New York AG Pursues Legal Action Against Loan Shark Group Over Shocking 820% Interest Rates

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State officials led by Attorney General Letitia James are waging a legal war on a notorious lending group, Yellowstone Capital, its founder David Glass, and at least 40 associated companies. The group is accused of camouflaging fraudulent loans as merchant cash advances, luring unsuspecting small businesses with staggering interest rates, topping out at an astronomical 820%.

Who is Yellowstone Capital and David Glass?

Once a go-to for small businesses in financial binds, Yellowstone Capital is the subject of a colossal legal takedown. Letitia James has spearheaded the charge, seeking damages of $1.4 billion and calling for an industry-wide ousting of Yellowstone and Glass. Merchants in need saw hope in the cash advances from Yellowstone, not realizing that these were potential financial traps with exorbitant rates- all without necessitating strong credit scores.

A critical example is City Bakery, a Manhattan icon forced to close after three decades when insurmountable daily payments became unmanageable. Promises to align customary dues with sales fell flat, leaving businesses like City Bakery faltering under relentless financial demands.

The Misuse of Legal Loopholes

Allegations of deceptive practices by the lending group suggest a profound manipulation of legal tools. Companies allegedly signed confessions of judgment - antiquated contractual mechanisms that allowed Yellowstone, subsequently rebranded to Delta Bridge, to sidestep standard court procedures and exploit their borrowers. City Bakery, once a thriving business with a large staff, became trapped in this dubious practice.

Yellowstone exploited the court systems for years to extract steep fees from struggling businesses. However, this strategy hit a stumbling block in 2020 when the New Jersey Attorney General's office launched legal action against the company for its lending practices. The lending giant faced further scrutiny the following year as the New York Office of Attorney General uncovered usury-like practices, precipitating a company rebranding.

Legal Repercussions and Settlements

Despite the attempted facelift to Delta Bridge, legal troubles continued to mount for Yellowstone Capital. In December, a monumental $27.3 million settlement was reached with the New Jersey Attorney General's Office. On the heels of this settlement, James announced a separate $3.37 million agreement with specific individuals associated with the scheme.

This renewed legal effort by Attorney General James signals an unwavering commitment to defending the vitality of small businesses throughout New York. Her stance is unequivocal - the state will not stand idly by as entities like Yellowstone Capital and Delta Bridge leverage illicit, usurious loans against the pillars of the regional economy. This case is a testament to New York's determination to thwart similar predatory practices that threaten local businesses, their proprietors, and the communities relying on them.

Fight for Small Business Justice Continues

The battle lines are drawn as New York State flexes its legal muscles against those who undermine the foundations of its small business community. With a seasoned legal team and an unyielding Attorney General, New York sends a clear message: predatory lending has no place in its markets. The outcomes of this case are likely to create ripples beyond state lines, serving as a stringent warning to would-be financial predators and a beacon of support to small businesses nationwide.

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