Chipsmart, which abruptly closed its two local computer stores last month, plans an asset auction Saturday to raise money to repay customers their deposits, the company's owner said.
The stores' sudden closures locked out PC buyers who'd left deposits but never got their systems, as well as customers who'd left machines for repair.
Consumer complaints prompted a Harris County District Attorney's investigation. And the Texas comptroller seized Chipsmart's assets for nonpayment of sales taxes.
Chipsmart owner W. Michael Duewel said he met earlier this week with officials in the special crimes division of the district attorney's office. He said he also worked out an arrangement with the comptroller to sell Chipsmart's physical assets in order to raise money to pay customers, creditors and the taxman.
Duewel said he believes enough money will be raised by Saturday's auction at the company's Spring location to pay back all customers' deposits.
And those who left machines for repair can pick them up through a small, local company called CompuSurgeon, who also will continue to operate Chip-smart's electronic commerce Web site.
"I am deeply sorry that (customers) have been inconvenienced to the extent that they have been," Duewel said.
Chipsmart closed its Spring store on May 4 and its south Houston store on May 13. Customers arrived at the stores to find black plastic covering the glass doors and signs listing phone numbers.
However, for customers such as Jerry Patterson, who said he paid $1,300 at the Spring store for a PC he never received, calling those numbers proved an exercise in frustration.
"I have left messages and never heard back from anyone," Patterson said.
Mary Mallimo took her computer in for an extended warranty repair in early April. She made three trips to the Spring store trying to reclaim it, but it was never ready.
The fourth time she arrived, she said, the store was closed.
"That was May 19, and there was a sign on the door that said there would be an inventory close-out sale on May 30," Mallimo said. "I went up there on May 30, hoping to reclaim my computer before they sold it, but there was no sale going on."
Better Business Bureau spokesman Dan Parsons said his organization received dozens of complaints from Chipsmart customers, including some who had ordered computers via the company's Web site and never received them.
Duewel and founder Jeff Roll-fing said Chipsmart fell victim to the same market forces that have bedeviled the giants of the personal computer industry.
Falling prices and shrinking profits, which wounded Compaq Computer Corp. last year, proved fatal to Chipsmart, Duewel said.
Chipsmart, started in 1993, at one point also had stores in Austin and San Antonio. The company closed those stores as well.
Rollfing said the company was profitable and growing until last year, when an earthquake in Taiwan sent memory chip prices soaring. Shortages of other parts, including the often pricey processors that are the brains of personal computers, didn't help.
"You remember last year when Michael Dell stood up and said that the big guys would get the parts they needed, and the little guys would suffer?" Rollfing said. "Well, he was right."
A Y2K-related slowdown in computer purchases by government and business clients cut into Chipsmart's sales around Christmas, a crucial time for computer retailers, he said. Although things began to improve after the first of the year, Rollfing said, the damage to the company had been done.
Duewel, who became involved with Chipsmart as a potential investor, became company president in February and Rollfing stepped down. On May 3, Duewel became owner of the company.
"In the face of a very substantial financial crisis, I closed down our operations and let all our people go," Duewel said. "There just weren't any alternatives."
Duewel said he kept a low profile after the closing because he was working out a plan to pay back customer deposits, meet Chipsmart's tax and credit obligations, and return machines brought in for repair.
Here are Chipsmart's plans:
Duewel said he hoped to shut down Chipsmart without resorting to bankruptcy, but that the company's creditors could still force the issue.
The Saturday auction will include more than 75 complete computer systems, as well as components for building PCs. Rollfing's 1999 Jaguar automobile also will be up for sale, Duewel said.