Excel Leasing CEO pleads guilty $50MM Ponzi Scheme

(photo KCBD.com)

Bennie Lee Judah taken into custody

On April 21, 2009 the SEC froze the assets of Excel Leasing, Lubbock Texas and took over the operation, formally charging the founder of the company Benny Lee Judah for defrauding investors. The technique was very similar to the operation of to HL Leasing, Fresno, California, operated by John Otto and his family. In this instance, the amount was much smaller as Judah was accused of selling only $50 million in unregistered securities to 240 investors between January 2006 and March 2009 and misusing the proceeds. In reality, it was a Ponzi scheme. He promised investors 10% on their investment in Excel Lease Fund, Inc.

He admitted to losing $50,161,707.

KCBD.COM (Channel 11) reporter Ann Wyatt Little wrote, "There are in excess of 250 victims nearly 300," says Federal Prosecutor Dick Baker who adds that many will forever be impacted by Judah's greed. "This is a substantial Ponzi scheme that involves $50 million. Based on my experience with Ponzi schemes the victims generally do not come out whole," he added.

It was not the first time. In 2001, he was ordered to pay a $50,000 civil penalty following allegations he and his company, Excel Leasing, sold $32 million in unregistered securities to investors nationwide between 1987 and 2000.

According to court records, at the time of the latest arrest he was not a registered securities broker.

Leasing brokers told Leasing News that they did sell him leases, and he paid a good commission and was easy to work with.

In pleading guilty, Judah got the maximum sentences, plus will pay a $500,000 fine and serve up to 25 years in prison; 20 years for money laundering and five years on the other charge. KCBD.com reports he "… agreed to pay more than $48 million in restitution as part of the plea negotiation. Receivers are working to find the missing money and track down all of his assets, but no one knows for sure what will be left after all is said and done."

Previous stories:

$40 Million Fraud/Leasing Founder Assets Frozen
http://www.leasingnews.org/archives/April%202009/04-24-09.htm#40

In Defense of Benny Judah/Excel Leasing
http://www.leasingnews.org/archives/April%202009/04-27-09.htm#def

Letter to Editor: re Benny Judah
http://leasingnews.org/letters/june_3_letter_to_editor.html

-------------------

or Justice creeps slowly in alleged HL Leasing Ponzi scheme
http://fresnobeehive.com/news/2009/11/justice_creeps_slowly_in_alleg.html#more

There are many more, such as:

2nd Alert---May reach $50 Million Fraud

"In my October 22nd article which I labeled " BIRDS OF A FEATHER ....STICK TOGETHER" the Louisiana lessee has fled to France. This guy must think he's a movie producer and waltz around Europe for the next 25 years. The underground silo in East Texas was a sham and a small North Texas Bank that gave it a $3.9 Million "Katrina Loan" is out of luck along with a number of large leasing companies which did medium six figure leases. Guess who really gets stuck with the bank loan? ....CORRECT...YOU & ME

"When does the next shoe drop on the other lessee?"

Regards,
Bernie Boettigheimer, CLP
President
Lease Police, Inc.
972-361-8111
972-692-8091-fax
214-549-3426-cell
bernieb@...

Lease Police Alert
--New Jersey and Louisiana/Birds of a Feather...http://leasingnews.org/archives/October%202009/10-23-09.htm#Lease_Police

--- 

This one is $170 fraud:

Sheldon Player Caught w/$900,000 Cash in Duffle Bag

by Christopher Menkin

It is amazing how this can happen again, using the same procedure and similar business model that sent Sheldon Player to jail for 13 years ago. Several banks wanted to know if brokers or leasing companies were on our mailing list on May 2, 2007 because they should have been forewarned about Equipment Acquisition Resource business.

An insider told Leasing News about news learned at the bankruptcy creditors' meeting: "Sheldon Player, while traveling from Chicago to Jackson Hole via Denver on 9/15/09 was found to have a duffle bag containing $700,000 in CASH. He claimed, when greeted by the federal authorities in Denver, that the cash was gambling winnings. The money was confiscated, but go figure, returned to Sheldon when he "supposedly" produced gambling receipts (which I'd assume he fabricated too).

"We were told that the serial numbers on nearly every piece of equipment are fakes and in some cases the serial tags were attached with double sided tape for easy switching for bank, leasing co, etc. inspection. The total value of all the equipment is believed to be $3-$5 million covering $140MM in lease transactions. The bankruptcy court will likely pursue the accountants, appraisers, etc., but as you suggested . . . a lot of lawyers will earn a lot of money and we duped creditors will take it in the shorts (I can only hope that Sheldon does too . . . in prison!). "

The latest developments involve ICON Capital suit of $21,599,653 of a master lease in default and the collateral of real estate taken, that ICON is trying to have not included in the bankruptcy, but as part of collateral of their master lease.

In the document file there is evidence of Sheldon Player's role in the negotiations and the real estate involved is part of an alleged Wyoming family exemption by player as the real estate in question "is owned not only by Mr. Player and his wife, Donna Malone, but also by Mr. Player's son Dale Player and Mrs. Malone's daughter Dana Malone." It appears ICON received limited guarantees on the property as only two of the four signed the guarantee.

There also is the question of why the additional collateral, as ICON states it learned of Mr. Sheldon's Greyhound Leasing arrest and was requiring it, although records show that a background check was not requested until after the December, 2007 Master Lease was in effect, meaning the additional collateral was not required as part of the original transaction, and therefore may be interpreted that it was part of the lease until ICON Capital learned about Sheldon Players past (for whatever legal technically it brings forth.)

It is interesting to note that an email dated January 9, 2008 in regarding property owned by Player and Malone and possibly others, in going over the collateral for additional real estate came up with this list  (much of it was not included in the ICON Capital lease requirements, as it appears only Wyoming property was used ):

"20 acres in Horse Creek…Jackson Hole (Teton County)
 40 acres Jackson Hole, airport (Teton County)
21.3 acres Jackson Hole…snake river (Teton County)
4 acres, Horse Creek (Teton County)
5 Chicago lots with building downtown Chicago, California Street
2 acres and EAR building Palatine
2 New Chicago condos
1 New Trump tower condo
1 Elgin, Illinois condo
7 condos in Naples, Florida"

Leasing News is in the process of interviewing smaller and regional banks on how they got involved with Equipment Acquisition Resources, some through brokers, lessors, lease packagers, and others through banks selling their leases:

"We were told by ****** that EAR was an exceptionally strong company and we relied heavily on audited financials from Von Lehman as well as invoices from Machine Tool Direct, Inc. and appraisals from Gonia Consulting. Unfortunately, we were one of the later banks that was not told about Sheldon Player's checkered past. Had we been told that EAR's de facto principal was a convicted felon for lease fraud, we never would have done the deal."

Leasing News has been seeking an interview with Heather Fritz, listed by the Better Business Bureau as head of Leasing Innovations, Inc. 261 N. Coast Highway 101, Solana Beach, California. The company was involved in the Bank of Dixon County, Ponca, Nebraska $321,596 lease and current suit against Equipment Acquisition Resources.

It may be those involved in the referral process or acting as the lessor or seller may have financial responsibilities to the creditors involved in the bankruptcy. In addition to assignment guarantees, representations and warranties, there are precedents of those such involved having financial responsibility.

It is interesting that Leasing News could not find Leasing Innovations listed holding a California Finance Lenders License, required in the state, particularly since the company web site states, "LII's Investment Program can help individual Investors as well as banking institutions achieve their investment goals. LII's Investment Program allows an Investor to purchase a stream of monthly, annual, semi-annual, or quarterly payments after personally reviewing the credit information on a particular Entity."

A telephone call has not been returned to date. Leasing News looks forward to receiving any statement or comments from Leasing Innovations.
http://www.leasing123.com/investors.html

Several main news media, including Bloomberg, recently contacted Leasing News after the latest story appeared as they could not locate the original Greyhound indictment or story. It is provided here and confirmed in an interview with Sheldon Player also that appeared in Leasing News May 2, 2007.

1989 Greyhound Case (84 pages):
http://leasingnews.org/PDF/1989_Greyhound_Court_Record.pdf

Sheldon Player 1986 Probation Case:
http://leasingnews.org/PDF/Sheldon_Player.pdf

Icon response regarding real estate collateral (exhibits not attached):
http://leasingnews.org/PDF/Icon_Main_Document.pdf

Previous stories:
http://www.leasingnews.org/Conscious-Top%20Stories/Sheldon_Player.htm

NorVergence BK Pre-Trial Date Set & What's New
by Christopher Menkin

The complaint filed July 14, 2006 by Bankruptcy Chapter 7 Trustee of the Estate of NorVergence, Inc. Charles Forman against Thomas N. Salzano et. al. (many, many leasing companies) continues with a pre-trial hearing set for February 10, 2010, 10:00am, Courtroom 3E, US Bankruptcy Court District of New Jersey, 50 Walnut Street, 3rd Floor, Newark. July 2, 2004 NorVergence filed bankruptcy. It and many side issues are still not settled, including on going cases and new cases now occurring in Florida by a bank that went bankrupt.

Don't ask about IFC Credit Corporation, Morton Grove, Illinois Bankruptcy, as the next dates there are November 9, 2009, the last date for creditors to file a claim, and the over $2 million in FTC settlement is still in question as to whether lessee will ever see their money back. (Settlement is the proper word in my opinion.)

Thomas John Salzano, age 27, the son of the head of NorVergence, continues his case with the New Jersey Supreme Court regarding disclosure of court documents that have not gone to trial. He objected to the Record newspaper printing he misappropriated $500,000 from NorVergence and public court documents having information about this on a case that had not gone to trial.

He was originally accused by the bankruptcy trustee Charles Forman of charging trips to bars and clubs, clothing and other personal expenses totaling $268,795 to NorVergence American Express card. Also according to the complaint filed by bankruptcy trustee, Thomas J. was accused of improperly using $200,000 of company money to help buy a house.

Whether the IRS investigated the income tax angle is not known. Documents printed were primarily from NorVergence Corporation, in bankruptcy, and the reporting by the newspaper of these documents is what the son objected to as causing harm to his reputation.

He won his original suit against the North Jersey Media Group, which owns the Record of Bergen County. A state appeals panel decided last year that media outlets should not be allowed to publish material from pretrial filings and may be sued if the allegations are determined to be false. The State Supreme Court is now hearing the decision.

This happened after the police closed down his father's cardboard charity box operation placed at small stores by commissioned salesmen and Salzano gets caught because he reportedly stiffs the landlord who is well connected in New Jersey, who called for Salzano's immediate eviction, and enforcing the order, the cardboard box charity operation came to light of law enforcement eyes.

The Federal Trade Commission with Senior Attorney Randall H. Brook filed against his father and uncle, Thomas N. Salzano and Peter J. Salzano on September 11, 2006 and won a stipulation judgment on October 17, 2007. The FTC won $181.7 million default judgment against NorVergence and the stipulated judgment kept Salzano out of related businesses, following other compliances, and any money up to $50 million was owed to NorVergence lessees.

In April, 2009 for $100,000 Thomas N. Salzano was indicted by the Louisiana Attorney General James D. Caldwell and Calcasieu County District Attorney John DeRosier regarding five Louisiana NorVergence telephone users on multiple counts of money laundering, conspiracy and theft. He spent the night in jail, pled not guilty in the morning, voluntarily surrendered his passport, plus posted a $75,000 bond and was released from jail. He is scheduled to appear October 26th when the court will hear motions in the case.

I remember Russ Rickards at CenVal Leasing who told me a long time ago: When you lie down with dogs, you get fleas. He never said they would never go away.

Foreman Original Complaint (7/14/06--1 of 2):
http://leasingnews.org/PDF/Foreman%2053%20page%20complaint.pdf

Foreman Original Complaint (7/14/06-2of2)
http://leasingnews.org/PDF/Foreman%2053%20page%20part%202.pdf

FTC Injunction:
http://leasingnews.org/PDF/Salzano%20FTC%20Stipulated%20Injunction.pdf

Pre-Trail Conference Date filing:
http://leasingnews.org/PDF/Pre-Trial%20Conference.pdf

NorVergence Story Collection:
http://www.leasingnews.org/Conscious-Top%20Stories/Novergence_main.htm