The New York Supreme Court has allowed fraud claims contained in a class action suit by small businesses against Northern Leasing Systems, Inc., a leading financier of credit card terminals and other small business items, to proceed to trial.

The suit, brought by New York attorney Krishnan Chittur, alleged that Northern Leasing had a scheme to “entrap small businesses into equipment leases with undisclosed charges and onerous terms.”

In an order signed April 7, Justice Shirley Klein Hetiler also upheld claims for punitive damages because the allegations “address more than a private wrong contending that defendants engaged in a course of conduct throughout the United States with such wanton dishonesty as to imply a criminal indifference to civil obligations.” The suit was brought on behalf of four businessmen, Kevin Pludeman of Dallas, Texas; Chris Hanzsek of Seattle, Washington; Sarah Jane Hush and Ozark Granite & Tile Co., Ozark, Missouri and Deninis E. Lauchman, of Gilbertsville, New York.

“Plaintiffs had signed a one-page document, comprising of a lease and personal guaranty, to lease credit card terminals. They were manipulated to sign in a hurry so that at the time of signing, plaintiffs were kept unaware of allegedly additional three pages of the lease or their contents. This experience was uniform amongst unrelated persons across the country,” a press release from Chittur’s office said. It said the plaintiffs were not alerted to the existence of the other pages or terms after the page on which they put their signatures. The lawsuit said the business owners were not given a copy of the lease but instead asked to call a special number and request for it. In certain cases, the signatures were forged, the suit said.

Northern Leasing electronically deducted much higher sums than those represented in the lease and continue the deductions long after the leases were to have expired, it said.

“When small businesspersons eventually discovered the scam and objected, defendants pointed to lease provisions requiring all legal proceedings to be in New York and other hitherto undisclosed provisions. Intimidated with lawsuits in New York, far away from their regular abode, small businesses across the country were faced with travel and litigation costs which easily exceeded defendants’ demands,” it said. It said most small business owners succumbed and paid the money demanded. “It is really rare for courts to uphold claims for punitive damages, and hence we are absolutely delighted that Justice Klein has done so,” Chittur said.

“We have been contacted by dozens of small businesses all over the country who have been victimized by this scam, and look forward to holding Northern Leasing and its principals accountable in court,” he said.