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NorVergence Leasing Customers Respond to Fleming
In Wednesday's Leasing News, a copy of Michael Fleming, CAE, president of the Equipment Leasing Association, letter to the editor of the New Jersey Star Ledger regarding the NorVergence debacle was printed. http://www.leasingnews.org/archives/November%202004/11-10-04.htm#ela It was also noted 41 leasing companies have been named in the various law suits. http://www.leasingnews.org/archives/November%202004/11-10-04.htm#norv In reality, according to the poll of members on the Yahoo list serve, there were 58 leasing companies who leased NorVergence contracts. The next bankruptcy hearing on the matter is November 30; however, the judge has given all until the end of the year to make all claims. In the Yahoo List Serve, many of the 863 members expressed their viewpoint on Mr. Fleming's letter to the Star Ledger, and asked us to print their side. Also included are some earlier comments that readers in the leasing business may be interested to learn The biggest fallacy in Michael Fleming's argument is: The Norvergence Fraud was based on deception about the Lease of the equipment. If they had been straightforward about this box costing $10,000 - $50,000 - if it had been quoted as such and there was the option to lease, or buy for cash or borrow from a bank of your choosing - THERE WOULD HAVE BEEN NO SALES! The entire NorVergence business plan was based on deceptively hiding that there was a 60 month lease for $10k-$50k! The Screening Managers have said this. Michael Fleming and the ELA have their heads in the sand by blaming the victims for the fraud. (name with held ) Mr. Fleming is correct that equipment leasing is a critical financing tool for small businesses. I have multiple leases on real equipment of value. But they were done upfront - we knew exactly what we were purchasing and the cost of the equipment and the financing were straightforward and negotiated in GOOD FAITH - not deceptively buried and then fraudulently separated from a telecom service contract. The "Norvergence matter" as Mr. Fleming benignly calls it, is ALL ABOUT Leasing - trying to say otherwise will not fly with the customers or the FTC or the AG's. Keep fighting. Keep writing. If Mr. Fleming's letter to the editor gets printed, we need the NJ customers to send rebuttals to the paper - lots of them. But it's a good sign that the ELA felt a need to write this. We must not rest - the more negative publicity the better. Carry on! (name with held ) Thanks for the article and responses, but this is nothing more than a fine piece of "Spinning" done by the leasing industry, with a major amount of inaccuracies, of course, to favor the poor leasing companies. As examples, stated below: “The Norvergence matter is not an issue about leasing. It is about a business that sold a service that they were not able to deliver. Unfortunately, many Norvergence customers leased the equipment necessary to make the service work. The problems related to equipment they no longer need would be the same whether the customer had leased, bought for cash, or borrowed money to buy the equipment. (quote from Fleming letter.) The Norvergence customer base had no option to buy the equipment. It was part of a service/equipment proposal. I asked to buy the equipment. I was told it could not be done. And, what happened to the section within the agreements that showed that the leasing companies would take over servicing the "complete" telecom needs of the lessees if Norvergence went bankrupt? “In the Norvergence matter, NorVergence customers selected the equipment and signed acceptances that they received the equipment and the equipment worked. ( quote from Fleming letter.) Again, this is just not true, and I am sure Mr. Fleming knows that. The Norvergence customer was told what was going to be supplied and had no ability to select the equipment, what kind, how much and with what capabilities the equipment had. This was "presented" to customers as part of their "deal", the service/equipment package. The customers were additionally "duped" into signing delivery and acceptance documents, thinking they were signing for any package delivered by UPS, Fed EX or other delivery service, not knowingly agreeing to the functionality of said equipment, as most was not installed to evaluate whether it really worked or not. The lessors did not select the equipment or make judgments that it was the appropriate equipment for the business.( quote from Fleming letter.) But the leasing companies did know that they were leasing the same equipment to may different customers for wide varying prices, not a common practice in the industry, let alone legal. As stated above, this response is so one sided and inaccurate, that the New Jersey Star ledger needs to hear the Lessee side as well. We can not allow a mouthpiece to the lease industry get away with sure falsehoods to protect themselves from any fault. Shame on them!!! (name with held ) I suppose the ELA also condones filing lawsuits for failure to make lease payments, when in fact all lease payments have been made. Do they also condone NO prior communication from a leasing company before a lawsuit is filed? (name with held ) Embedded in the second paragraph by ELA President Michael Fleming is the core problem that I have with this whole thing. He states that the Norvergence matter is not an issue about leasing...I agree wholeheartedly! So why are leasing companies involved? He goes on to state that it is about a business that sold a "SERVICE" that they were not able to deliver...My question is simply, How did that "SERVICE CONTRACT" that we signed get translated or transferred into an "EQUIPMENT LEASE" to begin with? All of the comparable analysis information that we were given by our salesman initially was based on our then current phone service information that we were asked to provide as the basis of cost comparison. As a side note, we have recently returned our "PHONE SERVICE" contract back to our original phone service vendor, signed up for a new 5 year "PHONE SERVICE CONTRACT" and I don't expect a leasing company to get involved because it is for "PHONE SERVICE" just as the Norvergence sales pitch was also made. As you must now know, many other variables entered into that original "PHONE SERVICE AGREEMENT" that we business owners originally signed to. Among them was an agreement that we were to get blazing fast internet services through a new high speed T-1 line, carrier neutral cell phones with free roaming, $.00/per minute usage, and yearly upgrades if requested. I don' t know of any "EQUIPMENT LEASES" out there that allow you to upgrade your equipment yearly without renewing the paperwork and would you really need an equipment lease for a T-1 line and cell phones? There was also a free 800 and free 800 fax number, for the businesses to consider and so on. If interested, you can read my previous post on November 3 for a more detailed list of "PHONE SERVICE PROMISES" that were made by this company. I remain convinced that this "PHONE SERVICE CONTRACT" was misrepresented at the very least to the business owners. I maintain that I would have had no other reason to leave my current phone service provider to pursue an equipment lease in an industry that offers new technology every day. To lock up my phone equipment options for a period of 5 years without the possibility of upgrade would be foolish. That would be the equivalent of securing a bag phone equipment lease and the current technology is portable picture phones. This point is something that I was quick to point out to my Norvergence sales rep. It noted that Norvergence would match any competitors offer during the life of the service contract. Again, "THAT DOESN'T SOUND LIKE THE TERMS OF AN EQUIPMENT LEASE TO ME" (name with held ) If 1 or 2 people make a mistake so then it is sour grapes. They should have taken more care. When 11,000 people start complaining, that's not sour grapes. That is a problem of great dimensions and consequences. I am certain that the leasing companies know how small business feels. By the way, when was the last time you purchased FIRESTONE or BRIDGESTONE tires for your car? (name with held ) Most importantly there doesn't have to be any deep discussion about why the now "embarrassed" LC's didn't do a more comprehensive job checking Norvergence out. Obviously they knew what was going on. As I said before, this fact is the LC's biggest problem. Not yet, but later. Right now their attention is getting all the money back they can before the injunctions start being enforced. But at some point in time this is going leave the realm of who owes who what and head into criminal proceedings. I guarantee it. Please remember, when it is proven that the LC's had knowledge of NorVergence situation, and still continued to accept leases, that becomes criminal on a very large scale no different than Enron, or the rest. (name with held ) I do not profess to have all the answers, but I do know one thing...the leases will be found to be based upon "fraud." This is the number one issue that faces the victims. The victims are also the Leasing Companies. I feel for them as much as I do myself. I was an early victim. I actually had service: 2 cell phones with unlimited talk time, "free" long distance on one of my 4 lines and Norvergence actually was re-imbursing me for my Comcast high speed internet access. At no time was the "matrix" a part of my "solution." This is what I am being sued for: a $100.00 router to the tune of $11400.00+.I was a happy customer until June 2004. Then the checks stopped, the service was cut off and I stopped paying my bill. My bill for service. I never signed anything that would obligate me to pay for a "box" without service. At least as far as I knew. I am not the smartest person out there, but I have managed to build a successful business out of nothing, like many of the my fellow victims out there. If I could only ask you one thing, it would be: What do you see as the best way out of this whole mess for both parties? I truly believe that the Leasing Companies will suffer beyond the loss of lease income if they peruse the collection of money. ( name with held ) The people that perpetrated this crime did a lot of research before crafting a plan that would take advantage of small business people that do not have the time or money to consult there attorney every time they change there phone service. That is what they thought they were doing (changing phone service providers) not leasing equipment. These guys are con artists. The contracts that they tricked everyone into signing are fraudulent plain and simple. The bank that is holding fraudulent paper has no more rights than the company that sold it to them once fraud has been proven. ( name with held ) I have run a telecommunications company for 20 years, and have used equipment leasing and sold same to my customers. What elides me, if indeed the leasing companies are not culpable in this situation, is that typically, it has been my experience that most leasing companies want to know the wholesale cost of the equipment being leased, and impose a limit on the mark-up. If that is indeed common practice, than it would seem that the leasing companies involved would have to have known that the prices for this equipment was being grossly inflated. If it is not a widespread practice to establish some sort of loan to value ratio for the equipment, that a reasonable person would have to ask why not. Steve Gelmis, President --- I have been after my County, which collects personal property taxes for ****, for more than a month to confront De Lage Landen's declared value of ****** for my compute router. De Lage Laden claims that the value of the equipment is equal to their cost of the lease, i.e.,****** I have requested that the County reduce the cost from ***** to the actual cost of less than $400. Even though I have sent them to a website showing that the actual cost of buying my matrix new is only a few hundred dollars, the County has refused to make changes -- indicating that De Lage Landen must make the change. De Lage Landen flat out refuses to make any changes even though the actual equipment costs are minimal in the actual lease. Almost all of the lease's value represents pre-paid telecommunications and internet service. ( name with held ) Didn't I read in your articles that several other leasing guru's stated the leasing companies should have seen through this. I have spoken with several leasing industry people and actually have asked them to help with legislation so the many don't suffer for the few. They stated that the leasing carriers just didn't care to look at Norvergence. They blame us for not doing the due diligence that they didn't do on their own affiliate. By the way, I never saw or spoke to anyone from my leasing companies. ( name with held ) Leasing News has heard the former president of the United Association of Equipment Leasing Bob Rodi called many things, but now we can call him a “guru.” Seriously, let's leave this article with the quote the gentleman above is referring to: “Ethics, in this business or any other, is largely a personal decision. I used to think that, as an industry or through our affiliations with associations, that we could somehow "force" ethics upon other members of our industry. I realized how wrong I was about that. As a business person you either have ethics or you don't. If you are competing against people who don't have good business ethics then shame on you if you can't turn that against the competitor and into a positive for you. Instead of whining about how unethical your competitors are, use your ethics and good character to uncloak these characters and beat them on the street. “Lastly, it never ceases to amaze me that funding sources know that these practices take place yet continue to preach about representations, warranties and ethics. The biggest and most respected names in the business are always associated with the worst players. As a prime example, look at this list of lenders that were lined up to get a piece of the Norvergence business. I can't be the only one in this industry that is still amazed by this even if I have become numb to it after all these years.” Bob Rodi, CLP President |
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