Governor's Office announces settlement with financing companies in NorVergence investigation

ATLANTA, GA (May 26) - The Governor’s Office of Consumer Affairs (OCA) announced today a settlement with three financing companies in the ongoing NorVergence investigation. The settlement will impact over one hundred (100) small businesses in Georgia and produce over $1.8 million in debt forgiveness and refunds for these companies. 

   The settlement is part of an interstate agreement that involves twenty other states nationwide.

   The case involves widespread telecommunications fraud involving NorVergence, Inc., a bankrupt New Jersey-based telephone equipment and service company. NorVergence had over 9,000 customer accounts nationwide which were small businesses, non-profit organizations, and local government entities. 

   The settlement is with CIT Group/Equipment Financing, Inc. (CIT), Lyon Financial Services d/b/a U.S. Bancorp Business Equipment Finance Group (USB), and Wells Fargo Financial Leasing, Inc. (WFFL). After securing contracts with businesses, NorVergence sold the rental agreements to approximately 40 different finance companies, including CIT, USB, and WFFL. 

   NorVergence made a deceptive sales pitch claiming that by using its Matrix box, the business would have integrated local telephone, long-distance telephone, wireless, and internet services at a savings of at least 30%. NorVergence sold the boxes for amounts ranging from $500-$1500, but they did not provide telephone or internet services. NorVergence had to obtain and pay for those services from other providers, which it had stopped doing before it went into bankruptcy. Additionally, a customer’s rental agreement was for 3-5 years at $200-$4000 per month. 

   When NorVergence went into bankruptcy in June 2004, its customers were left without service but the finance companies, including CIT, USB, and WFFL, maintained that the customers were still responsible for the rental agreement payments. Some finance companies charged consumers for replacement insurance premiums based on the total rental contract amount, not just on the much smaller value of the Matrix box. 

   All consumers who signed agreements with NorVergence that were bought by CIT, USB, or WFFL or signed NorVergence agreements directly with CIT, USB, or WFFL, will receive a notice in the mail regarding the opportunity to participate in this settlement. 

   Joe Doyle, Administrator of OCA, said, “This is a major step forward in this case, but it is only a beginning. We will keep working with the other states until we obtain justice for affected small business owners in Georgia who were trapped in this scheme.”

   For further information, please contact Bill Cloud, Governor’s Office of Consumer Affairs at 404-656-3790.