Settlement agreements with three leasing companies that were assigned NorVergence Inc. contracts in Rhode Island will return more than $230,800 to businesses hit with costly payments after NorVergence went bankrupt, state Attorney General Patrick C. Lynch said.
Rhode Island was involved in multi-state litigation that has now been settled with Wells Fargo Financial Leasing, CIT Group/Equipment Financing Inc., and Lyon Financial Services Inc., d/b/a US Bancorp Business Equipment Finance Group.
Under the deal, the three companies will refund or not collect rental payments they claimed were owed by former NorVergence clients. Four Rhode Island businesses will save $106,965 from Wells Fargo, and six will save $123,912 from CIT, Lynch said. Similar savings are expected to apply to small businesses contracted with Bancorp.
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NorVergence promised to “drastically cut” its clients’ costs by integrating and delivering unlimited local and long-distance telephone, cellular and high-speed Internet service through rental data routers dubbed “Matrix boxes,” Lynch said. NorVergence sold its five-year contracts to leasing companies, and when the firm was forced into bankruptcy in June 2004, its customers were left without service but still responsible for the lease payments.
“The bottom line is that NorVergence’s customers were left holding the bag and footing the bill for a large and elaborate telecommunications scam,” Lynch said. “By participating in this multi-state action, we’ve helped Rhode Island’s small-business owners protect themselves from large leasing companies that intended to recoup their own losses at the expense of the small businesses involved.”
All consumers who signed agreements with NorVergence that were bought by Wells Fargo, CIT, or US Bancorp, or who signed NorVergence agreements directly with any of the three leasing companies, will receive a notice in the mail regarding the opportunity to participate in this settlement, Lynch said. Local consumers may also call 274-4400 ext. 2401.
Lynch also said his office would help local businesses paying leasing companies that weren’t part of the settlement.
