WATERTOWN, N.Y. (Legal Newsline) - New York Attorney General Eric Schneiderman announced on Tuesday that his office has secured a $3.5 million settlement with a financing company to relieve hundreds of soldiers of their financial debt.
Rome Finance Co. of California operated as the financial company for SmartBuy, a storefront electronics retailer. Through its bankruptcy trustee, Rome Finance agreed to relieve soldiers of their debt with SmartBuy and to take the required steps to restore the credit history of hundreds of those negatively impacted.
Schneiderman's office is engaged in ongoing litigation with SmartBuy and a number of its other finance companies.
"This company took advantage of service members using deceptive practices and roping them into high interest contracts and ruining their credit ratings," Schneiderman said. "While fighting overseas, this is the last thing these soldiers needed to be worried about at home."
Schneiderman alleged that a kiosk and small storefront at the Salmon Run Mall near Fort Drum, N.Y., marketed specifically to soldiers, aggressively pushing sales of electronic equipment such as gaming systems, flat-screen televisions and laptops. SmartBuy sales representatives allegedly would not accept cash payments for the merchandise and instead pressured soldiers to enter into payment contracts with exorbitant interest rates and hidden fees.
The kiosk was allegedly part of a larger scheme by the company to defraud service members by deceptively reselling them computers and electronics at wildly inflated prices, then locking the soldiers into revolving credit agreements with undisclosed fees and very high interest rates. The company allegedly bought merchandise from stores like Costco, Walmart and Sam's Club and then marked it up by as much as 325 percent with an added interest of 10 to 25 percent. The interest rates allegedly averaged out at 244 percent.
The company abruptly ceased local operations in 2010 after learning of Schneiderman's demands that it cease its deceptive business practices and reimburse defrauded soldiers. Schneiderman's office commenced suit against all involved parties in April 2010.
Litigation against the remaining solvent affiliated companies is currently under way in New York State Supreme Court. The companies include Britlee Inc., Integrity Financial of North Carolina Inc., Rome Finance Co. LLC and Frisco Marketing of N.Y. LLC, doing business as SmartBuy and SmartBuy Computers and Electronics. All of the companies owned and operated by the Fayetteville, N.C.-based Rebecca Wirt, Stuart Jordan and John Paul Jordan, and the Concord, Calif.-based William Collins and Ronald Wilson.
As part of the settlement, Rome Finance Co. Inc., the first financing company to settle, will release approximately 995 soldiers from their contracts in the state of New York or those who sought protection in the state. The value of the first resolution with the bankrupt defendant is $3,530,090.58 of relieved debt.