Cash-Advance Pioneer Yellowstone Sued by New York for $1.4 Billion
- Lawsuit calls small-business lender a ‘fraudulent operation’
- Company was biggest user of predatory confessions of judgment
Yellowstone claimed rules on loan limits didn’t apply because the transactions were “advances” on businesses’ future revenue rather than loans.
Photographer: Mel Longhurst/Universal Images Group/Getty Images
Yellowstone Capital, a pioneer in a form of high-risk lending called merchant cash advance, was sued by New York’s attorney general for $1.4 billion for allegedly making illegal loans to small businesses.
For years, Yellowstone lent money at rates that exceeded usury limits – sometimes more than 800% annualized, according to the lawsuit filed in New York state court in Manhattan Tuesday. Like other cash-advance companies, Yellowstone claimed those rules didn’t apply because the transactions were “advances” on businesses’ future revenue rather than loans.