Norvergence, TNG (aka Today’s Destiny) and Medicus have more than one thing in common. All three sold services to over 12,000 small businesses across the country and all three went bankrupt leaving thousands of small businesses in debt and many in financial trouble due to personal guarantees. The third thing Norvergence, TNG and Medicus had in common was they all had contracts with Sterling National Bank that allowed them to take equipment worth only $500 ; tell small businesses the equipment lease they were signing was part of a contract for guaranteed services; and then receive $25,000 to $100,000 from Sterling for the ‘purchase” of the same $500 equipment. Small businesses customers only later, after signing, were sent copies of the invoices that triggered payments to Norvergence, TNG and Medicus from Sterling. This invoice almost instantly revealed to victims that Sterling paid an exaggerated purchase price to Norvergence, TNG and Medicus immediately after they signed. More distressing was the large amount assigned to the “equipment” purchased by Sterling and others was the discounted value of an “equipment lease” or “equipment rental agreement” and not, as promised a 5 year contract for services to be delivered over a 5 year period. Banks, such as Sterling, CIT, and 20 other leasing companies, fraudulently monitized 5 years of future services bundled with $500 pieces of equipment. The actual leases make no mention of any services and state the same $500 equipment is worth 100 to 1000 times its real fair market value (FMV).

Oh, did I mention that Sterling paid these companies commissions (unbeknownst to the small businesses) upon “equipment leases” being signed by the small businesses? And the contract, called the Master Lease Agreement, between Sterling and each of Norvergence TNG and Medicus, was the step that contained the supposed due diligence on the equipment which verified its “fair market value.” (By the way, fair market value (FMV) isn’t defined by what any fool will pay but is a highly regulated concept in the banking world. Remember the Savings and Loan disaster? It was caused by banks issuing loans for land that was falsely valued. Bank would value property $1,000 an acre three days after it was sold for $3 an acre. When these loans went into default, there was no value in the land for the banks to recoup loss through sales of the land. Banks are required to hold back cash—loan loss reserves. If the valuation of land or equipment in which the bank loaned money is fraudulent there will not be enough cash kept aside to cover the loss. Hence why the S & Ls failed).

Attorney General offices in 13 states, the SEC and FBI have investigated the Norvergence, TNG and Medicus fraud cases; but no one is in jail yet. These AGs have been no friend to these small business victims. AGs headlines have crowed, “NY AG Spitzer settles Norvergence case.” Meanwhile, small businesses in these “settlements deals” leave victims on the hook for, say, 20% or $20,000 of a Sterling $100,000 equipment lease.

Where is the equipment in the equipment lease? Truth is there is none. FASB Leasing accounting rules and the SEC require Banks to “unbundle” services and equipment by doing a rigorous fair market analysis of goods and equipment. How then is Sterling still not prosecuted by the SEC as a public company in violation of FASB lease accounting rules? Can stockholders trust a company that pays $50,000 each for equipment whose fair market value is only $500? In the case of the Medicus invoices, most of the equipment listed on the invoice is fictional, and does not exist, according to the manufacturers we called that were listed on invoices.

Natch, after Norvergence, TNG and Medicus collected enough cash in advance from Sterling, they suddenly stopped services to customers, sticking them with almost 5 years left to make monthly payments for equipment. There are more details and original documents to be found in my white paper sent to the Controller of the Currency, the regulator of national banks, regarding Sterling National Bank. Other reports on this case can be found at http://www.lesseerights.org

If major banks like Sterling and CIT can falsely value and insure equipment worth only $500 for upwards to $200,000,which clearly happened here, then our whole banking system is at risk. It is my opinion that the people responsible for this scheme should go to prison for fraud and racketeering to stop this fraud once and for all. Sterling after getting caught up in the Norvergence fraud, turned right around and did the same false valuations in equipment leases again in the TNG fraud, and again, in the Medicus fraud that followed. They obviously are not stopping thir victimization of small businesses or the dangerous practice of false valuations of assets that back loans by banks.

(I can send a link to my white paper if anyone is interested. See Forbes article http://www.asrlab.org/press/forbes.php and web site http://www.lesseerights.org