The state Attorney General's Office on Monday announced a lawsuit against a New York-based national jewelry retailer that allegedly preyed upon and misled active-duty service members, often selling them pieces marked up 600 to 1,000 percent over wholesale value, including special commemorative items such as the “Mother's Medal of Honor.”

The scheme was allegedly driven by retailer Harris Jewelry using a purported-but-illegal charitable program called “Operation Teddy Bear.” The bear program, in which employees would stand outside of stores holding military-dressed teddy bears and touting the charity, was used to lure the service people into its more than 20 stores placed on or near military bases, the suit claims. Once inside, the military men and women were “duped” into high-priced, illegal in-house financing contracts—with terms that were purposely made hard to decipher—for overpriced jewelry, said Attorney General Barbara Underwood in a statement.

In one example of Harris Jewelry's pricing, it would purchase the popularly sold “Mother's Medal of Honor” for $77.70 and then sell it to military customers for $799 plus warranties and interest, Underwood said.

The company has denied the lawsuit's allegations.

The 45-page complaint lodged in state Supreme Court in Jefferson County against Harris Originals of NY Inc. and its 30 or so related entities resulted from a more than two-year investigation conducted with 13 other states, according to Underwood. New York and Tennessee led the multistate investigation, and during its course, Harris Jewelry allegedly brought its own litigation in a failed attempt to use the state courts to challenge the AG Office's investigatory subpoenas issued under cover of anonymity, the complaint noted.

Alleging a relevant period of 2010 to present, the complaint also said that revenue across all Harris stores, located in at least 12 states and including online and phone services, was more than $30 million for fiscal year 2016-17. Total revenue between 2010 and 2017 exceeded $275 million, the complaint said.

“Harris Jewelry used service members as pawns in a predatory scheme,” Underwood said in her statement. “My office will not tolerate companies that seek to take advantage of New Yorkers in order to line their own pockets.”

But Harris Jewelry, based in Hauppauge, said in its own statement issued late Monday afternoon that it will “vigorously contest the inaccurate and baseless allegations raised” and that it “operates in full compliance with the laws that regulate our industry.”

“Harris Jewelry stands behind its decades-old business model. The New York attorney general has unfortunately reached the wrong conclusions about our business and the work we do,” the company's statement added.

According to Underwood's statement and the complaint—signed by Assistant Attorney General in Charge Deanna Nelson in Watertown and Assistant Attorney General Alicia Lendon—the retailer employed “unfair, abusive, false and deceptive acts and practices, deceptive credit repair services, and illegal lending in the financing of jewelry sales,” leading to eight alleged causes of action including civil usury, criminal usury and deceptive business practices.

While not naming amounts sought, the complaint asked for enjoinment of the business, disgorgement of moneys received due to illegal financing arrangements, restitution for affected consumers, and voiding and rescission of customer financing contracts, among other things.

The complaint stated Harris Jewelry—which operates one store just miles from Fort Drum in Watertown—“prominently advertises” that company founder Jerome Harris was a World War II  Marine veteran.

The business carries “a small and variable inventory” of jewelry, including engagement rings, patriotic and military-themed jewelry and special gifts such as the “Mother's Medal of Honor,” a “Token of Pride Coin,” and the “Forever as One Dog Tag Necklace,” the complaint added.

And “with very few exceptions, each jewelry sale is made with the 'Harris Program' financing to active-duty military members,” according to the complaint. Targeted customers are usually attracted to a Harris store—which are operated in some 12 states—in response to an illegal charitable marketing scheme, and then sold on the Harris Program as a credit-repair or credit-establishing opportunity, the complaint alleges.

Later, Harris employees allegedly encourage service members to choose “grossly overpriced jewelry to maximize the amount of credit available to the consumer, as determined by Harris based upon the service member's branch of service and length of time remaining on active-duty,” the complaint added.

Protection plans, teddy bears, shipping costs and taxes are added to the sales contract, through which consumers authorize automatic fund transfers twice per month, and collection efforts begin if a payment is missed, the suit claimed.

According to the AG's Office, Allyson Baker, a Washington, D.C.-based parter at Venable, is representing Harris. Baker could not be reached for comment.