The California attorney general filed a lawsuit yesterday, alleging a scam that promised to bring dozens of African American churches "into the 21st Century" with free computer kiosks instead saddled them with shoddy equipment and thousands of dollars in debt.
The lawsuit [PDF], filed yesterday in Los Angeles Superior Court, seeks $803,100 in restitution and civil penalties for 33 Southern California churches that fell victim to a nationwide scam in 2006. In all, 193 African American churches in 15 states were defrauded, according to the complaint.
"This was a cruel and hypocritical scheme," Attorney General Kamala Harris said in a statement. "The perpetrators preyed on institutions of faith. Let this be a lesson to others who may look to defraud our community organizations: You will be caught, and you will be held accountable."
According to the lawsuit, two Maryland firms and their representatives promised to provide churches with computers, housed in wooden podium-style kiosks, that would generate revenue and bring them "into the 21st century" – connecting them with parishioners, national advertisers, businesses and government.
Promoters said the kiosks would be leased to churches at no charge, paid for by "enlightened corporate sponsors" that wanted to help the community, the suit alleges. Even if those advertising sponsors failed to make lease payments, promoters said, the churches would not foot the bill.
Each kiosk turned out to be "only a low-end desktop computer, monitor and printer worth between $1,000 and $5,000 when it worked, which it rarely, if ever, did," the suit says. Checks to pay the leases began arriving late, then not at all. Eventually, churches were left to shoulder the price of each kiosk – generally about $37,200 or $47,100.
The lawsuit names Television Broadcasting Online (TVBO) and Urban Interfaith Network and employees Willie Perkins and Michael Morris, both currently incarcerated in Michigan for defrauding 21 churches in the state, and Wayne and Tanya Wilson, both of Rancho Cucamonga.
Before approaching churches, TVBO reached agreements to finance the kiosks with two leasing companies, also named in the suit: Balboa Capital Corporation, based in Irvine, and United Leasing Associates of America, based in Wisconsin.
Balboa paid between $25,000 and $27,500 for each kiosk and a $500 commission for each lease that TVBO secured. United, too, paid $27,500 for each kiosk leased to a church. The companies never tried to determine the fair market value of the kiosks and purchased them sight-unseen, the suit alleges.
Eventually, both Balboa and United learned of TVBO's misrepresentations, according to the suit. However, they failed to alert churches to the scam. Instead, records show, they continued to enforce the terms of the leases, enlisted TVBO to help collect against delinquent churches and sued those that did not pay up.