there was a problem with the lease/loan payoff
and they were addressing the problem with RW Professional and expected
to reach an acceptable resolution for all parties---in other words-B.S.. They are convinced that Amex cut a payment plan deal with Barry
and he is screwing the community banks by taking early payoffs on
leases and loans and using the money to make the payments to Amex. They said they heard he was paying as much as $70,000
a week. The logic-Amex could sue him and make him go BK and even prosecute
him for fraud. However, each community bank as a stand alone entity
will probably take a 100% write-off and not pursue him since the dollar
amount is probably less than $300,000 per bank plus they may only be seeing
a $50,000 problem at a given time and being a little naďve, not putting 2 +
2 together to know that their entire RW portfolio is at risk. Plus, they do not talk to each other and band together---divide and conqueror. “Barry Drayer told me he had 48 community banks in his network-all established by Al Crawford in Albany, NY.
“ (5/2002) Finance
Team of America makes complaint to Massachusetts Attorney General regarding RW Professional Leasing. |