OutFront
Eliot Spitzer, Meet
Rhonda Shearer
Dirk Smillie, 04.11.05A scholar of surrealism--and part-time sleuth--is giving leasing companies a run for their money.
The equipment leasing industry has never faced a muckraker quite like Rhonda Roland Shearer. Widow of the Harvard science guru Stephen Jay Gould, Shearer, 50, is a Dadaist expert who runs a nonprofit think tank that studies art and science out of her 4,000-square-foot loft in SoHo, which is adorned with Persian carpets, 18th-century English furniture and 400 works by surrealist Marcel Duchamp.
Shearer's beef with the leasing business is itself a bit surreal. In 2003 she signed a five-year, $28,000 equipment lease from telecom reseller Norvergence, which in turn sold the lease to the CIT Group. Norvergence promised customers its Matrix box would deliver unlimited broadband and cell phone service with no per-minute charges. But the box turned out to be no more than a glorified router used to send long-distance calls through Qwest (see "The Matrix Unraveled," Sept. 20, 2004), and Norvergence was later forced into bankruptcy.
When CIT told customers they could cancel the leases only by paying 10% of the contract value, Shearer erupted. She hired an accountant, enlisted the aid of two graduate students and spent eight weeks investigating. Result: a 285-page broadside aimed mainly at CIT. Shearer says she was overcharged for the Matrix box and service. The box cost Norvergence a mere $1,500 wholesale, yet a five-year lease could run $50,000. Her report also asserted that CIT's insurance premiums on leases far exceeded what CIT paid to insure the equipment.
CIT denies the charges and won't comment further. But Shearer got others interested. Investigators at the Federal Trade Commission and the U.S. Attorney's offices in New York and New Jersey are scrutinizing her report, sometimes using it to guide their inquiries.
Although the industry's top trade group, the Equipment Leasing Association, doesn't endorse Shearer's report, it distributed her bombshell to all 280 executives attending its annual meeting for investors in New York last month. Shearer was scheduled to present her findings at an ELA panel on fraud, until CIT raised objections and she was yanked. CIT's attorneys warned her that if she disseminated the report, she'd be hit with a defamation suit. "Let them come after me. I can take the heat," says Shearer.
CIT last month announced a $15 million charge-off in Norvergence lease losses and disclosed it had provided documents to a New York grand jury investigating Norvergence.
Shearer's attack on leasing isn't her first obsessive crusade. In 1998 she took on the art establishment by authoring a study asserting that many of Duchamp's "found objects" weren't found at all but assembled by the artist (scholars aren't certain). In 2002 Shearer raised $3 million to aid workers at the World Trade Center site. When an article in the Atlantic Monthly accused firefighters of looting the excavation, she produced a study attempting to debunk it.
Shearer's next project? Examining Boeing's contention that EgyptAir's Flight 990 crash was caused by a pilot bent on a suicide mission, a topic she says fits perfectly with her center's focus on using science to verify facts. Says Shearer, "I want to prove that mere mortals can insert themselves into the history-making machine."
