D.C. Sues Computer Leasing Companies for Fraud Scheme

D.C. has brought an action in D.C. Superior Court against several computer-leasing companies, charging them with deceiving numerous church congregations into paying hundreds of thousands of dollars for unneeded or broken computer equipment. 

In the lawsuit, filed last Wednesday, the city claims that United Leasing Associates of America, Television Broadcasting Online, and others hatched a plan to offer “free” computer equipment to hundreds of area church congregations, but then trick them into signing papers binding them to long-term lease payments of $50,000 or more.  The equipment, marketed by the defendants as “information kiosks” designed to help congregations communicate with members of the community and post job listings, consisted of ordinary desktop computers disguised in mahogany casing.  Those congregations who refused to pay the exorbitant monthly fees suffered harm to their credit rating.

Businesses need to conduct their operations in good faith and deal fairly with their customers.  An action for fraud and deceit arises when a defendant makes (1) a false representation (2) in reference to material fact, (3) made with knowledge of its falsity, (4) with the intent to deceive, which (5) causes the subject of the fraud to take action in reliance upon the representation.  See Atraqchi v. GUMC Unified Billing Servs., 788 A.2d 559, 563 (D.C. 2002).  Stated more simply, you commit fraud if you lie to someone for the purpose of tricking them into doing something, and the person falls for it.  Virginia has similar laws prohibiting fraudulent business transactions. 

In this case, according to the Complaint, the defendants tricked the congregations into signing the leases by assuring them (falsely) that all lease payments would be paid by advertisers and sponsors, and that the congregations would have “no financial liability” whatsoever.  (Note: never rely on others (except your lawyer) to tell you what a document says, especially a contract that you are signing.  When you sign a contract, you become bound by what the words actually say, not by what you assume they say based on the representations of others).

The lawsuit seeks an order that the defendants immediately stop the unlawful activity, that the fraudulent contracts be undone, and that each defendant pay attorney fees and civil penalties of up to $1,000 for each violation of the D.C. Consumer Protection Procedures Act (found at D.C. Code §§ 28-3901 through 28-3911 (2001)).

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