District settles with one of five firms accused of defrauding churches

By Hamil R. Harris
Washington Post Staff Writer
Sunday, August 22, 2010

The District has reached a settlement with one of five firms accused of defrauding about 30 Washington area churches out of nearly $1 million through a computer equipment deal that affected houses of worship in at least 20 states.

D.C. Attorney General Peter Nickles announced Friday that Balboa Capital, a California-based firm, agreed to stop collecting about $10,000 in payments from five District churches that were ensnared in a deal that obligated them to pay for faulty equipment.

The five ministries that settled with Balboa are the House of Help/City of Hope in Southeast; Miles Memorial CME Church and Rock Creek Baptist Church in Northwest; and Lane Memorial Colored Methodist Episcopal Church and the Way of the Cross Church of Christ in Northeast.

"The settlement is a start, but we will continue to go after these companies," Nickles said.

The District filed suit in April last year alleging that the five companies defrauded at least 30 African American congregations, primarily in the District and Maryland, out of tens of thousands of dollars by claiming to offer them free computer kiosks to enhance their outreach.

Instead of getting high-tech electronic bulletin boards, church leaders got bills that racked up when the equipment did not work and promised advertising failed to materialize. In one case, leaders at the Mount Horeb Baptist Church in Northeast, which has not reached a settlement, lost more than $62,000.

Nickles joined attorneys general from other states, including Michigan and California, who filed lawsuits against the companies.

Nickles said Balboa agreed to the settlement without admission of liability. A company spokesman was said to be unavailable to comment Friday.

The District had accused Balboa, along with four other firms and two individuals, of participating in the scheme to defraud the churches.

"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," Nickles said.

Also named in the suit were United Leasing Associates of America of Brookfield, Wis.; Chesapeake Industrial Leasing of Baltimore; Urban Interfaith Network of Oxon Hill; D.C.-based Television Broadcasting Online (TBO); Willie Perkins of the District; and Michael J. Morris of Waldorf.

The District has been unable to reach a settlement with the other companies.

On Aug. 19, the District filed a motion for default in D.C. Superior Court against United Leasing. The city has also filed motions for partial summary judgments against TBO and Urban Interfaith Network as well as against Morris and Perkins. In a countermove, Chesapeake Industrial Leasing has filed motion for summary judgment.

The Rev. Nathaniel Thomas of Forestville New Redeemer Baptist Church, a church that also lost thousands, said the battle is far from over.

"This is a partial victory for justice and fairness," said Thomas, co-chairman of a coalition of churches fighting the companies. "There are still a number of D.C. and Maryland churches who have not settled with Chesapeake, and that was the main company involved."

City attorneys say the money that the firms got from the churches amounts to about $10,000. It's not everything that was lost, Nickles said, but "it is a step in the right direction."

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