ISO Alleged to Have Forged a Confession of Judgment

Underwriters, keep your eyes on the notary stamps.

A lawsuit filed in the New York Supreme Court last week by a merchant cash advance company against an ISO and several co-defendants, alleges that an ISO was partially responsible for damages when a merchant defaulted.

And they make a compelling argument. In this case where a Confession of Judgment (COJ) was required to approve the deal, the merchant, who defaulted within 30 days of being funded, claims to have never signed one, despite the ISO having delivered a signed one to the funder.

Well then who signed it?

Upon inspection, the notary stamp on the COJ belonged to a notary in Nassau County, NY, where the contract logically would’ve been notarized. But the merchant is based in Florida and claims to have been in Florida at the time the COJ was allegedly signed.

So who would’ve been in Nassau County that day?

According to the funder, it was the ISO, since the ISO is based on Long Island and the ISO is the one that delivered the signed COJ to them.

These are just the allegations at this point, of course, since the defendants have not even yet had a chance to respond.

The complaint, however, adds another twist, that after the ISO got the deal funded, they then referred it to a debt settlement company, who assisted the merchant in defaulting.

As you might imagine, the debt settlement company is a named co-defendant.

The case is filed under Index Number: 656692/2017 in the New York Supreme Court. You can view the entire complaint here.