New York AG Sues Northern Leasing for Fraud, Deceptive Practices

New York Attorney General Eric T. Schneiderman announced the filing of a lawsuit against Northern Leasing Systems and several of its affiliated companies, including Lease Finance Group, MBF Leasing, Pushpin Holdings and others, as well as principal, Jay Cohen a/k/a Ari Jay Cohen, law firm Joseph I. Sussman and other individuals involved in Northern Leasing’s operations, for fraudulent and deceptive practices that trapped small business owners across the country.

The lawsuit alleges that Northern Leasing trapped small businesses into never-ending lease agreements for over-priced credit card processing equipment and abused the judicial process by suing to collect on these leases in the Civil Court of the City of New York, regardless of whether the debt is fraudulent, the claim is timely or legitimate efforts to terminate the lease were ignored. The Attorney General on behalf of the People of the State of New York, and Deputy Chief Administrative Judge Fern A. Fisher are joint petitioners in this proceeding.

Attorney General Schneiderman previously reached a multimillion agreement with Northern Leasing in 2013 for similar deceptive practices for siphoning over $3.6 million in unauthorized fees from the bank accounts of nearly 110,000 former customers without warning and up to eleven years after their leases had expired.

The attorney general’s office secured a temporary order restraining Northern Leasing from selling, assigning or transferring any equipment finance lease for less than fair market value. Northern Leasing and principal Jay Cohen are also restrained from transferring, converting or otherwise disposing of any asset owned, possessed or controlled by them for less than fair market value. Northern Leasing and Cohen also must provide a list of all assets to the attorney general within five days of service of the order.

“Small business owners – many of whom are immigrants, elderly or veterans – are the cornerstone of the economy and deserve to be treated honestly and fairly,” Schneiderman said. “We allege that Northern Leasing not only deceived consumers, but used the New York court system to perpetrate their harassing, fraudulent and deceptive debt collection practices. We will not allow companies to hold small businesses for ransom by using lies and forgery.”

The lawsuit seeks to vacate default judgments obtained by Northern Leasing against consumers, many of whom were not even aware that they had been sued by Northern Leasing until they learned of the default judgment when they checked their credit reports. The lawsuit also seeks additional relief, including but not limited to a permanent injunction prohibiting Northern Leasing, its related entities, and its owners and officers from continuing their deceptive business practices, ordering Northern Leasing to pay restitution to consumers, dissolving Northern Leasing Systems and directing Northern Leasing to notify all three national credit reporting agencies that the default judgments have been vacated and should be removed from consumers’ credit reports.

The Attorney General’s investigation found that Northern Leasing has targeted small business owners across the country through its allegedly deceptive practices, which include inducing individuals to sign lease agreements without realizing they are doing so, falsely representing that the lease is “free” or that the individuals will save money and falsely stating that the consumer can cancel the lease at any time.  In hundreds of instances, it is charged that consumers discovered that the signatures on the leases are not theirs or that material terms were added to the lease without their knowledge.

According to the charges, the credit card equipment leased to consumers by Northern Leasing was usually valued at only a few hundred dollars, but consumers were forced to pay far more than that due to what the charges call “onerous and totally one-sided” terms. The charges also say that Northern Leasing trapped lessees by refusing to cancel a lease under any circumstances and by including a personal guaranty in all leases, which traps each lessee into assuming personal responsibility for making payments under the lease agreement.

Northern Leasing also includes a personal guaranty in all of its lease agreements, which the charges argue trap the individual business owner (or whoever else may have signed the lease) into assuming personal responsibility for making payments under the lease agreement.

Also named in the lawsuit are attorneys Joseph I. Sussman and Eliyahu R. Babad, who filed collection actions in New York Civil Court on behalf of Northern Leasing. The suit further names Neil Hertzman, who is the vice-president of Customer Services and Collections for Northern Leasing and principal Jay Cohen.

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