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 telecommunications 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 contracts, which NorVergence then sold to financial institutions such as the companies that are settling today. The financing companies billed 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 left without 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. The 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.

#