Exclusive: FTC Wins $47 Million NorVergence Lease Judgment

In the ruling by the United States District Judge Dickinson R. Debevoise, entered into the court docket late on Friday, July 22, 2005, the court found for the plaintiff, the Federal Trade Commission, issuing a default judgment for fraud against NorVergence Corporation, now in bankruptcy.

In immediate contention were $47 million dollars of “uncommitted” signed leases, with claims against the receivables, assets, not only

for the specific contracts themselves, but for leases not actually held by leasing companies but where the leasing company was making claims against these assets. These contracts are now void. Also, contracts assigned to finance companies for part of their term will be void when that term is up and they would otherwise be returned to NorVergence.

Randall “Randy” H. Brook, FTC Shinning Knight Prosecutor

Randy Brook, senior attorney for the Federal Trade Commission, obtained the judgment. Known in the industry as the “dragon slayer” of leasing companies, primarily for his $24 million win and $1 million fine against Leasecomm, told Leasing News in an exclusive interview that this would not end the FTC's interest in NorVergence matters. He would not give a time table, but indicated that the five Commissioners of the FTC were the ones to decide when to proceed with any further legal action.

He also said it left no uncertainty that the FTC Act protected all consumers, whether they were individuals, small businesses, nonprofits, or other entities that were victims of the NorVergence fraud. Brook did not deny to Leasing News that the FTC could decide to take some leasing companies to court for illegal activities.

In discussing the “forum clauses” of the “Equipment Rental Agreements,” meaning venue or place of trial, he said the FTC was quite adamant that they were in violation of the FTC Act, as stated in the judgment against NorVergence, but left open the question of whether the leasing companies would be prosecuted for enforcement of this provision.

It should be noted that every NorVergence-related settlement to date between a state attorney general and a leasing company prohibits distant forum lawsuits against consumers who don't accept the settlement terms. Brook in the exclusive interview also pointed out 23 state attorney general plus the District of Columbia now have reached settlements with the major holders of NorVergence leases. He said it was not proper that he should make any comment on states' actions.

He wanted Leasing News readers to fully understand the FTC is very active in protecting consumers, which included small businesses, who were both defrauded by NorVergence and those involved in deceptive practices and illegal interstate commerce.

Brook said a formal press release would be issued this coming week.

Copy of Jude Debevoise Default Judgment and Order for Permanent Injuction and Monetary Relief entered into the court docket on Friday, July 22,2005:

http://leasingnews.org/PDF/NVdefJmtEntered.pdf