Penn. AG Sues NorVergence/Salzano Brother
GERALD J. PAPPERT :
PLAINTIFF : NO. 2004 -
NORVERGENCE, INC. :
PETER J. SALZANO, Individually, and PETER :
J. SALZANO as President, Chief Executive :
Officer and Chairman of NORVERGENCE, INC.
( highlights of complaint:)
9. Defendant Peter J. Salzano (hereinafter “Salzano”) is an adult individual and resident of the State of New Jersey.
10. Salzano is the President, Chief Executive Officer and Chairman of NorVergence. Salzano is being named in his capacity as President, Chief Executive Officer and Chairman of NorVergence, and, in addition, in any other position he held in NorVergence.
F. Directing the Defendants to pay civil penalties in the amount of One Thousand and 00/100 Dollars ($1,000.00) for each and every violation of the Consumer Protection Law, which will increase to Three Thousand and 00/100 Dollars ($3,000.00) for each violation involving a victim age sixty (60) or older;
G. Directing the Defendants to pay the Commonwealth for the costs of its investigation and prosecution of this action; and,
11. The Commonwealth is informed, believes and therefore avers that Salzano supervised, controlled, approved, formulated, authorized, ratified, benefited from and/or otherwise participated in the acts and practices hereinafter alleged, or, in the alternative, that Salzano acted in concert with NorVergence or used NorVergence as an agent or instrumentality in perpetrating the acts and practices complained of herein and, therefore, to adhere to the fiction of a separation between Salzano and NorVergence would be unjust, inequitable and would sanction fraud.
33. The Commonwealth is informed, believes and therefore avers, that most rental agreements that NorVergence entered into with consumers were for a five-year term. They were titled simply “Rental Agreement”, with the only indication that they were non-cancelable appearing in fine print. Although it is believed that NorVergence purchased the various MATRIX devices at prices ranging from $350 to $1,500, the cost at which NorVergence “rented” the MATRIX devices to its consumers varied greatly. For example, NorVergence's rental agreements required consumers to pay from $250 to $5,700 per month. The total cost to the consumer over the term of the rental agreement ranged from $24,000 to $340,000 for “renting” the MATRIX 850 equipment. The total cost to the consumer for MATRIX Soho equipment ranged from $10,000 to $30,000.
34. The NorVergence rental agreements were complex, highly technical, commercial contracts which, in a “sea of fine print”, included provisions that were totally inconsistent and/or contradictory to representations made by NorVergence sales staff in the course of securing the consumer's execution of the rental agreement. In some cases NorVergence had consumers sign more than one rental agreement covering essentially the same equipment which added to the already confusing sales transaction.
For example, the Somerset Chamber of Commerce entered into two (2) NorVergence rental agreements; one (1) dated as being accepted by NorVergence on May 25, 2004, identifying NorVergence, Inc., as the rentor, and the other undated rental agreement identifying Wells Fargo Financial Leasing, Inc., as the rentor. True and correct copies of these rental agreements are attached hereto and labeled Exhibit “A”.
37. The Commonwealth is informed, believes and therefore avers, that the NorVergence rental agreements characterized the agreements as finance leases under Article 2A of the Uniform Commercial Code and also contained, in very fine print, a provision that stated that if the agreement was a Uniform Commercial Code Article 2A lease, then all the protections of Article 2A could be utilized by the assignee.
38. The NorVergence rental agreements are not finance leases under Article 2A of the Uniform Commercial Code because the Commonwealth is informed, believes and therefore avers that:
a. NorVergence selected and supplied the MATRIX device equipment to its consumers.
b. NorVergence supplied the MATRIX device equipment to its consumers from its existing inventory of such devices and did not acquire devices in connection with the individual rental agreement leases entered into with the consumers.
c. Prior to signing the rental agreements, the consumers did not receive a copy of the contract by which NorVergence acquired the MATRIX device equipment that was the subject of the rental agreement.
d. It was not a condition of the effectiveness of the rental agreements that the consumers approved the contracts by which NorVergence acquired the MATRIX devices or the right to possess and use said devices.
e. Prior to signing the rental agreements, the consumers did not receive a statement designating the promises and warranties, and any disclaimers of warranties, limitations or modifications of remedies, or liquidated damages, provided to NorVergence by the supplier of the MATRIX devices as part of the contract by which NorVergence had acquired the MATRIX devices.
f. Prior to the consumers signing the rental agreements, NorVergence did not inform the consumers in writing of the identity of the person supplying the MATRIX devices to NorVergence; that the consumers are entitled to the promises and warranties provided to NorVergence by the supplier of the MATRIX devices in connection with the contract by which NorVergence acquired the MATRIX devices; or that the consumers may communicate with the supplier of the MATRIX devices and receive an accurate and complete record of the goods supplied and a complete statement of the promises and warranties, including any disclaimers and limitations of them or of remedies.
Full Copy of Complaint by Penn. Attorney General