New York Attorney General Letitia James has launched a massive $1.4 billion lawsuit against Yellowstone Capital, Delta Bridge Funding, and their network of over 40 lending companies. The lawsuit alleges that these entities orchestrated a massive predatory lending scheme, exploiting small businesses across New York through deceptive merchant cash advances disguised as high-interest loans.
In a bold move, James seeks to reclaim at least $1.4 billion in undue charges and illegal fees from these predatory lenders. Additionally, she demands a court injunction to cease their exploitative practices permanently.
The complaint unveils a disturbing pattern of deceit that dates back to 2009. Yellowstone Capital, spearheaded by founder David Glass, allegedly engaged in deceptive lending under numerous aliases, including Fundry, Green Capital Funding, High Speed Capital, and Capital Advance Services.
As investigations intensified, the operation purportedly ceased, only to resurface as Delta Bridge, also known as Cloudfund, continued its fraudulent activities under the same personnel and practices.
Also Read: How to Get a Loan Against LIC Policy
Deceptive Lending Practices Exposed
According to James’ office, these merchant cash advances were falsely presented as flexible sales of future revenues. However, in reality, they were short-term loans with exorbitant interest rates soaring up to 820% annually.
The lenders allegedly promised to “reconcile” merchants’ daily payments to ensure they never exceeded an agreed-upon percentage of the borrowers’ receipts. However, the lawsuit alleges that the lenders employed numerous fraudulent measures to ensure borrowers almost never qualified for payment refunds.
James’ office highlights the plight of City Bakery, a long-standing Manhattan eatery that was forced to shutter in 2019 due to unsustainable debts incurred from these predatory practices. The lawsuit claims that the bakery was making daily payments of $2,000, ultimately leading to its closure after 30 years in business.
Also Read: Kolkata FF & Fatafat: the Local Lottery Result & Tips 2024
Manipulating the Court System
The complaint further alleges that these lending companies manipulated New York courts to secure fraudulent judgments against borrowers. They allegedly misused an obscure legal tool called “confessions of judgment” to bypass court proceedings and take advantage of loan recipients. Small businesses like City Bakery inadvertently admitted guilt before receiving the agreed-upon funds by signing these confessions.
Holding Predatory Lenders Accountable
In her statement, James emphasized the importance of protecting small businesses, which are the foundation of the economy. “Yellowstone Capital, Delta Bridge, and the other companies pretended to offer a helping hand, but instead provided only illegal, ultra-high-interest loans,” she said. “My office will not allow any scheme to harm small businesses, their owners or employees, or the millions of New Yorkers who rely on them each and every day.”
The lawsuit seeks to impose a permanent industry ban on David Glass and prevent the involved companies and their affiliates from perpetuating their fraudulent operations.
Also Read: Drake Bell Breaks Silence on Sexual Abuse by Dialogue Coach Brian Peck
This legal action follows a series of settlements and investigations into Yellowstone Capital’s practices. In 2020, federal regulators sued the company, alleging unauthorized withdrawals from customers’ bank accounts. In 2021, Yellowstone agreed to surrender more than $9.7 million in funds to the Federal Trade Commission, which was later redistributed to the harmed businesses.
Additionally, before filing the lawsuit, James reached settlements with five individuals involved in the Yellowstone scheme, totalling $3.37 million in restitution for affected businesses and imposing a permanent ban from the industry.
As the legal battle unfolds, small businesses and their advocates eagerly await the outcome, hopeful that this action will serve as a deterrent against predatory lending practices and safeguard the interests of hard-working entrepreneurs who form the backbone of the economy.