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The Funding Tree---Six Months Later
“The Funding Tree, Inc., Riverside, CA has been accepting sub-prime deals on trucks and other equipment. They collect 15% prepaid residuals and doc fees up front. They cannot fund and getting refunds is next to impossible. I know of deals that are 3 plus months old. They also claim on their letterheads to be members of the NAELB. They are not according to Maria at the NAELB.” Some deals are as old as 7/01 Gary W. Psaledas Western Equipment Financing, Inc. 83 Abajo Dr., Edgewood, NM 87015 505-286-5437, Fax 505-286-543 Thirty-three years, Member NAELB Funding Tree Response: “We have 3 deals that are 120 days aged. 1 is a managed credit program, which means, this is normal. The vendor receives the payments and once the lessee makes 4 or more consecutive, on time payments the vendor is paid. The other two transactions are trucking transactions.” Kendra Bernal The Funding Tree, Inc. 6141 Riverside Ave., Suite 1 Riverside, CA 92506 909.369.3150 Office Phone Looking into this further, Leasing News reportedly found over thirty transactions not funded: Dealers Not Funded Midwest Truck Sales, Inc. John Saied 888-446-1127 R.E.B. Express Ellie Corbello 888-968-3563 X 113 Volvo of Utah Rebecca Hall 888-478-2276 Rush Finance Brent Hughes 800-973-7874 Coastal Finance(broker) Jim Coxe 800-887-0843 Volvo of Albuquerque Venita Coffee 505-843-7703 Inland KW-Phoenix Jerald Collens 800-258-7791 TEC Equipment Georgia Field 800-497-7667 Idaho FL Frank Flemming 800-658-5084 Danforth Capital (broker) Dan Chagnon 800-910-2225 Whited Trucks Mark Walsh 800-786-4736 IMCO Trailers Paul Yberra 888-496-4626 Prudential Leasing (broker) William Ross 972-392-3008 AMEX Equipment Dick Steensland 623-872-3468 Premier Truck Center Chris Mehaffie 800-671-6882 Atlas Trucks Gordon Chou 877-860-6757 S.E. Truck Sales Peter O'Donnell 877-295-3748 M&K Quality Truck Sales, Inc. Ron Meyering 800-510-8727 I-10 International Trucks Gayle Austin 877-954-9241 returned half of $26,000 up front money Tulsa Freightliner Dan Clark 800-725-5312 According to the Department of Corporation, there are another two dozen deals from dealers on one street that were not funded, money not returned, and they have an on going investigation and hearing to be held on the allegations. At this time, Gary Psaledas of Western Equipment Financing goes on line via listserve of the National Association of Equipment Leasing Brokers to warn other members about the Funding Tree and the experience he is having. Other brokers have similar problems with the Funding Tree. He then contacts the California Department of Corporations. “I received a phone call from John Noonan, CA Dept. of Corps., Investigations division, 916-322-6067. He asked a lot of questions regarding the Tree. He also told me that Bernal had 9 Felony counts in 97 of which she pled to two. I will be talking with him again today. This may be a good source for you to send the ex-employees and the other brokers.” Leasing News confirms this information with the Department of Corporations and the District Attorney, who confirmed what we were told. One of the requirements was “ Mrs. Bernal not to handle money of others.” The Funding Tree nor Kendra Bernal is not a licensed in the State of California, although she originally told Leasing News the company was licensed. Ex-employees, including the ex-sales manager tell us about high lease factors, advance rentals and 15% deposit collected on many hard credit “owner-operator” leases, but commissions not paid, and they suspect the leases were not funded. They state the Funding Tree was also collecting monthly rentals from lessees, although the vendors had not been paid. Reportedly “commission only” sales people come and go. Kendra Bernal states this is a misunderstanding and she will have a statement soon. In the meantime, the Funding Tree and Integrity Group merges. She tells us they have money and will be funding leases, as part of the agreement to merge, plus they are seeking new “investor money.” Please wait, she asks, as this will all be straightened out. From: Dave Muilenburg <dave_muilenburg@yahoo.com> Subject: Re: Funding Tree Inc. Confidential Date: Wed, 13 Mar 2002 11:11:23 -0800 (PST)
“I appreciate your prompt response and would like to file a complaint. I don't know what information you need but the following should suffice. Lessee - Gilbert Lechuga dba G.L. Concrete Pumping. Approved January 31, 2002. Amount approved $50,020.00. Down payment $7898.00 (which they cashed). We requested the advance back verbally and they are insisting of it in writing which we are doing. Let men know if you need any more information. Thanks, Dave” Leasing News does not know the true status of this transaction at this date. Yes,. this was confidential, at first, then given permission to quote and try and obtain the advance rentals “or approvals” back. This went back and forth trying for resolution. In the meantime, Gary Psaledas is counter sued and upon the advice of his attorney, will make no more statements. Kendra Bernal states she is returning all the advance rentals from deals not funded, just as Commercial Money Center did, and to please give her some time to accomplish this. Several more weeks go by. Perhaps another month. “Here is some info I know about them. I am just a small time broker that previously worked for *******. I moved from California to ***** and was offered a position with the Funding Tree, as I had a lot of contacts in the "D" and "F" credit arena. “They were trying to pick up where CMC left off, but I can tell you, they were the most unprofessional group of people I have ever worked with. They have been collecting hefty advance rentals since August of last year and as far as I know have not funded a single transaction. It only took me a short time to figure out they were not going to come through on any of their promises. I was told it could be 30 days for funding “. I know I personally booked about 125K in transactions before I figured out that none of them were to going to fund. Not a huge amount,(3K in commission)that I will never see, but I felt truly bad for the lessees I helped to convince the 15% advance would secure the equipment they so badly needed. “ I think they are painting a picture to gullible brokers like me, using their contacts to get deals, and then dumping them after they have generated several deals for them. I realize my problems are minimal but maybe you can forewarn others of the situation.” ( name withheld) Joe Rodriquez of Integrity Group calls to say please hold off on the story as he is trying to legally end this merger. He states he has not made any money. Any of the advance rentals and deposits have stayed with the Funding Tree. He is a broker. Kendra Bernal promised to bring in investors and lines of credit to fund transactions as they were going to be the next Commercial Money Center. But it never happened. He states he has gone through two attorneys in trying to “clean this up.” More dealers reportedly not paid: Courtesy Chevrolet (AZ) 602-279-3232 Sam Garber American Machinery Exchange (AZ) 623-872-3468 Richard Steensland Rush Truck Centers of AZ 602-272-7611 Roger Tarlton (2 deals) Rowe Bros. (OR) 503-228-5558 Hal Western Empire Truck Sales (NY) 716-538-2200 Not sure who to talk to there. Leasing News asked again to learn what was happening, particularly regarding the Department of Corporation restraining order. Kendra Bernal replied: “Sorry it took a while to get back with you today. We did receive a cease and refrain order prohibiting us from doing "consumer lending without a license" This does not impact our leasing business. We have made some modifications to our lease documentation, etc. to ensure that nothing we are doing can be considered "consumer lending". We are working with legal counsel on this matter and feel that we are in complete compliance. “As to the transaction of GL Concrete transaction: “We received the transaction in on 03/05/02. The transaction is still missing several items (Copy of drivers license, copy of full phone bill, some bank statements, Vendor Profile, Personal Financial Statement, Indemnity Agreement, Certificate of Insurance, Original Invoice is incorrect) as you can see this is more than a couple of items. The broker that sent the transaction to us (A-1 Financial) was notified of the missing items on 03/06/02 and again on 03/11/02 and yet again on 03/13/02. We spoke with Clair this morning and he said that he did not receive the missing item list on 03/11/02, so we re-faxed the list to him today. We cannot fund a transaction that is incomplete. “I do not know who Dave Muilenburg is. As far as we know the only additional broker is Anear Financial and Melinda is the only contact that has been forwarding information to Clair and TFT. We did receive a call from an irate CPA this morning by the name of Yvonne who wanted to cancel the transaction. This is obviously not the lessee. We require that all cancellation requests be put in writing. Unlike most leasing companies we do allow lessees to cancel transactions and we do issue refunds, minus our doc fee of $395.00. “ If you need to speak with me, give me a call at the office (909) 369-3150 Kendra Bernal President During this time brokers on the National Association of Equipment Leasing listserve were being solicited to send business to the Funding Tree. We have several faxes, along with the broker agreements and other terms. One of the claims is that the Funding Tree has been in business for over five years. The main pitch: “ We specialize in A to D credit transactions. Referring to our guidelines, you will find that we are unconventionally liberal in our credit decision criteria.” During this time, the Funding Tree had the Department of Corporations hearing postponed. I think there were two postponements, but the main hearing is now June 4. STATE
OF CALIFORNIA BUSINESS,
TRANSPORTATION AND HOUSING AGENCY DEPARTMENT
OF CORPORATIONS TO:
KENDRA BEERNAL The
Funding Tree, Inc. The
Integrity Group Integrity
Funding P.O.
Box 1016 Mira
Loma, CA 91752 6141
Riverside Avenue, #1 Riverside,
CA 92506 or 10263
50th Street Mira
Loma, CA 91752 DESIST
AND REFRAIN ORDER The
California Corporations Commissioner (“Commissioner”) finds
that: 1.
At all relevant times, Kendra Bernal is mad has been the president of
The Funding Tree. toe. (“The Funding Tree”), a California
corporation. She is also associated with the entities The Integrity
Group and Integrity Funding. 2.Beginning
in or about July of 2001, Kendra Bernal and The Funding Tree held themselves
out as being engaged in the business o making consumer and/or commercial
loans, 3.In
multiple transactions involving consumers in multiple states, including
Illinois, Florida, and Texas, Kendra Bernal and The Funding Tree represented
to consumers that they would provide the consumers funding for purchases
of commercial vehicles. In reliance upon those representations by Kendra
Bernal and The Funding Tree, multiple consumers entered into contacts
with dealers for the purch2se of, and took possession of, commercial
vehicles. 4.Kendra
Bernal and The Funding Tree also entered into agreements -with consumers
whereby Kendra Bernal and The Funding Tree promised that they would
fund loans to the consumers. The consumers provided valuable consideration
to Kendra Bernal and The Funding Tree in exchange for those promises. Dated:
January __, 2002 Sacramento,
California DEMETRIOS
A. BOURTRJS California
Corporations Commissioner By
VIRGINIA JO DUNLAP Acting
Supervising Counsel Enforcement
and Legal Services Kendra Bernal told Leasing News her attorney advised her that she was not doing consumer loans, although the company was running consumer credit on each application, and that it was NOT necessary to have a California Finance Lenders License. In California, all the major banks and finance companies require discounters to have such a license, and it is part of their application process to do business with them. From a United Association of Equipment Leasing Legal Workshop Conference: “The point was that if the transaction was ruled a loan, not a lease as you had intended, you could be subject to laws of usury in California. “The lease then could be considered usurious and you would lose, even if in default. “All your salesmen must either have this license or work as your employee ( you cannot have a free lance salesmen unless he has a license ). Bank of theWest and others used not to do business without evidence of the license. “Some of these licenses are needed in other states.” Kendra Bernal states she does not need the license to operate, attract an investor or obtain a line of credit, and has hired an attorney to represent her at the June 4 Department of Corporation hearing. Leasing News asked her for a statement, and she sent this PDF file, three pages, which we recommend you read in its entirety: : http://www.leasingnews.org/PDFFiles/TFT_LN_COMMENT.pdf
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