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In a landmark settlement announced on January 22, 2025, New York Attorney General Letitia James secured a $1.065 billion judgment against Yellowstone Capital, a merchant cash advance provider accused of predatory lending practices. Operating under various names, including Delta Bridge Funding and Cloud Fund, Yellowstone misled small business merchants by representing their cash advances as purchases of future receivables. In reality, the company debited fixed amounts from merchants’ bank accounts, leading to effective interest rates that often reached triple digits, with some as high as 820%.

The settlement includes the cancellation of $534.5 million in debt owed by over 18,000 small businesses nationwide, including more than 1,100 businesses in New York, which will see over $36 million in debt relief. Additionally, Yellowstone and its officers have agreed to pay $16.1 million to be distributed to the affected businesses. Despite these payments, Yellowstone remains liable for $514.3 million of the judgment, and legal actions continue against its co-founder, David Glass, and related entities.

Attorney General James emphasized the detrimental impact of Yellowstone’s practices, stating, “Yellowstone and its executives lined their pockets at the expense of vulnerable small businesses who turned to them for help. Their predatory loans forced successful companies to close and put New Yorkers out of work.”

This settlement underscores the importance of ethical lending practices and serves as a warning to other financial institutions about the consequences of engaging in deceptive and usurious activities.