May 26, 2005
278 MARYLAND BUSINESSES DEFRAUDED BY TELECOM COMPANY
TO GET DEBT FORGIVENESS UNDER SETTLEMENTS
Attorney General J. Joseph Curran, Jr. announced today that
his Consumer Protection Division, working in conjunction
with a multi-state
group of Attorneys General Offices, has entered into settlements
with four financing companies that will provide up to $5.7 million
in debt forgiveness for 278 Maryland businesses that had been
defrauded by NorVergence, Inc., a bankrupt New Jersey-based
equipment and service company. Three of the financing companies – CIT
Technology Financing Services, Inc. and CIT Group/Equipment Financing,
Inc.; General Electric Capital Corporation; and U.S. Bancorp, Business
Equipment Finance Group, Inc. – are forgiving 85% of the
outstanding balances owed by the Maryland businesses, and one company – Wells
Fargo Financial Leasing, Inc. – is forgiving 86%.
In 2002, NorVergence began selling telecommunications products
to businesses in numerous states, including Maryland. In the
sales of these products, NorVergence misrepresented the type
of the equipment
they were selling and the discounts that the customers would
realize from use of the equipment. The customers signed multi-year
which NorVergence then sold to financial institutions such as
the companies that are settling today. The financing companies
customers under the original contract terms. Last summer, a federal
bankruptcy court declared NorVergence bankrupt. As a result,
businesses that entered into contracts with NorVergence were
telecommunications services and had to purchase alternative services.
However, the financial institutions that had purchased their
NorVergence contracts continued to bill them.
I am pleased that these 278 Maryland businesses that were caught
up in NorVergence’s deceptions will be receiving relief,
and that the financial institutions have agreed to forgive most
of the outstanding balances on these businesses’ NorVergence
leases," said Curran.
In addition to forgiving most of the outstanding balances, the
financing companies will forgive any late fees and penalties
that have been assessed after termination of contracted services.
companies also will issue refunds to businesses if the businesses’ payments
exceed amounts due under the settlements and will terminate all
litigation and withdraw any adverse credit reports against the
businesses that elect to participate in the settlements.
Maryland businesses that are eligible to participate in the settlement
will receive notices in the mail in approximately one month.