A host of non-profits on the North Shore are on the hook for tens of thousands of dollars after leases for office equipment went badly awry.
The North Shore Multicultural Society, the North Shore Women’s Centre, Family Services of the North Shore, the North Vancouver branch of the Canadian Mental Health Association and the North Shore Schizophrenia Society have all been left holding hefty contracts after the business that brokered their leases shut down and the owner disappeared.
Each had leased printers and photocopiers through a Burnaby-based business called Docusystems Integration Inc. The societies allege Docusystems owner Ryan Peek encouraged the non-profits to sign leases with two other companies De Lage Landen Financial Services Canada Inc. and GE Commercial Distribution Finance Canada. GE Commercial was later purchased be Wells Fargo Equipment Finance.
The non-profits said Peek convinced them to sign up on the promise that Docusystems would issue post-dated “rebate” cheques covering much or all of the lease payments. The system worked for years but, starting in June, Docusystems cheques started bouncing and Peek disappeared, according to the groups. In July, the non-profits received a letter from Docusystems saying the business was closing, in most cases with the charities having preauthorized payments being automatically debited from their accounts.
“We’re paying almost $1,200 a month for this machine,” said Michelle Dodds, executive director of the women’s centre. “That’s about eight per cent of our annual budget. If we have to pay that money every year … it’s going to affect our programs and our staffing and our services that we provide in the community. We’re in a little bit of a desperate situation.”
Next hardest hit is FSNS, which still owes $21,000 over the next three years. The schizophrenia society is out $12,000. The CMHA branch fared better than the others and owes just $3,752.
All are now trying to figure out how to deal with holes left in their budgets.
“We can absorb a little extra but our budgets are extremely tight, as are any non-profit’s,” said Vivian Martin, director of finance for Family Services. “Any extra, unknown operating expense that we’re going to be suddenly saddled with means money will be taken away from programming to the community. That’s the bottom line.”
The loss is particularly disheartening, given how hard it is for non-profits to raise money, said Nancy Ford, executive director of the Schizophrenia Society.
“Fifty per cent of our revenue comes from families’ donations. These are families dealing with serious mental illness – schizophrenia, bipolar disorder, anxiety, depression, suicide, etc. They come to us. We support them and give them information,” she said. “How do we look after our non-profits? A big chunk of their time is just trying to find funding. It’s always the biggest challenge.”
Docusystems is now in bankruptcy proceedings. Wells Fargo learned that Docusystems had closed only when its disgruntled customers began calling, according to documents filed in court by Wells Fargo’s lawyers.
“Some of the photocopiers in the possession of the (customers) have serial numbers that do not match the model of the photocopiers actually described in the leasing agreements and in many of these cases, the monthly rental payment that was being made by the (customer) was for an amount significantly higher than the market value of the photocopier actually delivered,” the claim states.
“To make up for the monthly payments that were grossly inflated or for equipment that was no longer in possession of the clients, the respondent appears to have established a scheme where some retail customers were receiving full or partial ‘donations’ and/or ‘rebates’ from (Docusystems). In some cases, retail customers were authorized to proceed with automatic monthly debits in the respondent’s bank account in order to ‘top up’ inflated rent payments or to cover the fictitious rent payments to be made in connection with non-existent units.”
Docusystems appears to have targeted charities and religious organizations under the auspices of being “philanthropists who wish to give back to the community,” the claim continues.
The RCMP executed a search warrant and seized all of the books, records and computers related to the case. Reached for comment, Cpl. Scott Schumann, Surrey RCMP spokesman, said “the investigation is still ongoing.” “There’s a tremendous number of interviews that they’ve taken already and they’re sifting through those,” he said.
As of late July, 61 customers with a total of $2.4 million in outstanding lease obligations have contacted Wells Fargo about the irregularities. A group of 35 of them have hired a lawyer and are threatening a class action lawsuit against Wells Fargo.
“As appears from the foregoing and unbeknownst to (Wells Fargo), (Docusystems) was engaged in highly questionable and most likely illegal business practices,” the claim states. The Burnaby office was found vacated with only a few older photocopiers left behind and the cellphone number Peek provided to clients had been disconnected.
While the inner workings of Docusystem’s business remain confounding to the non-profits, it’s less important than how they’re going to deal with the leases. Dodds and the others have pleaded their cases to both companies. De Lage Landen offered to lower the women’s centre’s monthly bill – but then also lengthen the contract.
“So really in the end, we’re paying exactly the same amount,” Dodds said.
Peek’s lawyer declined to comment. Wells Fargo and De Lage Landen did not respond to a request for comment.
