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Virginia Tightens Screws on Financing Alternatives Founder

State seeks to hold George Christian personally liable for consumers' losses

By Joseph S. Enoch
ConsumerAffairs.com

March 4, 2008 

Bob McDonnell, the state attorney general, believes FAI founder George Christian may be responsible for at least 12 Virginia Consumer Protection Act violations. That's according to a letter written to Christian from the lead counsel in the case against Financing Alternatives, Richard Schweiker, senior assistant attorney general.

The letter, which Schweiker mailed in late November, informed Christian of McDonnell's decision and offered Christian the opportunity to meet with Schweiker and explain why he should not be held liable. Christian's lawyer called the attorney general's office and said simply that his client would not be meeting with them, said McDonnell spokesman David Clementson.

McDonnell's office has not reached a resolution of all potential claims against Christian, so he could be held accountable for more than the initial 12 alleged violations that include lying about having a good standing with the Better Business Bureau and Virginia Office of Consumer Affairs, and misrepresenting the actual cost of the products, Clementson said.

The lawsuit against Christian could be included as part of the current lawsuit Schweiker filed against the company in July 2007 or could be a separate suit. Clementson could not comment on what route McDonnell will go or when the suit or amendment will be filed.

Whatever the case, the lawsuit will seek restitution for all affected consumers and up $3,500 per violation, according to the letter.

Financing Alternatives, a computer layaway company based in Chesapeake, Va., swindled thousands of consumers across the nation out of their money after not delivering on promises to provide computers, according to the lawsuit and complaints filed with ConsumerAffairs.com.

Low-income consumers targeted

The company targeted low-income consumers with credit problems and requested they make 13 weeks of payments before the computer would be shipped. However, many consumers say they never received a computer or a refund after 13 weeks, or anytime thereafter.

“I finished paying for the computer in May 2007 and was told that there was a 120-day backlog with the shipment of the computers,” Sonya of Dallas, Texas wrote to ConsumerAffairs.com. “To date I still have not received the computer.”

FAI charged consumers more than $2,000 for computer and laptop packages that retailed in stores for about $500 or less.

A Virginia Circuit Court judge shut down the company's operations in October and put the company under the control of Paul Campsen, a local attorney acting as receiver. Although Financing Alternatives has not solicited new customers for many months, consumers continue to file daily complaints wondering where their computers and money have gone.

ConsumerAffairs.com has received 166 complaints; the Better Business Bureau has received 487 complaints, according to its website; and the Virginia Department of Consumer Affairs has received about 2,500 complaints according to investigator Mike Coston.

“During a court hearing on Dec. 14, 2007 our office said that in the course of the litigation, Financing Alternatives provided preliminary information to us indicating that there were at least 72,072 consumers who paid over $30.4 million to Financing Alternatives and had not received computers,” Clementson wrote in an e-mail. At least 1,765 paid in full and received nothing according to the original complaint filed in July 2007.

Financing Alternatives representatives told consumers blatant lies when they called to inquire about their missing orders, authorities said.

Arthur Ruffin, who worked in the company's customer service department from January 2007 to August 2007, said he had to tell so many people why they weren’t receiving a computer, he remembers his scripted response to their questions:

“Due to internal upgrades in our shipping and processing department, we are experiencing a delay,” he told customers.

He said there were no “upgrades” and that of the thousands of customers who paid in full, “25 percent at the most” ever received anything.

Millions in proceeds

Before that initial October hearing, Christian and his wife funneled much of the remaining assets into various accounts, according to Schweiker. They even took most of the physical belongings and paperwork from Financing Alternatives' rented headquarters.

The company's receiver, Campsen, estimated that there is no more than $60,000 left in the company while it owes countless millions in back taxes, unpaid advertising contracts and refunds to thousands of consumers.

If Christian is named in the lawsuit, the state could go after his house, which the county assessed at $864,900, his many vehicles and the millions he earned as the company's chief executive officer – if he hasn't spend it already.

After the Dec. 14 hearing, Christian and his wife were ordered to hand over all of the company's financial documents which they took from the company's vacated premises in early October. However, Campsen has not received a single document, said his assistant, Bronwen Joyner. She said it could be weeks before the Christians are forced to hand them over.

The Virginia State Police has an active criminal investigation into Christian's activities, authorities said.

While the lawsuits and investigations continue, Christian appears close to launching a new, nearly-identical company called Green Frog Funding.

The toll-free number on Green Frog's website goes into a general voicemail box, but the website has undergone numerous facelifts in the past month, one of which even included a picture of Christian.

The prices and layaway program are identical to Financing Alternatives' scheme. It is unclear whether the company is soliciting any customers yet as phone calls were not returned and there are no complaints.

It is believed Christian is operating Green Frog out of his garage using Financing Alternatives' assets and computers, according to a source close to the case.

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