Norvergence

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Norvergence company logo

Norvergence was a Newark, New Jersey corporation that prior to going bankrupt in July 2004, sold telecommunications services and related products to small businesses, nonprofit organizations, churches, and municipalities. It is now under invesitigation for fraud by a number of government agencies including the FTC.

1 History
- 1.1 Pyramid scheme
- 1.2 Bankrupt
2 See also
3 External links

[edit] History

Founded by Peter Salzano and Thomas N. Salzano in 2001. In its three year existence Norvergence hired 1,800 sales and other employees and in 2003 had revenues of $143 million.

Claiming to be associated with Nortel Networks, the company started cold calling companies promising huge saving on their internet and phone bills, often up to 30%. The company's motto was "Drastically Reducing Telecommunications Costs". The company claimed that through the use of a Merged Access Transport Intelligent EXchange device (MATRIX) device for short, they could eliminate per minute charges for telecommunications services. Instead they charged a flat fee and arranged financing for the rental of the MATRIX device for a period of usually 5 years. In reality, the MATRIX "black box" was a standard integrated access device, commonly used to connect telephone equipment to a long-distance provider's lines. It provided no saving.

[edit] Pyramid scheme

Norvergence appeared to operate like a Pyramid scheme. The telecommunications company claimed that they were able to offer such saving because of their long-term contracts with established telecommunications providers. Norvergence had no such contacts and instead provided early customers with discounted service by selling new customers finance contracts to third party finance companies for quick cash. The scheme collapsed when NorVergence was unable to provide services or pay its suppliers.

[edit] Bankrupt

After the company went bankrupt companies that had signed up to the service still had to pay their finance bills to third party finance companies because in the fine print in the rental agreements Norvergence allegedly provided that the finance companies could insist on full payment from the customers even if it failed to provide the services it had promised. Therefore companies were forced to pay for a service that they weren't getting.