Calif. launches probe into scam targeting churches

AP News
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Posted: Nov 21, 2009 1:20 AM

California is investigating several companies suspected of bilking churches nationwide of hundreds of thousands of dollars through fraudulent computer leasing schemes, authorities said Friday.

State Attorney General Jerry Brown said as many as 30 Southern California churches may have been defrauded, with the same companies suspected of bilking other churches in as many as 10 other states.

The companies offered churches free computer kiosks that could serve as electronic message boards and generate advertising revenue, Brown said.

"Instead, churches were left with leases as high as $45,000 per year for what amounted to little more than desktop computers and printers housed in podium-sized wooden boxes," the attorney general's office said in a statement.

The leasing companies later filed lawsuits against churches to collect payments, interest and late fees, Brown said.

Standing beside a defunct computer system at the Bryant Temple Church in South Los Angeles, the Rev. Clyde Oden Jr. said the kiosks seemed to present an opportunity for the church to raise funds.

"This seemed to be a cutting-edge opportunity, that's how it was presented to us. It turns out that the cut was against us," said Oden, whose church leased a system in 2006.

Oden said he initially received quarterly checks for $3,000, supposedly for kiosk advertising, from Maryland-based Urban Interfaith Network and Television Broadcasting Online. But Oden said he had to pay the entire amount to the company that had leased the machine. The checks stopped after a year, he added.

Brown's office said it had served subpoenas at Urban Interfaith Network and Television Broadcasting Online. Lawyers for the companies couldn't be immediately located.

Brown said his office was investigating three men and a woman who owned the companies that offered the kiosks. Two of the men were charged in Michigan last month with racketeering, fraud and other crimes. Prosecutors there contend they bilked 21 churches of about $660,000.

Also subpoenaed were three leasing companies _ Irvine-based Balboa Capital Corp.; United Leasing Associates of America Ltd. of Brookfield, Wis.; and San Francisco-based Banc of America Leasing and Capital LLC.

Banc of America Leasing is a subsidiary of Bank of America.

E-mails left for Balboa and United Leasing seeking comment were not immediately returned.

Banc of America spokesman Will Wilson said the firm was cooperating with the probe and it had been unaware of any allegations of wrongdoing at the time it did business with companies involved in the alleged scam.

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Associated Press Writer Thomas Watkins contributed to this report.