New York Attorney General Takes Legal Action Against High-Interest Cash-Advance Scheme – Sky Bulletin

ALBANY, N.Y. (AP) — The office of New York Attorney General Letitia James has launched legal action against a cash-advance company for allegedly issuing deceptive loans with exorbitant interest rates reaching 820%. Small businesses nationwide were the victims of what James describes as “predatory” tactics.

The lawsuit was filed on Tuesday targeting Yellowstone Capital as well as a network of its affiliates, which Attorney General James claims continue their questionable practices under the new name Delta Bridge, even after Yellowstone was scrutinized by multiple investigations and ostensibly ceased operations in 2021.

The entities were said to offer merchant cash advances, but these were in reality illegal loans with steep interest rates. Renowned Manhattan bakery City Bakery found itself paying over $2,000 daily due to these advances and was ultimately forced to close, as per the allegations presented by James’ Office.

“These companies, under the guise of Yellowstone Capital and Delta Bridge, purported to be a support for small businesses. Instead, they saddled these enterprises with unlawful and severely burdensome loans,” Attorney General James remarked. She emphasized that small businesses, vital to the economy, should not be subjected to such exploitative practices.

No immediate response was received from contacts for Yellowstone and Delta Bridge when reached for comment. Additionally, Maury Rubin, the former proprietor of City Bakery, did not reply promptly to requests for comment.

Key figures in the operations, including David Glass who co-founded the company and has a past conviction for insider trading, are also implicated in the legal filing. Glass did not respond to contact attempts as of this reporting.

Attorney General James is requesting a permanent injunction against the companies involved and a lifetime ban from the industry for Glass.

The office of the Attorney General is also seeking restitution for affected businesses in the sum of approximately $1.4 billion.

In 2020, Yellowstone and its ownership faced a federal lawsuit for unauthorized bank withdrawals from clients’ accounts. To settle with the Federal Trade Commission in 2021, the company agreed to relinquish over $9.7 million, which was then redistributed to businesses impacted by their practices. Additionally, in 2023, a settlement in the ballpark of $27 million was reached with the state of New Jersey over similar allegations.

Prior to the New York legal action, settlements with five individuals linked to Yellowstone resulted in $3.37 million restored to the aggrieved businesses, disclosed by the office of the Attorney General.

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Reporting by Maysoon Khan, who is a Report for America Statehouse News Initiative corps member. Report for America is a national service organization that stations journalists in local newsrooms to cover underreported topics.