NorVergence Fraud-related Settlement Grants Relief to Georgia Businesses
April 18, 2008
ATLANTA, GA – Joe Doyle, Administrator of the Governor’s Office of Consumer Affairs, announced a settlement with National City Commercial Capital Company, LLC, in connection with an alleged widespread telecommunications fraud involving NorVergence, Inc., a bankrupt New Jersey-based telephone equipment and service company. Under the settlement, National City Commercial Capital Company has agreed to refund or not collect $553,000 in rental payments from 38 Georgia companies. Mr. Doyle joined in the settlement with the Attorneys General of 22 other states.
National City Commercial Capital Company is one of approximately 40 financing companies involved with the financing of telecommunication services through the rental of data routers that NorVergence called a “Matrix box.” NorVergence rented Matrix boxes (which purported to integrate and provide local telephone, long-distance telephone, wireless, and internet services) at a reduced rate to small businesses. NorVergence’s deceptive sales pitch was that the “Matrix box” would provide telephone and internet services while reducing telephone and internet service bills by 30%. The two types of “Matrix boxes” cost NorVergence between $500-$1500 and did not provide telephone or internet services. NorVergence had to obtain and pay for those services from other providers, which it had stopped doing before it went into bankruptcy. The rental agreement was typically for 3-5 years for $200-$4000 per month, depending upon the business’s previous telephone and internet bills.
After securing contracts with businesses, NorVergence sold the rental agreements to different finance companies, including National City Commercial Capital Company.
NorVergence had over 9,000 customer accounts nationwide. Most of these customers were small businesses, non-profit organizations, and local government entities. When NorVergence declared bankruptcy in June 2004, its customers were left without service but the finance companies, including National City Commercial Capital Company, maintained that the customers were still responsible for the five-year rental agreement payments.