Thursday, Sep. 03, 2009

Governor French caught in copy machine dispute

BELLEVILLE -- Governor French Academy may have to file for bankruptcy to protect itself financially from a dispute involving copy machines, the school's headmaster said Thursday.

"We started to receive bills out of the blue for copiers we don't have," said Governor French founder Phillip Paeltz.

Paeltz said the school has done business with Kevin Welch, of Okawville, for nine years, leasing copying machines from various companies the school staff thought Welch represented. The school staff was under the impression the leases were terminated when they returned the copiers to Welch but discovered later that some of the machines were never returned to the companies, according to Paeltz.

Welch could not be reached for comment Thursday.

Now seven leasing companies are suing the private K-12 school, accusing it of being in possession of 14 copiers. Paeltz said the value of the leases and the machines comes to an estimated $500,000.

Paeltz said the school tried to work through the situation with Welch in April, when school officials first started getting erroneous bills from the copy machine companies, and Welch, according to Paeltz, told the school he would take out a loan to pay the money owed. When he failed to do so, the school filed a civil fraud lawsuit against Welch in July. The lawsuit is pending.

Paeltz said he knows of at least two similar incidents occurring in Illinois, one at a church in Madison County and one at a senior citizens center in Okawville.

Paeltz said the school's next step is to send proposals to the seven companies to settle the dispute.

"If they accept it, then I guess this is over," Paeltz said. "If they don't accept it, we will file for Chapter 11 protections."

Paeltz said a judge will determine the exact amount of the damages in court Wednesday.