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States Settle NorVergence Claims with 10th Leasing Company

Company Agrees to Write Off $15 Million in Debt

August 25, 2006

NorVergence • Consumer Complaints • Inside NorVergence --- News • FTC Sues Company for Financing NorVergence Scheme • Texas Sues NorVergence Debt Collector • States Settle NorVergence Claims with 10th Leasing Company • FTC Settles NorVergence Case • Norvergence Forfeits $47 Million In FTC Settlement • California Settles with USB Leasing • States Settle with Three Leasing Companies • GE Capital Agrees to NorVergence Settlement • Leasing Companies Release Florida Customers from NorVergence Leases • Massachusetts Sues NorVergence • Illinois Sues NorVergence • FTC Charges NorVergence • Florida Sues 12 Leasing Companies In NorVergence Case • States Open Investigation

Officials from 21 states and the District of Columbia have reached agreement with a tenth leasing company involved with a fraudulent telecommunications company that went bankrupt in July 2004, leaving hundreds of small businesses nationwide on the hook for costly payments.

The agreement with Missouri-based Popular Leasing U.S.A., Inc. ("PLUSA") was reached in connection with collection agreements the financing company holds on behalf of NorVergence, Inc.

Affected consumers and businesses may choose or decline to participate in the settlement agreement. If all affected consumers in the participating states and Washington, D.C. accept the deal the financing company will write off approximately $15,300,000 in debt for 650 small businesses.

Officials from across the country have reached similar agreements with nine other financing companies including GE Capital, US Bancorp, Wells Fargo and CIT Technology. Those financing companies, including PLUSA, agreed to write off more than $53.9 million they claimed to be owed by 2356 NorVergence customers.

"With each of these additional settlements with a finance company more small businesses are provided relief from the collection hassles that have mounted against them since the collapse of NorVergence in July of 2004," Illinois Attorney General Lisa Madigan said.

Under the settlement agreement PLUSA has agreed to write off or forgive a combined $15,302,391 they claimed to be owed by 650 NorVergence customers from the states represented in the agreement.

While PLUSA denies any wrongdoing, it has agreed to forgive approximately 85 percent of the debt they claim consumers owe on rental agreements and provide up to two years for customers to pay any remaining balances.

Specifically, the settlement agreement provides that small businesses that have not previously reached independent settlement agreements with PLUSA will have the opportunity to receive an 85 percent write-off of the money owed from the period beginning on July 15, 2004, the approximate date that NorVergence ceased providing any services. Consumers who have made payments to PLUSA since July 15, 2004, will receive credit for those payments toward their remaining balance.

In addition, any customer or business that previously settled with PLUSA will have the opportunity to choose to receive an 80 percent write-off of the money owed after July 15, 2004 if they settled for terms that are less favorable than this settlement.

Under NorVergence's alleged scheme, the company would sell its five-year contracts to finance companies and walk away with the profit. When NorVergence was forced into bankruptcy in June 2004, its customers were left without service but still responsible for the five-year lease payments to the finance companies.

In addition, PLUSA charged customers for replacement insurance premiums based on the total contract amount, instead of the smaller value of the Matrix box. PLUSA has agreed to refund a portion of the premiums and associated fees collected for this insurance.

The states of California, Colorado, Connecticut, Delaware, Georgia Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, Washington, West Virginia and the District of Columbia are parties to the settlement.

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