AG's NorVergence Response: 48.2% Take Settlement by Christopher Menkin
685 out of 10,629 NorVergence leasing customers want their day in court. When NorVergence Corporation filed for bankruptcy protection in Newark, New Jersey on June 30, 2004, it was claimed 11,000 lessee would be “cut off” from their telephone carriers and the debt left behind would be over $200 million dollars. What was not said was the “service” was buried in NorVergence “Equipment Rental Agreements,” which 47 leasing companies purchased and claimed the lessees had to continue to make payments because of “hell and high-water” provisions in the contract, whether the equipment worked or not, the leasing companies had to pay. A major hue and cry started on the world wide web with blogs, listserves, web sites, and then class action suits, followed by 28 attorney general offices and the District of Columbia who took the leasing companies to task, eventually gaining $28.45 million they claimed to be owed by 1,371 NorVergence customers. All the lessee had to do was agree to the settlement, often 80% to 90% on the contract, including other costs incurred such as personal property tax, insurance, and late fees. Despite all the hoopla, press releases from attorney generals running for re-election, or higher office, such as Eliot Spitzer in New York, their offices have evidently not followed up, and more importantly, do not know how many of the NorVergence lessee's in their state accepted the settlements. "We do not have data yet from all leasing companies, but the data we have received indicates about a 50% acceptance rate (48.2%)." said Melissa A.Merz, Illinois Attorney General Press Room, representing Attorney General Lisa Madigan.
Illinois Attorney General Lisa Madigan For well over 45 days Leasing News was calling the large dollar settlement attorney general's press rooms to find the results of the NorVergence settlements offered. Some were call every day for weeks. Some were called every other day. We have the telephone bill records to prove this statement. Leasing News even caught some in during the last week of the year. Ms. Merz was the first to respond, on January 4th , 2006. To date we have not heard from Paul Larrabee, New York State Attorney General's Office, 518-473-5525 (Buffalo, New York, as the main office said he was the person in charge;) In New Jersey, Jeff Williams, 973-504-6323, who made many promises to get back with the information (He said he read the articles in the Star-Ledger and knew about NorVergence and the troubles in his state ). Sarah Nathan, 617-727-2543 in the Massachusetts's attorney general's press office said at least a dozen times she would get back to Leasing News (originally, I thought if this were the New York Times, certainly she would respond by the afternoon, and soon this trade publication felt like Charlie Brown with Lucy and her foot ball.) Our main contact since July 2004 was the Massachusetts's AG lead attorney Karlen Reed, who was always helpful. She also responded after hours. She took time to explain things in non-lawyer language. She was also involved in the coordination with the coordination of 28 attorneys general Offices and District of Columbia. Some time last year she was assigned other cases and told us she had no knowledge the status of the settlements. In our last attempt to reach her, we learned she joined the private sector. No one seemed to know in the Massachusetts's press office (or care) about the large dollar settlements or those who had made complaints. In the meantime, two web blogs have former NorVergence lessee shouting they will never give up. Often Leasing News quoted their defiance in not making lease payments, “Send the word out, we are coming for the rest of the LC's now! It is true the NorVergence scandal is off the headlines, perhaps even considered old news. And those leasing companies who had agreed to 80% to 90% of the contract, insurance, personal property tax be credited obviously did not offer enough.
NY Ag Eliot Spitzer In New York Attorney General Spitzer's last press release on the subject he announced he announced a total of 711 NorVergence customers from New York receiving a potential of over $16 million in relief, with that latest four agreements, BB&T Leasing Company, Interchange Bank, R-G Crown Bank (d/b/a Crown Bank Leasing), and National Penn Leasing Company, will forgive $2.8 million (90% of the balances on outstanding leases) in payments due from 111 New York customers, who signed long-term contracts with NorVergence. The list of those leasing companies who have not settled in New York State: Alfa Finance http://www.leasingnews.org/Conscious-Top%20Stories/Novergence_127.htm Those that settled made certain agreements, and for example sake, let's take Wells Fargo (WFFL) (their settlement dated May 20,2005): "WFFL shall fully credit each Participating Customer for any payments it has made pursuant to the Rental Agreement after July 31, 2004, including but not limited to monthly payments and charges of insurance, late fees, and taxes. • The Participating Customer shall either elect to: As important, they had: "23. a “The thirty-five(35) day opportunity to elect to participate in the settlement described herein in exchange for a release of all claims against WFFL relating to NorVergence... "Within sixty days of the effective date, the attorney general is to be informed of the letters sent, providing a list of those whose letter were undeliverable (after making reasonable attempts for correct or new addresses) and an accounting of the Participating Customers, including the Participating Customers' Settlement Balances and payment schedules elected and agreed upon... "There are provisions that the lessors are to report every six months until all are resolved according to the agreement." Here are copies of the Wells Fargo, USB, and CIT settlements: http://leasingnews.org/PDF/Wells%20Fargo%20AVC%205-26-05.pdf http://leasingnews.org/PDF/USB%20AVC%20Final%205-26-05.pdf http://leasingnews.org/PDF/CIT%20AVC%205-26-05.pdf July 1,2005 settlements should have been made to the lessor, and September 1,2005 reports back to the attorney general's offices. Here it is January, 2006, and Illinois is the only one able to produce records and state 48.2% accepted the settlement offered. Allegedly 1,521 NorVergence lessees to date have been offered settlements, out of an original estimated 12,000. This does not include the FTC win of $47 million dollars of “uncommitted” signed leases, with claims against the receivables, assets, held by the NorVergence Corporation in bankruptcy and claimed by several leasing companies as “additional collateral” for their defaulted leases. No counts of leases were given, according to Leasing News Research, and it should be noted the 12,000 leases was given to the Bankruptcy judge from the officers of the NorVergence Corporation at the time of filing. It also should be noted there is a 1450 member class action suit. The remainders of the alleged 12,000 leases appear to be in individual litigation with the first issue “venue,” which is being overturned in most court districts. If Illinois's records are indicative, less than 50% agreed to the settlements offered by the attorney general's offices. No wonder they don't want to write a press release about it, or divulge the information. 685 out of 10,629 NorVergence leasing customers want their day in court. Federal Trade Commission Senior Attorney Randall Brook has been on vacation in France ( for the Christmas holidays.) Wait until he hears this news. |
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