New York Attorney General Letitia James has announced a significant settlement with Yellowstone Capital and its network of 25 predatory lending companies. The agreement includes over $534 million in debt relief and at least $16 million in restitution for small businesses affected by high-interest loans. The total judgment against Yellowstone amounts to $1.065 billion, with the company responsible for canceling all outstanding debts owed by small businesses across New York and nationwide.
Attorney General James stated, "Targeting small businesses with predatory loans and outrageous interest rates threatens the livelihoods of hardworking business owners and their employees." She emphasized that her office has secured substantial debt relief for affected businesses, helping them remain operational.
The lawsuit against Yellowstone's CEO Isaac Stern, President Jeffrey Reece, and related entities was filed in March 2024 following an investigation by the Office of the Attorney General (OAG). The investigation revealed that these entities exploited small businesses through fraudulent loans disguised as merchant cash advances. These transactions functioned as short-term loans with exorbitant interest rates reaching up to 820 percent annually.
The settlement mandates that Yellowstone cancels all amounts owed by merchants, totaling over $534 million. An immediate payment of $16.1 million will be distributed to impacted small businesses, with potential increases if compliance is not met. Additionally, Yellowstone and its officers are permanently banned from the merchant cash advance industry.
Attorney General James continues to pursue legal action against companies that assumed Yellowstone's operations in 2021, including Delta Bridge Funding and Cloudfund, along with other individuals involved in the lending scheme.
This case follows previous actions taken by Attorney General James to protect small businesses from fraudulent practices. In February 2024, she secured a court judgment exceeding $77 million against Richmond Capital Group for similar predatory lending activities.
Assistant Attorneys General Adam J. Riff and Dami Obaro led this matter under Bureau Chief Jane M. Azia's supervision within the Bureau of Consumer Frauds & Protection.