Here is what I was seeing for the week of 7-15
LOC-Advanced Fee MCA Broker Enters Guilty Plea
Yisroel (Scott) Heber agreed to plead guilty recently to a charge of wire fraud in the Southern District of New York. Heber played guilty to an advance fee scheme where, among other things he fraudulently promised lines of credit for upfront payment or having the merchant agree to take a high-risk Merchant cash advance. I hear brokers tell me every day that they lost deals to other brokers, because the broker promised the merchant a term loan or a line of credit. This type of business practice is happening every day. This is a practice that I have discussed in depth in the past and now I am seeing brokers get arrested, pleading guilty, and then Scott Heber’s case will be awaiting a prison sentence. It is my belief that with the advanced fee, line of credit bait and switch we will see more people being arrested and receiving prison sentences in the MCA industry in the near term If you’re doing this, stop now
MJ Capital Guilty Plea
In more compliance news, Johanna Garcia, one of the founders of MJ capital plead guilty last week to charges of wire fraud and conspiracy to commit securities fraud in $180 million Ponzi scheme. I have recently had a lot of MCA brokers, call me looking to purchase investor leads. Leads of investors who had previously bought securities, or private placement. These are brokers who are in the process of raising money to build out their own lending platforms and become funders. This is the end game for many brokers; however, this is a process that needs to be done legally. There needs to be compliance in place. If you are raising money to become a funder, you should be in contact with a securities attorney discussing what you can and cannot do while raising money. There should be safeguards in place such as escrow accounts. In many cases where fraud happens, and money is misappropriated the project did not start out as a Ponzi scheme. The brokers who raise the money, had access to the capital at one point used some of the capital for an unrelated need thinking that they would put the capital back which inevitably never happens. Ultimately things get out of control. Like the line of credit bait and switch people who are selling unregistered securities and misappropriating funds even small amounts are going to prison. Check with your attorney today to protect yourself and your family.
The month is almost over, call me today with any of your lead generation needs as I am bringing in new leads daily and want to help you finish the month strong.
Have a Great Week