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In The Marketplace
New York Attorney General, Eliot Spitzer, has announced a settlement with General Electric Capital Corporation in connection with a widespread telecommunications fraud involving NorVergence, Inc., a bankrupt New Jersey-based telephone equipment and service company. Under the terms of the agreement, GE Capital will forgive approximately $2 million in payments due from New York customers who had signed long-term contracts with NorVergence.
NorVergence began aggressively marketing its telecommunications products in 2002, falsely promising potential customers savings of up to 60%. It attributed these savings to its use of a proprietary device referred to as a “Matrix box.” The company claimed this technological innovation provided customers with wireless, toll-free inbound, local and long-distance telephone service; and high-speed Internet connection, all for a fixed monthly fee. In truth, the equipment accomplished none of these functions; rather, it is commonly used in the industry to permit both voice and data transmission through a high-speed service line. NorVergence's sales force was trained to apply deceptive and high-pressure sales tactics to prospective customers, which included small businesses, not-for-profits, and religious institutions. Nationally, the company secured approximately 11,000 customers, nearly 1000 in New York.
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