Attorney General Gurbir Grewal announced lawsuits against Yellowstone Capital LLC, it’s parent company and six other firms over allegedly predatory small business loans and abusive collection tactics Tuesday.
The state’s suit in Hudson County Superior Court claims the firm and subsidiaries High Speed capital LLC, World Global Capital LLC, HFH Merchant Services LLC, Green Capital Funding LLC, and MCA Recovery LLC and Yellowstone affiliate Max Recovery Group LLC “acted in concert to cheat financially-strapped small businesses and their owners out of millions of dollars nationwide” through predatory loans.
“Local businesses are struggling due to the COVID-19 pandemic, especially since many were unable to take advantage of the limited relief made available by the federal government through the Paycheck Protection Program,” Grewal said. “We will not tolerate — now or ever — efforts to take advantage of them through predatory lending and collection practices.”
The suit alleges the firms lured customers into predatory contracts by lying about repayment terms, calling fixed terms “not fixed,” falsely claiming the loans did not create personal liability, charging illegally high interest rates, hiding fees and withdrawing money from consumers’ accounts without authorization even after those consumers made all required payments, among other things.
Deputy Attorney General Chanel Van Dyke, Assistant Attorney General Janine Matton and Section Chief Patricia Schiripo are representing the government.
Office of Consumer Protection supervising investigator Jennifer Micco and investigator Walter Kaminski are handling a Division of Consumer Affairs investigation into the matter.
“As consumers are increasingly forced to turn to lenders for help, we must ensure they are protected from predatory and deceptive practices that push them further into economic despair,” Division of Consumer Affairs acting Director Paul Rodríguez said. “As this lawsuit demonstrates, we will hold accountable any company that violates our consumer protection laws by subjecting consumers to punishing interest rates and draconian repayment terms that lead to their financial ruin.”
As first reported by WHYY’s Joe Hernandez, Yellowstone moved to New Jersey after receiving $3.3 million tax credit award from the Economic Development Authority, but the firm never received those tax credits because it failed to meet a capital investment benchmark set in the award’s terms.