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Man to pay $1.2 million in school copier case
By Jane Coaston
ST. LOUIS POST-DISPATCH
01/27/2010

CORRECTS name of judge throughout;

BELLEVILLE — An Okawville man accused of orchestrating an elaborate photocopier scam was ordered Tuesday to pay $1.2 million to a private school in Belleville.

In a courtroom packed with students and parents from Governor French Academy, St. Clair County Associate Judge Andrew Gleeson told Kevin Welch that his actions over the last decade showed a pattern of, at the very least, intentionally confusing customers about the leasing agreements he set up as part of his copier business.

"You had knowledge, you had intent," Henry said. "Look at the tsunami you've left in your wake."

In the civil suit, Governor French Academy accused Welch of creating a pyramid scheme of copier leases. Welch allegedly got the school to lease two copiers, and the school then signed leases for what they believed to be new machines, with payment going to Welch.

When new copiers were needed, the suit alleged, Welch replaced them and said the new lease agreements nullified the old ones. But Welch neither paid off the old leases nor returned the old machines to the leasing companies.

Welch, representing himself, denied wrongdoing, saying that the school should have understood the lease terms. "I had no intent of damaging these people at all," he said.

School attorney Kevin Stine said the seven lease agreements for 14 copiers that Governor French signed left the school with more than $500,000 in bills to leasing companies.

Moreover, according to testimony in the one-day bench trial Tuesday, Welch is accused of defrauding several other institutions, including the Christian Activities Center in East St. Louis, the Okawville Senior Center in Okawville and the Sparta and Oakland community school districts.

The judge said that the testimony persuaded him to add $700,000 in punitive damages over the school's losses. "It scares me what you've testified to," Gleeson said. "I need to send a message."

Parents and students watched the proceedings, and the judge commented before the lunch recess on the strong attendance.

Parent Deile Smith said that what Welch did to the school was more personal than business. "What he did was put a very good school in jeopardy of closing its doors," Smith said. "As a parent, it angers me."

The school had said last fall that Welch's fraud could send it into bankruptcy.

Welch said during his testimony that he was in dire financial straits. He left the courtroom without comment after Gleeson's verdict.

A spokesman for the Illinois attorney general said the state is investigating Welch's scheme.

1/27/108:05 PM

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Original Post

Art Post (Guest)

BELLEVILLE -- The day after the courts ordered an Okawville man to pay $1.2 million to Governor French Academy for fraud, the school placed liens on his properties to make sure it gets its money.

Philip Paeltz, the school's head administrator, said he believes the liens are for properties in St. Clair and Madison counties on which Kevin Welch pays property taxes, according to county records. Paeltz said he is not certain of the value of these properties because it has yet to be determined whether Welch actually owns them.

Welch could not be reached for comment.

The school sought $50,000 in damages and fees from Welch regarding a dispute involving leases for copy machines that it returned to Welch in exchange for newer copiers under their two-machine lease, according to a lawsuit the school filed against Welch. The complaint accused Welch of pocketing money from the leases rather than paying suppliers. It alleged Welch took the money from leases the school administration thought were terminated, money that he told school officials would go toward payments for their new lease.

During a one-day civil trial Jan. 26, Welch, who defended himself, said the collapsing economy left him unable to make lease payments. And as an example of his current financial condition, he noted how he no longer has a vehicle in his own name.

The $1.2 million verdict, issued by St. Clair County Associate Judge Andrew Gleeson at the conclusion the trial, includes about $470,000 for actual damages, $43,000 for legal fees and $700,000 in punitive damages.

Paeltz said he does not know how long Welch has to come up with the money, and that there has been no correspondence between the school and Welch since the trial.

"I haven't heard anything from him, and I don't expect to hear anything from him," Paeltz said. "He was difficult to find before the trial, and I suspect he's going to be difficult to find after it as well."

2/16/108:27 AM

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