A recent lawsuit filed by New York Attorney General Letitia James has brought to light disturbing allegations against a New York-based cash-advance operation. The lawsuit claims that the operation, known as Yellowstone Capital, engaged in fraudulent and predatory lending practices, exploiting struggling small businesses across the country.
The lawsuit, filed on Tuesday, targets Yellowstone Capital, along with a network of related companies and individuals who allegedly continued the operation under the guise of a rebranded entity called Delta Bridge. Despite purportedly shutting down in 2021 amidst multiple investigations, the operation persisted in issuing illegal loans disguised as merchant cash advances, which carry exorbitant interest rates as high as 820%.
According to the lawsuit, one of the victims of these predatory practices was City Bakery, a long-standing Manhattan eatery that was reportedly forced to pay over $2,000 a day, ultimately leading to its closure. Attorney General James condemned the actions of Yellowstone Capital and its affiliates, stating that they deceived small businesses under the guise of offering assistance while actually providing illegal and exploitative loans.
The lawsuit also names individuals involved in negotiating and servicing these alleged illegal loans, including David Glass, a co-founder of the company who had previously pleaded guilty to insider trading charges. The Attorney General is seeking a court order to halt the operations of Yellowstone, Delta Bridge, and their affiliates, as well as a lifetime industry ban for Glass.
Furthermore, James is pursuing restitution of at least $1.4 billion for the impacted small businesses. This legal action follows previous regulatory actions against Yellowstone Capital, including a settlement with the Federal Trade Commission in 2021, where the company agreed to surrender over $9.7 million in funds to be redistributed to affected businesses.
Prior to the New York lawsuit, James had reached settlements with five individuals involved in the Yellowstone scheme, resulting in $3.37 million in restitution for impacted businesses. The Attorney General's office is committed to holding accountable those who engage in predatory lending practices that harm small businesses, which are the backbone of the economy.
