Join Our Telegram Channel


New York Attorney General Letitia James has now formally secured a major court victory against three merchant cash advance companies, Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding (the Richmond companies) and their principals, Jonathan Braun, Tzvi Reich, Robert Giardina, and Michelle Gregg, for harming small businesses through high-interest loans and undisclosed fees.

The lawsuit filed by the Office of the Attorney General (OAG) alleged that the Richmond companies’ merchant cash advances, which are a form of short-term, high-interest funding for small businesses, were in fact illegal, high-interest loans with astronomical and illegal rates.

An affirmation filed with the lawsuit highlights the companies’ fraudulent and illegal conduct, including ways in which the respondents have harassed and threatened merchants that have been unable to afford these hefty daily payments. Braun has called business owners and has insulted, sworn at, and bullied them, demanding payment and making threats such as, “You have no idea what I’m going to do,” and “I will take your daughters from you.” Braun also threatened that he would come to one merchant’s synagogue in Brooklyn and physically beat him and “publicly embarrass him,” stating, “I am going to make you bleed.” He threatened another, “Be thankful you’re not in New York, because your family would find you floating in the Hudson.” 

The court order requires the Richmond companies to cancel the debt owed by thousands of small businesses nationwide and to repay all interest and overcharges collected, totaling tens of millions of dollars.

“Small businesses are the backbone of our economy, and of all the challenges they face to stay open, predatory lenders shouldn’t be one of them,” said Attorney General James. “This decision will bring relief to thousands of small business owners in New York and across the country who were cheated by Richmond Capital. Small business owners were trying to get up on their feet when Richmond Capital crushed them with predatory loans that buried them in harmful debt. Richmond Capital will finally pay the price for the harm it caused for thousands of small businesses nationwide.”

In June 2020, Attorney General James sued Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding for a variety of offenses that were harming small businesses in New York and throughout the nation. Attorney General James found that the Richmond companies were illegally loaning money to small business owners at astronomically-high interest rates, fraudulently charging undisclosed fees, debiting excess amounts from merchants’ bank accounts, and illegally obtaining judgments against merchants by filing false affidavits in New York State courts. In one example, the Richmond companies loaned $10,000 to a small business and required its owner to pay back $19,900 within 10 days, through daily payments of $1,999. As a result of the large daily payments and the short, 10-day repayment term, the annual interest rate for the merchant cash advance, including fees, came close to 4,000 percent — almost 250 times the legal interest rate. 

The court decision requires Richmond Capital to stop collecting on its outstanding debt and to repay thousands of small businesses the unfair interest they had to pay. In order to determine the full amount of restitution, the Richmond Capital is required to provide an accounting and full history of monies collected.

This case was led by Assistant Attorneys General Jack Figura and Dami Obaro with assistance from Assistant Attorneys General Adam Riff and Christopher L. Filburn, law fellow Emily Smith, and former Data Scientist Chansoo Song under the supervision of Deputy Bureau Chief Laura Levine and Bureau Chief Jane Azia of the Division of Economic Justice. The Division of Economic Justice is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.

Justice Andrew Borrok in Manhattan earlier issued a temporary ban on Braun and anyone working for him from participating in business lending while the case proceeded, saying in a Sept. 1 ruling that “the record firmly establishes irreparable harm.”

Braun was serving a 10-year prison term on drug charges when Trump commuted his sentence in January 2021. Trump’s White House didn’t mention James’s pending suit against Braun or his lending activities when the drug sentence was commuted. The former president has, however, frequently accused New York’s Attorney General of bringing partisan cases. James sued Trump and his company for $250 million last year in a civil fraud case that’s heading to trial next month.

To join a FAA News WhatsApp Group, click here.

To join the FAA News WhatsApp Status, click here.

No comments: