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State suit: SmartBuy ripped off soldiers

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The state attorney general's office filed suit Tuesday against a national retailer that it claims was ripping off Fort Drum soldiers by charging usurious interest rates at its Watertown store.

The state Supreme Court action against Frisco Marketing of N.Y. LLC, which does business as SmartBuy, seeks to end the allegedly illegal lending practices nationwide and also seeks to get back all of the money Fort Drum soldiers paid to the company since it opened a location in Salmon Run Mall in 2005.

The Watertown store closed abruptly in April, after the company learned it was under investigation by the attorney general.

According to the complaint filed at the Jefferson County clerk's office, the company, through its financing agreements, charged between 225 percent and 325 percent more for computers and electronics than a person would have paid had he shopped elsewhere.

In fact, the attorney general claims that all of the inventory for the Watertown store was purchased at full retail price from several big-box stores in North Carolina and then resold by SmartBuy "at greatly inflated prices and with excessive and usurious financing arrangements."

The complaint alleges that SmartBuy's nine locations nationwide all were set up near military bases and that store personnel were instructed to sell only to active military members, even though the stores ostensibly were open to the public.

"Our lawsuit not only seeks to bar them from ever doing business again in the state, but also to vindicate the countless soldiers who were preyed upon and defrauded by SmartBuy and its affiliated companies," Attorney General Andrew M. Cuomo said in a statement.

The attorney general claims that each of the lenders to SmartBuy customers had direct ownership ties or longstanding business ties with SmartBuy's owners or directors. He alleges none of the lenders was licensed to lend anywhere in the country.

Mr. Cuomo contends that soldiers rarely were told the final price of a product up front, nor were they told that they were opening lines of credit. While SmartBuy claimed it accepted cash or credit cards for purchases, "sales only occur in this manner by special exception," according to the complaint, and the stores have neither cash registers nor credit card scanners to handle those methods of payment.

Payments were made through "allotments," or payroll deductions taken directly from the soldier's bank account. If a soldier disputed the loan agreement or the amount of the debt, it is alleged, the lenders contacted the soldier's commander, a violation of the federal Fair Debt Collection Practices Act.

In addition to Frisco Marketing and SmartBuy, the attorney general's action is against Integrity Financial of North Carolina Inc., Britlee Inc., doing business as MilitaryZone, GJS Management Inc., Rome Finance Co. Inc. and Rome Finance Co.

Mr. Cuomo claims each of the entities is owned or operated by John Paul Jordan, Stuart Jordan or Rebecca Wirt, all of Fayetteville, N.C., and Williams Collins and Ronald Wilson of Concord, Calif.

In addition to full restitution for soldiers, the attorney general is asking a judge to order, among other things, that the lending practices be stopped and that all financing agreements with the allegedly unlicensed lenders be declared null and void. The office also is seeking civil penalties.

Since Mr. Cuomo's investigation began, more than 50 other soldiers have filed complaints about SmartBuy's lending practices. Anyone who did business with the company or any of its affiliates is urged to call the attorney general's office at 1 (800) 771-7755 or by e-mail at

Mr. Cuomo said he has notified Defense Secretary Robert M. Gates and Secretary of the Army John M. McHugh of the findings of the investigation.

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