Behind every successful company and innovative product, there are always the people who work on the back of a company’s success re-creating, copying and conning their products and customers into thinking that their business is the real deal.
And as kiosk deployment has become just as common as having a television in the home, more and more people are jumping on the bandwagon to try and con consumers and business owners about their dodgy kiosk systems.
Just last week, the city of Washington DC reached an settlement with a kiosk leasing firm that agreed to stop harassing five African American churches for payment after they latched onto a deal that proved too good to be true.
Although this is the first case the city has filed against three equipment leasing firms and two kiosk salesmen and their companies, it is alleged to be involved in a complicated and incriminating deal combining kiosks, con men and black churches. The con has spread from coast to coast with a number of churches hit by the scam including ones in California and Michigan, as well as the nations capital.
Press reports showed that Morris and Perkins embarked on their criminal business around ten years ago. Their plan was to visit African American churches around the country as executives of Urban Interfaith Network and Television Broadcasting Online (TVBO), companies based either in Washington or suburban Maryland. Morris and Perkins lived in suburban Maryland.
Mike Cox, Michigan attorney general, stated that both Morris and Perkins offered churches free kiosks that would be placed on site to provide outreach, education as well as Internet services to parishioners. In return, the kiosks would carry a advertising from a national sponsor that sought to reach the parishioners.
As an added inducement, Morris and Perkins told some of the churches that they would earn revenue of their own from the sponsor’s advertising. Churches were told that no contract was needed and all the legality stuff was simply a formality that didn’t need to be addressed but insisted that it still needed to be signed. So as pen went to paper church parishioners signed their contract without realising they had agreed to pay the full price for the kiosk.
From the contracts, Morris and Perkins contacted equipment leasing firms and asked for loans to purchase the kiosks, using the church contracts as collateral. Once they received the loans – valued at as much as $27,000 per kiosk – the pair used money to get bare bones equipment from the churches and further made initial monthly leasing payments to the equipment providers.
Peter Nickles, the city’s attorney general said, “The churches either did not get the equipment, or if they did, it wasn’t working, and if it was, the sponsorship deals never materialised.”
On another side of town, the leasing firms were led to believe they would be seeing monthly checks from the churches for the kiosk systems. There was usually little money to pay the lease fee already, and there was no sponsor for the kiosk advertising.
The deals continued to come in and leasing firms billed the churches for the kiosks with some of the contracts having full access to the churches finances.
“The firm could draw down from the bank account of the church. They charged the lease payments. In one case the firm took $60,000,” said Nickles.
After a while the churches contacted the authorities and Michigan arraigned Perkins and Morris in October 2009. Michigan plan to begin its case against them in Detroit’s 3rd Circuit Court at the end of September, a spokesperson for AG Cox said.
Perkin’s and Morris’s attorney, LaRene & Kriger of Detroit, didn’t return calls.
The case caught the attention of Nickles and California attorney general Edmund G. Brown Jr who found that after the churches learnt of the alleged scam, there was still a continual attack on the parishes by equipment leasers enforcing the terms of the leases, filing lawsuits against the churches to collect payment, interest and late fees.
These equipment leasers in April 2009 were charged with defrauding the churches. One of the companies – Balboa Capital Corp settled their case in Washington just last week, agreeing to stop collecting on the leases with several of the churches and to pay two of the churches $4,000 in total. Balboa wrote in their legal filings that it was “not complicity in the alleged scheme” and agreed to the settlement to avoid litigation costs.
Nickles said he will continue to pursue the other two lessors and as the cases go on, the churches have worthless equipment situated in their parishes that have completely gone to waste.