NEWARK — The Attorney General’s Office and the Division of Consumer Affairs have reached agreements with seven financial service companies that forgive monies owned by former New Jersey customers of NorVergence, a bankrupt telecommunications firm that discontinued service in July 2004, Attorney General Peter C. Harvey and Consumer Affairs Director Kimberly Ricketts announced.

The seven agreements forgive a total of approximately $15.9 million that was owed by 770 former NorVergence customers located in New Jersey. The latest agreement with Court Square Leasing was signed today. New Jersey also was part of a national, multi-state settlement involving TCF Leasing Inc. that included two New Jersey customers.

"These customers, mostly small businessmen and businesswomen, couldn’t even get a dial tone but the bills kept coming in month after month. Their credit ratings were at risk and their livelihoods were threatened. Thanks to the understanding and cooperation of these seven financial service companies, we’ve lifted a tremendous burden from these entrepreneurs and we’re again letting them focus on the business of their business," Acting Governor Richard J. Codey said.

The financial companies continued to bill NorVergence customers, under terms of the service contracts they bought from NorVergence, though these customers received no telecommunications services following the company’s filing for bankruptcy.

"These former NorVergence customers, through no fault of their own, were faced with paying for telecommunications services that they were no longer receiving after NorVergence discontinued operations and filed for bankruptcy," Attorney General Harvey said. "These financial companies, which bought long-term service agreements from NorVergence, also were affected by NorVergence’s actions."

"I want to acknowledge these financial service companies for working with us to provide relief to the former NorVergence customers," Director Ricketts said. "We’re continuing to work with other financing companies that bought lease agreements from NorVergence so additional New Jersey consumers obtain relief."

NorVergence, which was based in Newark, sold and resold telecommunications services as integrated packages, including local and long distance telephone, cellular telephone and high-speed internet access. NorVergence primarily marketed its services to small businesses and not-for-profit organizations that did not have in-house counsel or technology personnel who could properly evaluate what was being offered.

Customers were told that they could save up to 60 percent compared to their current service providers over the term of the NorVergence contract, which was typically five years.

Under the settlements with Consumer Affairs, the seven financial service companies also agreed to assist consumers in resolving any adverse credit reports resulting from unpaid NorVergence balances. Late fees or penalties and property insurance charges also will be forgiven.

In addition to Court Square Leasing, which forgave $47,000 to its New Jersey customers, the other companies who have reached settlements (amounts as noted) with Consumer Affairs are:

• Lyon Financial Services Inc. (doing business as U.S. Bancorp Business Equipment Finance Group), $2.93 million
  
• De Lage Landen Financial Services Inc., $588,000
  
• Lakeland Bank, $0
  
• Wells Fargo Financial Leasing Inc., $4.40 million
  
• General Electric Capital Corp., $3.57 million
  
• CIT Technology Financing Services Inc., $4.36 million

Deputy Attorneys General Lorraine K. Rak, Chief of the Consumer Fraud Prosecution Section, and Jeffrey Koziar represented the State in these matters.

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