More NorVergence Victims Let Off The Hook
from the banks-should-look-at-who-they-do-business-with dept
Last year, we wrote about the big telco scam known as NorVergence. This was a company that was selling cheap telco boxes to unsuspecting companies by using an overbearing, fast-talking sales force armed with misleading pitches promising things they couldn't deliver. The end result was that people were buying boxes that were available online for $300 total for $300 per month for five years. Knowing they had a house of cards on their hands, the folks at NorVergence than handed over the five year leases to various financial institutions, took the cash and promptly shut down -- leaving "customers" with useless boxes that they still had to pay leases on for five years, because the financial institutions didn't care whether they worked or not, just that the leases got paid. Slowly, but surely, pressure has been put on these financial firms to drop the claims. Last year, some New York firms and some New Jersey firms were let out of the leases. Now, it looks like more New York firms are off the hook. Obviously, these financial firms should have paid closer attention to the leases they were buying up, but it's still amazing how the executives of NorVergence got away with what they were doing. As we noted when we wrote up the first story, some of the executives had already bankrupted another firm doing much the same thing and were hard at work on a third version. Recently Broadband Reports noted that one of the NorVergence execs had started another firm, supposedly raising money for a charity, but which actually seemed to be pushing what appears to be quite a similar scam. While the financial institutions never should have bought those leases in the first place, all of this does make you wonder why the execs from NorVergence seem to have gotten off free and are able to keep starting up similar businesses.
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Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
No, obviously, none at all.
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
Hmm, "all the executives"...ALL of them? How many exactly, D? How much time in the Valley?
"Creative destruction"? Are you postulating a massive conspiracy theory here? Guess I would need more evidence than your hearsay testimony.
Sorry, but there is a huge (and obvious, and well understood) difference between VC money poured into an unworkable business model as opposed to selling a defective product to the consumer-at-large.
If I tell a bunch of money guys that I have developed the perfect widgeting system, and they decide to back the operation, it is clearly understood and agreed in advance that they are liable to lose their investment (or make a bundle). If they fail to perform due diligence, hey, too bad they have no one to blame but themselves and no recourse - that's the nature of gambling. It's what they do.
On the other hand, if I sell substandard widgets on the open market, and make claims as to the benefits of my widgits, either I make it right or I will likely face numerous consumer protection laws (and/or class action lawsuits) designed, at the core level, to ensure a certain expectation of useability and utility to those who purchase that item or service.
If I buy a hammer, it is reasonable to expect it to drive a nail. I am a consumer, and I have a legal right to redress should my hammer fail to perform that task.
If, as a venture capitalist, I invest in the Bamboo Handle Hammer Co., and the company fails due to shoddy craftsmanship and product failure, I will likely lose my investment...too bad, I didn't know much about hammers. Shame on me.
And Dorp, do you really think all those visionary folks in the Valley are simply con men? Call me naive, but I suspect most of them actually thought they had something. The market just didn't bear them out. That just sounds more likely to me.
Free enterprise: I come up with an idea. I sell that idea to a bunch of gamblers who have every right to examine and evaluate every detail of my idea prior to making an investment. They do, but ultimately the idea fails. That makes me evil in some way? Gimme a break. That's like sueing a casino because you lost your rent money. It's just business as usual.
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Re: Sounds Exactly Like Silicon Valley
Isn't netflix made fun of on here all the time, as the poster child of a bad business model? Ditto for ebay, why pay auctioning fees when there are plenty of other sites that let me advertise for free?
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Re: Sounds Exactly Like Silicon Valley
Whether a given company cons investors or consumers, the fact remains that the executives were crooks. They had no intention of forming a lasting company -- they were just in it to pump a few bucks and run. I refuse to believe that the executives were so stupid, they actually thought their harebrained schemes would work.
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Re: Sounds Exactly Like Silicon Valley
Here is the crux of Elliot Spitzer's crusade:
"Customers were told the blue Matrix box would provide wireless, toll-free telephone service and high-speed Internet access for a monthly fee.
"The equipment performed none of these functions," Spitzer's statement said. Instead, it contained a firewall and router, allowing voice and data transmission over high-speed service lines."
Well, now let's examine that statement. Assuming it was a wireless router, then it did in fact offer "wireless, toll-free telephone service and high-speed Internet access for a monthly fee."
All one has to do to get that is install a Skype client on a workstation. Voila ... wireless toll free telephone calling.
Charging $300 per month for a managed router/firewall doesn't seem all that illegal to me. It's expensive, but it ain't illegal.
There may be more to this story, but from what I've read so far, looks like some stupid customers are being let out of expensive leases just because its cheaper for the big banks to settle than to collect.
Spitzer's case - if this article fairly presents it - would never fly in court, but he's threatening them.This is also known as legally extorting the with the threat of court and expensive legal fees.
Shame.
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Re: Sounds Exactly Like Silicon Valley
If I am sufficiently spineless that some fast-talking boiler-room sales guy can separate me from my money, why is HE suddenly a victimizer and not a "truly effective salesperson"?
If I pay too much, then maybe I'm a victim of MORON disease, but that's about it.
The culture of victimhood in this country is completely out of whack.
Let's not exacerbate that problem here.
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Re: Sounds Exactly Like Silicon Valley
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Re: Sounds Exactly Like Silicon Valley
If you don't get the difference between consumer fraud and VC funding, I have a nice orange bridge that's cheap...
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Re: Sounds Exactly Like Silicon Valley
*plonk*
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So-called
Bankers should go to jail for falsely declaring on their books and to insurance companies that the this Norvergence equipment's value was up to $200,000 per box not the real $200 or $1550! Documents prove these leasing companies knew the real equipment value. This lease flipping-- where equipment values suddenly are raised by bankers from $1550 to $200,000-- is like the land flipping deals from the 1980's S&L crisis. Send these bankers to jail!
Check out reports about the Leasing companies partnerships with Norvergence and their joint fraud posted on www.LesseeRights.org
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