A U.S. District Court in New Jersey has voided 1,600 contracts with a telephone-services outfit, in what a government lawyer says should be a warning to finance companies still trying to collect on rental agreements they bought from the firm.

National City Commercial Capital Corp., a Cincinnati unit of the Cleveland banking company, and Brecskville's Preferred Capital Inc. are among more than 40 companies that bought telephone-equipment leases from NorVergence Inc. of Newark, N.J.

The federal court in New Jersey erased more than $47 million that customers had owed NorVergence for services not received since the company's bankruptcy filing last summer. Judge Dickinson R. Debevoise also ordered $181.7 million in restitution.

"Call this a warning," said Randall Brook, a senior attorney with the Federal Trade Commission, which in November filed the original complaint against NorVergence.

Brook said the FTC could now shift its focus to the finance companies after Debevoise found that the rental agreements were a tool for "deceptive and unfair acts" in violation of FTC regulations.

Specifically, the judge and FTC lawyers are concerned that companies are using lawsuits to seek payments from customers who did not receive service.

Preferred Capital, for example, has sued hundreds of small businesses that have stopped paying. "We continue to seek to collect on those agreements," said Tamara O'Brien, an Akron attorney who is representing Preferred Capital. She would not divulge specifics.