FTC files legal action against Yellowstone Capital and Fundry
A major provider of a type of small business financing that has caused problems for small hauliers has cheated customers and stole millions of dollars from them, says a US Federal Trade Commission lawsuit.
Yellowstone Capital, now operated as Fundry, was a pioneer in the controversial financing niche of cash advances to merchants. An MCA provider gives a customer, typically a small business with a bad credit rating, a cash advance in exchange for a much larger amount paid back through daily automatic payments.
The FTC’s filing announcement said the defendants “used deception to lure small business customers, and then routinely withdrew money from their accounts without consent even after the customers refunded the money they had received. ‘they should”. He also alleges that the defendants “illegally withdrew millions of dollars in overpayments from their clients’ accounts, and to the extent that they provided refunds, sometimes took weeks or even months to provide them.”
Yellowstone Capital, Fundry, Founder and CEO Yitzhak Stern and Chairman Jeffrey Reece have been named in the FTC lawsuit. The complaint was filed with the United States District Court for the Southern District of New York.
Thousands of entities with U.S. DOT numbers, mostly fleets, brokers and other trucking-related entities, have used ACMs over the past five years, based on an analysis of companies that have filed uniform trade codes, which are part of virtually all MCA applications. . UCC deposits, made at the state level, are privileges that a creditor uses to establish that they have an interest in a debtor’s property that has been pledged to secure funding. The state-based statements were collected and analyzed by RigDig, a data affiliate of the trucking industry of Overdriveeditor of, Randall-Reilly.
Some owners of small fleets who have subscribed to MCAs were interviewed in Overdrivethe recent Cash-Flow Crisis series by, who explored the funding challenges faced by small fleets and owner-operators during and before the coronavirus pandemic.
the The FTC filed a similar complaint in June against a group of companies and their executives, all linked to the former Richmond Capital Group. A similar lawsuit has been filed by New York State against the same parties, who are not related to the defendants in the Yellowstone lawsuit. The allegations against the Richmond companies are similar to those against Yellowstone.
the Overdrive series, citing a 2018 survey series by Bloomberg Businessweek, noted that Yellowstone introduced the MCA model when it was first created in 2009 by David Glass and a friend. “Among the scammers and con artists who work in the lower echelons of Wall Street, Glass is a legend,” Bloomberg wrote. “Before he was 30, he inspired the 2000 scam film ‘Boiler room’ and was “later arrested by the FBI for insider trading”.
Yellowstone and another lender, Green Capital, were reorganized and renamed as subsidiaries of Fundry. Fundry did not respond to an interview request from Overdrive.
The FTC complaint states that the defendants market their products “through a large and constantly evolving network of agents.” Among them are Green Capital Funding LLC, West Coast Business Capital, LLC, World Global Capital LLC, High Speed Capital LLC, Thryve Capital Funding LLC and Mason Capital LLC.
The FTC is seeking restitution of illegally earned money “and other equitable remedies.”