Guggenheim Bounced $250,000 in Checks in ’86

A computer company headed by Alan Guggenheim, a Republican candidate in the 37th Assembly District, bounced two checks worth $250,000 before the company filed for bankruptcy in 1987, according to court records.

The checks were written to ITT Commercial Finance Corp. for payment of computer inventory by Saloman Computers Inc., of which Guggenheim was chief executive officer. ITT later filed a lawsuit against Guggenheim’s firm.

In an interview this week, Guggenheim said he promptly wrote a cashier’s check for the $250,000 to cover the two checks. He denied any fiscal impropriety and said he has paid off all his former creditors.

“In business you always take risks, and I’m pretty proud of what I’ve accomplished,” he said. “I created over 100 jobs and invested in the economy.”

Guggenheim, 41, said the two checks were drawn against a Computerland of Sacramento account at a branch of the River City Bank in Citrus Heights in Northern California.

They were returned to him, Guggenheim said, because he was caught in a dispute between his two lenders--the bank and ITT--that eventually forced his business into bankruptcy.

“This is the typical case of a small business caught between two lenders,” he said.

Shortly after filing for Chapter 11 reorganization in May, 1987, Guggenheim was also sued by the landlords of his Sacramento-based Computerland franchise for failing to pay rent, utilities and expenses between January and July of that year.

That $15,000 suit was settled, according to Guggenheim and a spokesman for his former tenant, Downtown Plaza Associates of Sacramento.

Guggenheim is the top money raiser among seven Republican candidates in the primary for the 37th Assembly District, which stretches from Port Hueneme to Thousand Oaks.

Born and raised in France, he moved in 1978 to the French Caribbean and became project manager for a construction company in Martinique and Guadeloupe, he said.

Three years later he moved to Lodi and began his computer company with the financial backing of Martinique and Guadeloupe investors, he said.

Guggenheim opened four Computerland franchises in Stockton, Modesto, Sacramento and Citrus Heights. He said he established two lines of credit, one with the Citrus Heights-based River Bank to finance his sales, another with ITT to finance his inventory.

On Sept. 3, 1986, ITT cut off its credit to Guggenheim’s businesses “without notice whatsoever and despite our good-faith efforts to work with them,” according to Guggenheim’s sworn statement in bankruptcy court.

Twelve days later Guggenheim’s wife, Suzanne, wrote two River Bank checks worth $250,000 to ITT to pay for computer equipment, but the bank denied the draw request, court documents show. Guggenheim said he didn’t know his credit had been shut off when his wife wrote the checks.

After the checks were returned to ITT, the financial lender sued Guggenheim and his companies in Sacramento Superior Court for breach of financial agreements, records show.

At a settlement meeting in October, 1987, Guggenheim gave the judge a $250,000 cashier’s check. As part of the settlement, Guggenheim’s company agreed to pay ITT a total of $900,000, including attorneys’ fees, Guggenheim said.

Shortly thereafter, the lawsuit was dismissed without prejudice, records show.

Guggenheim said ITT was responsible for bankrupting his company. Several other Computerland stores were forced to close when ITT arbitrarily cut off their credit, he said.

“ITT used some tactics that were very strong-handed. They never did any paperwork and were overcharging us interest. They went to court without telling us. They exert undue pressure to put you out of business.”

A spokesman for ITT Commercial Finance Corp. in Sunnyvale declined to comment on Guggenheim’s allegations.

The lawsuit for unpaid rent was a direct consequence of the bankruptcy, Guggenheim said.

“When you go into bankruptcy, everybody sues,” he said. “This is California. People like to sue.”

Guggenheim said he was forced to sell company assets worth more than $1 million in public auction for just over $650,000. He then sold his company to Computerland and managed to save most of his employees’ jobs, he said.

Then he sold his $285,000 house, paid off $300,000 in personal debt caused by his company’s bankruptcy, and moved to Thousand Oaks in 1989, where he started a new company.

“I lost a ton of money,” he said. “But I have no outstanding business debts. Everything has been settled.”

For two years, while he built up his new firm, Cal Car Investment Services Inc., Guggenheim and his wife lived in a rented house, he said.

Last year, Guggenheim became a U.S. citizen and moved into his new $310,000 house, he said.

A self-described conservative, pro-life candidate, Guggenheim lists his business background as one of his biggest assets in his campaign literature.

“He understands business and how to make it work both here and internationally, in the simple competitive areas as well as high-tech markets,” one campaign flyer says.

Guggenheim said this week that his financial setbacks in Northern California are not relevant in the Assembly race.

“If we want some new people in office instead of politicians, we should talk about issues instead of digging dirt,” he said.

Oxnard Mayor Nao Takasugi, one of Guggenheim’s chief rivals in the Assembly race, said Guggenheim’s past financial problems raise questions about his business credentials.

Former County Supervisor Madge Schaefer, another candidate, declined to comment.

Guggenheim, who loaned his election campaign $40,000, said his business past will make him a better public official.

“You always learn from your mistakes,” he said. “They make you stronger and better. I took some risks, but I created 100 jobs. I make no apologies.”