WATERTOWN -- The state's attorney general has filed suit against a Salmon Run Mall jewelry store claiming the business has targeted Fort Drum soldiers with illegal business practices.
Attorney General Barbara D. Underwood filed state Supreme Court action at the Jefferson County clerk's office against Harris Originals of NY Inc. and Harris Originals of Watertown NY Inc. as a result of a multi-state investigation into the company.
It is alleged the business sold military-themed jewelry with markups of between 600 and 1,000 percent above wholesale and used illegal in-house financing contracts that attached an additional interest rate of 14.99 percent on the financing.
"As we allege, Harris Jewelry used service members as pawns in a predatory scheme," Ms. Underwood said in a prepared statement. "My office will not tolerate companies that seek to take advantage of New Yorkers in order to line their own pockets."
The company, in a prepared statement, denied the attorney general's allegations as "inaccurate and baseless" and vowed to "vigorously" contest the claims.
"Harris Jewelry stands behind its decades-old business model," the statement said. "The New York Attorney General has unfortunately reached the wrong conclusions about our business and the work we do."
The company, based in Hauppage, Suffolk County, has retail stores near, and in some cases on, military bases across the country. It is alleged that it entices soldiers into its Watertown store with its "Operation Teddy Bear" program. Through the program, the business sells teddy bears in military uniforms with the promises of charitable donations.
The attorney general, however, claims that the program is a "marketing ploy to dupe service members into high-priced, illegal in-house financing contracts for vastly overpriced jewelry."
The items, under names such as "Mother's Medal of Honor," "Token of Pride Coin" and "Forever as One Dog Tag Necklace" are sold on credit the company provides under the name of Consumer Adjustment Corp. USA. It is alleged that Consumer Adjustment is an alter ego of Harris Originals of NY, a relationship that is never clearly disclosed to the consumer and is used to finance more than 90 percent of the business's sales.
The complaint alleges that Harris Jewelry advertises "quality" jewelry on "fair" terms, but marks its products up by as much as 1,000 percent, well above the industry standard of 200 to 300 percent. For example, according to the attorney general, the company buys its "Mother's Medal of Honor" for $77.70 and retails it for $799, plus warranties and interest. Similarly, the "Forever as One Dog Tag Necklace" wholesales for $97, but is sold retail for $699.
The complaint further alleges that Harris Jewelry's use of a "per payday" advertised price on its merchandise prevents service members from calculating the cost of the jewelry over the life of the contract.
The attorney general says that Operation Troop Aid Inc., the original charitable partner in Operation Teddy Bear, voluntarily dissolved and was assessed a suspended penalty earlier this year in a settlement with attorney general's offices in several states, resolving potential charges of improper charitable co-venture activities and failures to account for donations and distribution of funds.
The action seeks, among other things, to prevent Harris Jewelry from operating within the state until it can demonstrate it is properly licensed and operating in compliance with state laws.
New York and Tennessee are lead states in the action, joined by 12 other states. The case is being handled by Deanna R. Nelson, assistant attorney general in charge of the Watertown regional office.
This article is written by Brian Kelly from Watertown Daily Times, N.Y. and was legally licensed via the Tribune Content Agency through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.