Black Churches Scammed Out of Hundreds of Thousands of Dollars, Suit Says (Video)

D.C. Attorney General Peter Nickles, in a 16-page affidavit, alleges that agents for the companies offered the churches free computer kiosks to enhance their outreach. What the churches actually received was inexpensive computer equipment that often did not work. The kiosks, located in church foyers, were to serve as electronic bulletin boards for announcements and community activities and would pay for themselves through paid advertisements.

But the suit alleges that congregations unknowingly signed leases obligating them to pay tens of thousands of dollars for faulty equipment. After the kiosks were installed, Nickles said, church accounts were drained by unauthorized withdrawals and unlawful collection practices.

"They didn't go after rich people," Nickles said. "They went after African American churches who really need the funds to help the poor and the needy, and we are not going to put up with this."

Named in the suit are United Leasing Associates of America of Brookfield, Wis.; Balboa Capital of Irvine, Calif.; Chesapeake Industrial Leasing of Baltimore; Television Broadcasting Online of the District; and the Urban Interfaith Network of Oxon Hill. The suit also names Willie Perkins of the District and Michael J. Morris of Waldorf.

Balboa and United Leasing vehemently denied the allegations. The other companies did not respond to telephone inquiries, and Perkins and Morris could not be reached to comment yesterday.

Balboa engages in nationwide leasing transactions. Michelle Chiongson, its in-house counsel, said the company had not been served with the lawsuit. "I will tell you that Balboa does not defraud churches," she said.

United Leasing, according to news reports, filed suits against 39 churches in eight states this year to collect at least $1.4 million on the kiosks. The churches involved said they were told that they would receive revenue from the kiosks through commercial sponsorships but that those did not materialize.

"This lawsuit appears to use the same allegations from a previous lawsuit brought by a handful of churches in Detroit," the company said in a statement. "It is unfortunate the local prosecutors in the District of Columbia decided to file an action without first contacting ULA about its position."

Mount Horeb Baptist Church in Northeast and other churches contend that the kiosks were a nightmare.

Joyce Williams, head of the Mount Horeb trustee board, said she was approached in August 2007 by Perkins and Morris with what sounded like a "win-win" business proposition.

To cover what was described as a service fee, Perkins and Morris gave her a check each month for $15.50, and the church wrote a check to United Leasing. With that banking information, Williams said, the company gained access to church accounts.

In September, "I got a call from Wachovia Bank asking had we authorized United Leasing to take $62,801. I said, 'Oh, Lord -- we are going to have checks bouncing all over the place.' We really need our money."

The congregation of 600 members was founded in the 1880s.

According to the complaint, Perkins was an agent for Television Broadcasting, Urban Interfaith, United Leasing, Balboa and Chesapeake. Morris was an agent for Television Broadcasting and United Interfaith.

United Leasing said there was nothing illegal with their lease agreements.

"ULA also denies that there was any kind of agency agreement with TVBO, the company alleged in the lawsuit to have made the false statements to the churches," the company's statement said. "As is typical in most true lease situations, there were three parties involved. The churches were one party and they wanted to acquire the kiosks for business purposes. . . . The written leases each church signed contain the same standard wording as used by other leasing companies throughout the country for the purchase" of property.

Several churches in the Washington area have now formed United Churches for Justice. Their attorney, Fred Cooke, said 250 to 300 churches might be involved.

The Rev. Nathaniel Thomas, pastor of New Redeemer Missionary Baptist Church in Forestville, said his church has lost about $15,000. "An activity that was supposed to help churches with scholarships and ministry and outreach has turned into a nightmare."