Exclusive Interview: Randy Brook

“On the Record” with the top FTC equipment leasing senior attorney

Randy Brook, the senior attorney for the Federal Trade Commission (FTC) in the NorVergence leasing case does not believe new regulations are needed in the leasing industry. He finds the NorVergence matter an “aberration.” He believes the leasing industry itself has learned the hard way and will pay more attention to “dealer” or “vendor” leases in the future.

“I don't think this is going to happen in this scale again, “ he said. “ The industry will change its policies as the cost of money to the lessors is great. This is a situation where no one wins.”

It should be pointed out, in this “on the record” interview, this top federal attorney was speaking only his personal views. The Commissioners of the FTC have not taken any position on matters like the need for legislation, and only they speak for the official position of the Federal Trade Commission. Leasing News very much appreciates his personal opinion on this matter.

Brook was the lead attorney also in the Leasecomm/Microfinancial case, which he says was different as it did not involve a “dealer” or “vendor” of equipment, but the leasing company itself.

The FTC is actively pursuing all aspects of the case, viewing it in a civil manner, and any information that may come there way pointing to criminal activity, he says they turn over to the appropriate agency.

“There may be action for the U.S. postal inspectors and various states have their own laws, plus other tax authorities, including the insurance commissions, may consider criminal activities, “he explained. “I assume they would take a hard look into matters . ..
Other that what CIT itself reported publicly in its SEC filing about
grand jury subpoenas, I don't know of any specific, current criminal
investigations of any finance companies.”

There is no time table to when the FTC will complete his investigation or whether his office will file a legal complaint.

Brook says the main premise centers around the leasing companies “...in deciding to do business with NorVergence based on information provided by or available from NorVergence... the finance companies knew or should have known that NorVergence was primarily selling a discounted package of telecommunications services and the
Matrix was an incidental part of the promised services.

“Additionally, in receiving contracts from NorVergence where the total price might vary from $24,000 to $340,000 for the exact same $1,500 product, those finance companies knew or should have known that the contracts might have been part of a scheme to defraud consumers.”

One of the misconceptions centers around the word “consumer.” Several states define a difference between “consumer law” and “commercial law.” Some states have telecommunications laws that also may figure into the equation, but the FTC has no distinction and protects all consumers, whether in business or not.

“Our goal is to help all consumers, “ he said. “In the bankruptcy filings in New Jersey, NorVergence stated they had 11,000 equipment leases.

The lessors demanded that payments continue, even though they stop received all services and appear to be stuck with a worthless $500 piece of equipment.”