A Somerset County judge has ordered a $15 million judgment against a New Jersey company accused of defrauding more than 600 Pennsylvania consumers, including small businesses, churches, charities, schools and the local chamber of commerce.

Sources said it is unlikely that any of the organizations will see a dime.

The company, NorVergence of Newark, N.J., sold telecommunication packages in Pennsylvania from April 2003 through June 2004 with the promise of big savings, flat rates and unlimited broadband, land line and cell phone service, according to the Pennsylvania Attorney General's office.

The service, the company said, was made possible by installing a "black box," typically called the Matrix or Matrix 850, at the customer's place of business.

Court documents show that the company rented the boxes to consumers for between $250 and $5,700 per month - for as long as 60 months - even though the box was nothing more than a standard telephone router. The company purchased the device from a Huntsville, Ala., company, for less than $1,500.
Authorities said NorVergence sold the rental agreements to finance companies in return for lump sums of cash.

"The commonwealth ... believes that the finance companies paid NorVergence in excess of $100 million in upfront payments for the purchase or assignment of the rental agreements," Senior Deputy Attorney General Barry Creany wrote in the lawsuit, which was filed in December 2004.

Authorities said the rental agreements were complex, highly technical documents with a "sea of fine print."

The agreements reportedly included provisions that required customers to pay even if NorVergence failed to provide services. The agreements also allowed finance companies to seek collections in any forum they chose, making it difficult for customers to dispute the monthly rental fees, according to the Federal Trade Commission, which filed its own complaint against the company Nov. 4 in U.S. District Court in New Jersey.

NorVergence, which in 2003 boasted annual revenues of $143 million, was forced by creditors into Chapter 11 bankruptcy in June 2004. Not long thereafter, the Pennsylvania Attorney General's office was flooded with complaints from consumers who had their telephone and Internet service disconnected.

Creany said the company sold telecommunication packages to 645 Pennsylvania consumers, including nine in Somerset County. Those included the Somerset County Chamber of Commerce, which signed two rental agreements in May 2004.
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