by Mike Masnick

Jersey Victims Off The Hook In Norvergence Scam

from the due-diligence? dept

A few weeks ago we wrote about how NY state had worked out a deal to take NY based businesses off the hook for the ridiculous scam leases they were tricked into buying from NorVergence. NorVergence, of course, was selling a cheap telco box by having quick talking salespeople lie to small businesses about how it could do everything ("unlimited broadband, landline and cell phone service with no per-minute charges"), and then charging them $500/month for it. NorVergence then quickly sold off these leases to financial institutions, took the money, and shut down. People who bought these boxes were left on the hook, and the financial institutions still wanted their monthly payments, even if the service no longer worked. Now, Rose has alerted us that New Jersey has reached a similar agreement with financial institutions to protect New Jersey businesses taken in by this scam. So, here's the question: why do each of these state attorneys general need to be doing this? Why aren't those who ran the scam being held responsible instead?

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  • identicon
    Steve Mueller, 13 Jan 2005 @ 12:09pm

    Why Do States Have To Intervene?

    I would guess that states have to intervene because the financial institutions that bought the contracts (gasp!) want their money. They aren't in the business of providing telco service to NorVergence clients, but were acting as collection agents. The user contracts were with NorVergence, not the financial companies. Do you expect those companies to ensure that NorVergence was actually living up to their end of the deal?

    I suppose the banks could sue NorVergence to get their money back, but why would they want to? Presumably the contracts were more lucrative than the amount paid to Norvergence, and there would be court costs and other expenses trying to recover that money. I doubt any company would go through that unless they had to. It probably takes the Attorney General to make them have to.

    It would be nice if the companies just forgave the contracts on their own, but they aren't charities.

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 13 Jan 2005 @ 3:53pm

      Re: Why Do States Have To Intervene?

      Sorry, I guess I wasn't clear. Of course the banks want their money, but they should be suing NorVergence, not the customers who were suckered. That was the point I was making. I wasn't suggesting they forgive the loans out of the kindness of their hearts at all, and I'm actually really surprised that the AGs got them to forgive these. They should be going after NorVergence for the money entirely.

      reply to this | link to this | view in chronology ]

    • identicon
      JOhn, 13 Jun 2005 @ 8:42am

      Re: Why Do States Have To Intervene?

      This was a complet scam and a fraud that relied on the banks to activly participate in or it would not have worked. The Salzono crime family involved had a background in leasing, not in telephone systems. They had a criminal history and where onced fined largest fine in FCC history for telecom fraud. The banks did not simply buy these leases, they worked directly with Norvergence in the scam. They where aware for monthes that they item being marketed was a fraud and they continued to "buy" these leases as long as they contined to pay out. There was no innosense on the banks part at all. Only the arrogance that the victims where all carefully screaned acourding to thier instructions to insure their inability to fight a legal battle agains the banks. It was deliberate particiaption in an illegal activity that they stacked the odds in there favor of "beating the system" in court. They where not just "collection agents" on any level as I am sure your aware of as you are likely in the banking industry to make such an ignorant claim. They had their hankds in this at many levels and where well aware that they where buying leases on fraudulent contracts and to defend that on any level is criminal in itself. These banks should loose every penny they expexct the victims to pay them ( for recieivntg nothing) and they should be fined so heavily that they decide to not take part in the next marketing scam that comes along.

      reply to this | link to this | view in chronology ]

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