Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 2, 1990 TAG: 9007010014
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Medium
Have you ever heard of either ELCOA or Welco Securities? Or, if you have not heard of them, can you steer me to some organization that could tell me if they are reputable people?
A: An annual yield of 10.58 percent on a six-month "certificate" is indeed attractive. Welco offers up to 12.4 percent for a 10-year investment.
The literature shows that Welco is a member of the National Association of Securities Dealers, not the more stringent New York Stock Exchange.
A call to Welco's office was answered, not with the company name, but with the phone number called. It was then switched to the "certificate office."
A woman there said she would provide the names of local investors as references. She found no investor in the Roanoke-area zip code, however, and could come up with only two Virginians. One was in Tabb (near Yorktown) and the other in Petersburg.
She said money sent for "certificates" was invested in equipment leasing, primarily in restaurant equipment. ELCOA also leases office and business equipment, but not cars.
The woman promised to mail a prospectus, but 10 days later it had not arrived.
In Roanoke, Dominion Bankshares has an equipment leasing subsidiary. Its operations are financed through Dominion Leasing's own commercial paper, not through the individual investor.
Jerry Cheadle, president of Dominion Leasing, said the security of the investment you are considering depends on the credit worthiness of the restaurant leasing the equipment.
Equipment for a McDonald's franchise, for instance, would be better collateral than for a new mom-and-pop operation.
Restaurants have a high rate of failure, Cheadle said, and their equipment depreciates rapidly. If an average small restaurant defaults, he said, the equipment would be worth 10 cents on the dollar at best.
As for office equipment, he said, computers and phones have little value.
Cheadle said there is nothing inherently unsafe about the leasing business, but bankers lease equipment on the basis of the lessee's credit. He advised you to get a prospectus so you can determine the viability of the lessees and make the same kind of evaluation.
When you do this, you should remember that high returns almost always mean high risk. And you should wonder why the investment is couched in banking terms and why you were selected for such a fabulous offer.
\ In it together
\ Q: My husband, now deceased, was the sole money-maker. We filed tax jointly. He left me penniless. Am I responsible for federal taxes that he owed?
A: People who sign a tax return jointly are each fully responsible for paying the entire tax bill. The income was yours as well as his.
If you are speaking of the tax bill that will be due for the current year, you and your husband's estate are responsible for paying taxes on the income he received this year.
The same is true if you and your husband failed to pay your full tax bills when you filed returns in prior years.
Pam Hamlin, spokeswoman for the Internal Revenue Service in Richmond, said the agency will work with you if you are having a problem paying the bills. The IRS will, for instance, try to work out a schedule of installment payments.
You can call the IRS toll-free between 8:30 a.m. and 4 p.m. Mondays through Fridays at 1-800-424-1040. You should have all your tax documents in front of you when you call so that you can answer questions. Try to explain your present situation as fully as possible.
by CNB