Florida AG Drops Leasing Bomb

Subpoenas 15 Leasing Companies/Halts Payments

 

Charlie Crist, Florida Attorney General 

http://myfloridalegal.com/newsrel.nsf/newsreleases/
85F13800D5F8982685256F01006FC076?OpenDocument 

Press release from Florida Attorney General 

TALLAHASSEE- Attorney General Charlie Crist today issued subpoenas to 12 leasing companies for information and documentation pertaining to "demand for payment" letters sent to former customers of NorVergence, a telecommunications company. NorVergence filed for bankruptcy protection in July 2004, leaving hundreds of Florida businesses and a total of 11,000 businesses nationwide in debt for services and equipment that were not delivered or that did not work. NorVergence sold a box called the "Matrix" to small businesses, promising to provide telephone and internet services at greatly reduced prices. Many customers signed 5-year agreements with NorVergence for the "Matrix," unaware that the box in fact did not

provide the promised services. The box has a retail price of approximately $500, but NorVergence pressured the small businesses to sign agreements to pay between $450 and $1,200 per month for use of the "Matrix."  

When NorVergence filed for bankruptcy, the leasing companies that purchased the agreements from NorVergence began demanding payment for service that was never provided. If customers refused to pay the leasing companies for the equipment and services, the leasing

companies accelerated the terms of the contract and demanded full payment of the agreement within five days. The immediate payments that were demanded ranged from $10,000 to $80,000. 

"Demanding full payment for a device that did not deliver the promised service, and in some instances was never even installed, is preposterous," said Crist. "We will work to protect the rights of small business owners in Florida who were harmed by these leasing companies."

The subpoenas commence a formal investigation into whether the agreements violate the Florida Deceptive and Unfair Trade Practices Act. They seek information regarding the formation of the agreements, the assignment of the agreements to the leasing companies, and the companies' demands for payment from Florida customers.  

The leasing companies include: CIT Technology Financing Services, Inc.; Commerce Commercial Leasing; Court Square Leasing Corporation; Dolphin Financial Corporation; Information Leasing Corp.; IFC Leasing, Inc.; Irwin Business Finance; Liberty Bank Leasing; Patriot Leasing Co. Inc.; Preferred Capital, LLC; Sterling National Bank and Wells Fargo Financial Leasing, Inc.  

Attorney General Crist is working with other Attorneys General and federal agencies in this investigation. The Attorney General has also demanded that the companies agree to immediately desist from further demands for payment from Florida customers, pending the outcome of the investigation, and has given the companies five days to respond to this demand. The companies have five business days, or until September 9, to respond to the subpoenas.  

Samples of the subpoena and accompanying letter are available through the following links:

Subpoena: http://www.myfloridalegal.com/norvergencesubpoena.pdf

Letter: http://www.myfloridalegal.com/norvergenceletter.pdf

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