Yellowstone Capital settles for $1 billion over predatory lending practices By Investing.com

Investing.com – New York Attorney General Letitia James announced a settlement with Yellowstone Capital and its officers, a network of 25 credit companies accused of predatory practices. The settlement involves a $1.065 billion judgment against Yellowstone. The company will cancel $534 million in outstanding debts owed by small businesses, as well as pay $16.1 million in restitution to affected businesses.

Predatory predatory companies, under Yellowstone’s control, targeted small businesses with illegal high-interest loans. More than 1,100 businesses across New York state and more than 18,000 nationwide were affected. These companies will now receive debt relief, and the funds paid by Yellowstone will be distributed among them.

The remaining $514 million of the judgment will be the responsibility of Yellowstone companies. The Attorney General’s Office accused Yellowstone and its executives of exploiting small businesses with predatory loans, which resulted in the closing of successful companies and job losses.

The lawsuit against Yellowstone CEO Isaac The stern (AS:), president Jeffrey Reece, and the Yellowstone entity were presented in March 2024. The investigation of the Office of the Attorney General (OAG) revealed that Yellowstone had disguised fraudulent loans with taxes high interest as merchant cash advances. These advances are a form of short-term, high-interest financing for small businesses that cannot secure loans from traditional banks.

The lawsuit will continue against Delta Bridge Funding and Cloudfund, companies that took over the operations of Yellowstone in 2021, and eight other individuals involved in the loan operation. This includes Yellowstone co-founder David Glass. Before the lawsuit, Attorney General James settled with five people who paid $3.37 million to be distributed to the affected companies. These individuals have also been banned from the merchant promotion industry.

Under the agreement, the Yellowstone entities are required to cease all attempts to recover balances owed by the businesses they have lent to. It must also stop the pending actions to enforce them, abandon unsatisfied court judgments, and end certain liens on the property of small businesses. Companies and officials will also be permanently banned from the merchant cash advance industry.

Affected small businesses that have a court judgment or lien pending against them from Yellowstone will receive information by mail on how to apply to be released. This request must be made within the next six months. Business owners looking for more information about the settlement can find it on the OAG website.

The settlement with Yellowstone is the latest action taken by Attorney General James to protect small businesses from fraud. In February 2024, a court judgment of more than $77 million was secured against Richmond Capital Group, Jonathan Braun, and its affiliates and principals for similar fraudulent practices. In April 2023, two websites that impersonated the New York State Department of State and significantly overburdened aspiring small business owners were shut down.

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