Attorney general targets financer over contested debt collecting

Rob Luke Jun. 6, 2007, 8:00pm

Texas Attorney General Greg Abbott

HOUSTON -- Texas Attorney General Greg Abbott has filed action against an Illinois finance company already in legal hot water in its home state over disputed accounts.

Abbott announced today that he had petitioned the Harris County District Court to stop Morton Grove-based IFC Credit Corp. from collecting on small business debts it knew were fraudulently incurred when it bought them.

In his Request for Injunctive Relief, Abbott alleges IFC "has engaged in false, deceptive or misleading acts and practices." He says IFC bought $21 million in accounts from bankrupt NorVergence knowing the (unstated number of) small business debtors had been duped into worthless five-year agreements.

IFC Credit failed "to exercise caution before acquiring the indebted customers' accounts, and of knowing NorVergence customers were tricked ... with the false promise of low-cost services," Abbott stated. He had sued NorVergence directly in 2004 for "misleading" business customers.

Chicago's Cook County Superior Court has already hammered IFC for its dealings with Norvergence. The court ruled in 2006 that a firm was "induced by fraud" to sign NorVergence contracts, which were soon afterwards bought by IFC.

That case, involving five leases worth $120,000, was reported last year on blogsite Fight The Scam, established by trade journal Leasing News for businesses affected by NorVergence/IFC actions.

IFC purchased 550 leases from Norvergence nationally in 2004-05, Fight the Scam reported. In Texas those contracts, almost all with small business, were valued between $4,400 and almost $160,000, Abbott's release stated.

Abbott's petition calls for all debts (value not stated) resulting from IFC/NorVergence contracts in Texas to be dissolved. It also asked that all lawsuits IFC brought against Texas contracted businesses for unpaid debt since 2004 be voided.

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