NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a multi-million dollar settlement Thursday with a group of business equipment leasing companies that allegedly schemed to steal $11 million from small business customers' bank accounts.
The New York-based Northern Leasing Systems Inc. and its affiliates provided credit card processing machines and other equipment to small businesses. NLS and its partners allegedly siphoned more than $3.6 million in unauthorized fees from the bank accounts of close to 110,000 former customers as part of a plan to steal more than $11 million. The scheme was discovered and the companies were stopped.
The settlement resolves a lawsuit filed by Schneiderman in April against NLS and its partners, including Lease Source-LSI LLC, Golden Eagle Leasing LLC, MBF Leasing LLC and Lease Finance Group LLC.
"My office will go after companies who cheat the marketplace and use shell companies to pick the pockets of unsuspecting and hard-working business owners in New York and across the country," Schneiderman said. "This settlement sends a clear message that deceptive business practices will not be tolerated in New York, and we will take action to help protect consumers and small businesses from fraud."
NLS allegedly used a shell company, SKS Associates LLC, to debit money from small businesses. Some victims were debited as long as 11 years after they ceased doing business with NLS.
Under the terms of the settlement, NLS and its affiliates will refund the more than $3.6 million they debited from customers' accounts in spring 2011. NLS and its partners also agreed to refrain from efforts to collect the remaining $7 million from customers targeted in the scheme, make automatic refunds to certain former customers, use a claims process for all other customers and make reforms to future lease agreements to clearly disclose information about administrative fees. The companies will also pay $575,000 worth of penalties, costs and fees to the state of New York.