WASHINGTON (Legal Newsline) - Leasing companies are wondering why their agreements with African-American churches have landed them in a lawsuit alleging a group of individuals and businesses defrauded the churches with shoddy computer equipment.
District of Columbia Attorney General Peter Nickles filed his suit in April against Television Broadcasting Online, Inc., Urban Interfaith Network, Inc., Michael Morris and Willie Perkins, claiming their actions cost dozens of African-American churches hundreds of thousands of dollars.
He included three leasing companies as defendants -- United Leasing, Balboa Corp. and Chesapeake Industrial Leasing Co.
"The District does allege that the TVBO Defendants were acting as 'agents' for Balboa and the other Leasing Company Defendants; however, at least insofar as Balboa is concerned, the allegation is incorrect," attorneys for Balboa wrote in June.
"None of the TVBO Defendants were agents for Balboa and none had any agreement with Balboa of the sort insinuated by the District."
Nickles' complaint says the TVBO defendants offered the leasing of information kiosks (a desktop computer and printer in mahogany casing) to African-American churches.
Nickles said the computers did not contain any significant software and the churches were forced to enter into leases that reached a total of $50,000 or more.
Balboa's attorneys wrote that it had no part in the scheme and merely financed the kiosks on the churches' requests.
"Balboa did not ask the congregations to acquire the 'information kiosks' from the TVBO defendants," Balboa's attorneys wrote.
"On the contrary, it was the congregations who asked Balboa to acquire the kiosks from one or more of the TVBO defendants, so that the congregations could then lease that equipment from Balboa.
"If there were any misleading communications between the TVBO defendants and the congregations, those are matters for which Balboa cannot fairly be held responsible."
The suit claims the scam targeted up to 50 predominantly African-American church congregations in the District, as well as many more in Maryland, Michigan, Wisconsin, Texas, California and other states.
In Nickles' complaint, he says the leasing companies failed to supervise the actions of TVBO.
"Perkins and Morris acted with actual and/or apparent authority as the agents of Defendant Leasing Companies, and as such, Defendant Leasing Companies owed a duty to the congregations to supervise Perkins and Morris in the conduct of their dealings with the congregations regarding the placement of the kiosks and the lease terms," he wrote.
"Defendant Leasing Companies were negligent in permitting Perkins and Morris to engage in transactions with the congregations that were fraudulent and deceptive."
United Leasing submitted a motion to dismiss, arguing that Nickles is off-base.
"The allegations in the Amended Complaint are insufficient to infer that any agency relationship existed between the TVBO defendants and United Leasing," the company's attorneys wrote.
"Generally speaking, there is a twofold test for determining the existence of an agency relationship: (1) whether there is evidence of the parties' consent to establish a principal-agent relationship; and (2) whether the activities of the agent are subject to the principal's control.
"At no point does the District allege that the TVBO defendants were acting under the direction and control of United Leasing."
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.