Yellowstone Capital is over $1 billion in predatory lending practices, according to Investing.com

Investing.com – New York Attorney General Leticia James announced a settlement with Yellowstone Capital and its officers from a network of 25 lending companies accused of predatory practices. This settlement includes a $1.065 billion judgment against Yellowstone. The company will write off $534 million in loans owed to small businesses and pay $16.1 million in restitution to affected businesses.

Predatory lending companies, controlled by Yellowstone, target small businesses with illegal high-interest loans. More than 1,100 businesses in New York state and more than 18,000 nationwide were affected. These businesses 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 held by the Yellowstone companies. The attorney general’s office accused Yellowstone and its executives of exploiting small businesses with predatory loans that caused successful companies to close and job losses.

The case against Isaac, the CEO of Yellowstone Stern (AS:), President Jeffrey Reese and Yellowstone entities were sued in March 2024. An investigation by the Office of the Attorney General (OAG) found that Yellowstone had made fraudulent loans with high interest rates disguised as merchant cash. These developments provide short-term, high-interest financing for small businesses unable to access loans from traditional banks.

The lawsuit continues against Delta Bridge Fund and Cloudfund, the companies that took over Yellowstone operations in 2021, and eight other individuals. This includes Yellowstone co-founder David Glass. Attorney General James paid $3.37 million to the five individuals before the lawsuit to be distributed to the businesses that were injured. These individuals are banned from the merchant cash advance industry.

Under the settlement, the Yellowstone entities will be required to cease all attempts to collect on the debts of the businesses they loaned. They must also terminate pending actions to enforce them, release unsatisfied court judgments, and waive certain liens on small business assets. The companies and their executives are permanently banned from the merchant cash advance industry.

Small businesses with a Yellowstone court decision or one pending against them will receive by mail how to request these releases. This request must be submitted within the next six months. Business owners interested in more information about the settlement can find it on the OAG website.

The settlement with Yellowstone is the latest step by Attorney General James to protect small businesses from fraud. In February 2024, a judgment of more than $77 million was confirmed against Richmond Capital Group, Jonathan Brown, and their partners and principals for similar fraudulent practices. In April 2023, two websites impersonating the New York State Department and charging small business owners high fees were shut down.

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