Attorneys General from across the country have reached agreements with US Bancorp Business Equipment Finance Group, Wells Fargo Financial Leasing and CIT Technology Financing Services, Inc., ending the companies' attempts to collect leases on behalf of NorVergence, Inc., an allegedly fraudulent telecommunications company that went bankrupt.

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 three leasing companies will write off approximately $24.03 million in debt for 1,123 small businesses.

"Hundreds of Illinois small business entrepreneurs signed telecommunication service agreements with NorVergence because they believed they were making a financially responsible decision for their businesses. But when the service unexpectedly ceased, their collection agency hassles began," said Illinois Attorney General Lisa Madigan "With this agreement, three additional leasing agencies have agreed to work with the states and small businesses to end the nightmares that started when NorVergence deceived its customers."

Under the settlement agreements, US Bancorp, Wells Fargo and CIT - which entered into direct contracts with NorVergence customers or, through other third-party companies, bought out lease agreements between NorVergence and its customers - have agreed to write off or forgive a combined $24.03 million they claimed to be owed by 1,123 NorVergence customers from the states represented in the agreements.

While US Bancorp, Wells Fargo and CIT deny any wrongdoing, they have 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.

Signing the US Bancorp agreement, were the Attorneys General of Arizona, Colorado, Connecticut, Delaware, Illinois, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, West Virginia and Washington, D.C., and the Georgia Governor's Office of Consumer Affairs.

The Wells Fargo agreement was signed by the Attorneys General of Arizona, Connecticut, Delaware, Illinois, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Washington and Washington, D.C., and the Georgia Governor's Office of Consumer Affairs.

The CIT agreement involves the Attorneys General from Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, Pennsylvania, Rhode Island and Washington, D.C., and the Georgia Governor's Office of Consumer Affairs.

The settlement agreements provide that small businesses that have not previously reached independent settlement agreements with the leasing companies 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 US Bancorp, Wells Fargo or CIT since July 15, 2004, will receive credit for those payments toward their remaining balance.

In addition, any customer or business that previously settled with Wells Fargo or CIT for terms that are less favorable than this settlement can receive the more favorable settlement terms if they choose. Customers that settled with US Bancorp for less favorable terms will have a chance to receive an 80 percent write-off of their balance as of July 15, 2004.

"Deceptive sales pitches lured Connecticut businesses into signing long-term agreements that failed to deliver promised discounts," Connecticut Attorney General Richard Blumenthal said. "When the service ceased, collection agency hassles started. These companies rightly recognized the unfairness of demanding businesses to pay for services promised, but not received. These agreement to forgive the vast majority of the money ends a nightmare for businesses that thought they were getting a useful deal, but ended up with a useless debt."

On May 18, eight Attorneys General announced a similar agreement with General Electric Capital Corporation (GE Capital). That leasing company agreed to write off or forgive more than $2.8 million it claimed to be owed by 216 NorVergence customers from the states represented in the agreement.

In November 2004, Madigan filed a lawsuit against NorVergence, a telecommunications company based in Newark, New Jersey, that set up a sales office in Oakbrook Terrace. Madigan's lawsuit alleged the company's sales pitch offered small businesses discounted telecommunications services through the use of a "Matrix" box.

NorVergence claimed the device was necessary to allow small businesses to reap a 30 percent discount on its current telecommunications costs, including long distance, DSL service, and wireless phone service. The total cost of agreements to lease the matrix boxes ranged from approximately $12,000 to $175,000.

Under NorVergence's alleged scheme, the company would sell its five-year contracts to leasing 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 leasing companies.

In addition, some finance companies charged customers for replacement insurance premiums based on the total rental contract amount, instead of the smaller value of the Matrix box. These leasing companies have agreed to refund most of the premiums and associated fees collected for this insurance.

Consumers who signed agreements with NorVergence that were bought by US Bancorp, Wells Fargo or CIT, or signed NorVergence agreements directly with one of the three leasing companies, will receive a notice in the mail shortly regarding the opportunity to participate in this settlement. To accept the settlement offer, consumers must follow instructions contained in the notice and execute a Settlement and Mutual Release by the date indicated in the notice.