Articles by deBanked Staff
Sneaky Debt Settlement Company Temporarily Restrained by Judge
May 20, 2018
A debt settlement company has sunk to new lows, according to a petition filed by Yellowstone Capital in Nassau County. Defendants SMCA, Inc. DBA Settle My Cash Advance, Thassos.com Corp DBA Thassos.com, and George Alexander, have been accused of fraudulently transferring funds owed to Yellowstone Capital to themselves while trying to mask the evidence in the process.
Unlike other purported debt settlement schemes, the Settle My Cash Advance defendants are alleged to have first actively coached a merchant to hide his money in new bank accounts rather than pay his judgment. This, according to emails attached as exhibits, included instructions by the defendants on how to cover up the paper trail so that the money could not be traced. Once this was successfully carried out, the defendants then absconded with the merchant’s money, leaving him broke and the judgment still unpaid.
According to the merchant’s sworn affidavit, Settle My Cash Advance lured him into believing that they not only had a relationship with Yellowstone but that they would also reduce the judgment entered against his business by 25% – 70%.
“SMCA (Settle My Cash Advance) told me to transfer all funds, as my business and I earned them, to SMCA to hold them for us so that Yellowstone could not collect on its judgment,” the merchant wrote. “The deal that SMCA represented to me was that SMCA would take the funds, hold them in trust, and use them to settle our obligations with Yellowstone for a small contingency fee.”
What happened instead is that the defendants ran off with the money held in trust and did nothing to help with Yellowstone, the documents say.
Presented with the facts laid out before it, the Court ordered that the funds held by Settle My Cash Advance be restrained pending a May 30th hearing.
Merchant Cash Advances Are Not “Masked” Usury or Loans
May 17, 2018
A New York Supreme Court judge cited the decision rendered in Champion Auto Sales, LLC et al. v Pearl Beta Funding, LLC on Wednesday, when she dismissed usury claims brought against four merchant cash advance companies.
The case at issue was Wilkinson Floor covering, Inc., Stephen Wilkinson v Cap Call, LLC, TVT Capital, LLC, Yellowstone Capital, LLC, Ace Funding Source, LLC (Index #160256/2016)
Champion set forth the general principle that the underlying agreement in that case was not a usurious transaction, she opined. Beside the plaintiff’s claim being procedurally deficient, the judge said that the plaintiffs had not established usury because a rudimentary element of usury is the existence of a loan or forbearance of money and when there is neither, there can be no usury.
Per the Honorable Carmen Victoria St. George:
In New York, there is a predisposition in this State against declaring that contracts are usurious. This is especially true with respect to commercial agreements, where “usurious agreement[s] will not be presumed from facts equally consistent with a lawful purpose.”
Additionally, because plaintiffs’ obligation to pay them future receivables is conditioned on plaintiffs’ receipt of such, the agreements at issue are not loans.
Prosper Loan Sales Highly Dependent on One Big Buyer
May 16, 2018Forty-five percent of all loans originated by Prosper Marketplace in the first quarter of 2018 were sold to a single buyer, according to their latest earnings statement. The single largest buyer over the same period last year had only purchased 33% of their loans.
Last year, Prosper announced that they had closed a deal with a consortium of institutional investors to buy up to $5 billion worth of loans over the next 24 months. The investors in the consortium are affiliates of New Residential Investment Corp., Jefferies Group LLC and Third Point LLC.
Prosper originated $744 million worth of loans in the first quarter of this year alone. $333 million of those were purchased by the consortium for a total of $2.16B purchased to-date.
World Business Lenders Secures Credit Facility
May 16, 2018
World Business Lenders announced yesterday that it obtained a $30 million credit facility from a Cayman Islands fund created by a group of Asian banks and investors.
“The terms [of the facility] are very attractive,” said World Business Lenders CFO Tom Wills. “Single digit fixed interest rate and high advance rates.”
The new facility will be used to continue funding a loan product that is a hybrid of a business loan and a mortgage, Wills told deBanked. He said that World Business Lenders invented this product three years ago.
“Three years ago, we saw some credit weakness coming into the market and we decided to develop this real estate collateralized product,” Wills said.
World Business Lenders provides business loans that range from $5,000 to $2 million and are paid back between six and 36 months. Their average loan size is $150,000.
Wills said that the hybrid product is becoming more institutionally accepted and that they have been seeing more demand for it. Created in 2011, the company employs over 100 people at its office in Jersey City, NJ.
World Global Financing, Inc. Declares Bankruptcy
May 9, 2018World Global Financing, Inc., a Florida-based merchant cash advance provider, filed for bankruptcy yesterday, according to Chapter 11 documents obtained from the Southern District of Florida.
Company CEO Cyril Eskenazi reported that its assets and liabilities were both between $10 and $50 million. Among the company’s creditors are ACH Capital, LLC, Capital One, Eaglewood funds, MB Financial Bank, the IRS and other tax authorities, WG Financing Inc, WG Funding Trust, Wilmington Savings Fund Society, FSB, several law firms, a mortgage company and more.
OnDeck Funded $591M to Small Businesses in Q1
May 8, 2018
OnDeck’s originations were $591 million in Q1 of this year, according to their earnings report, up 3% year-over-year. 29% of that was generated by funding advisors, OnDeck’s term for brokers.
They reported a total net loss of $1.9 million.
Compared to the same quarter last year, OnDeck’s Cost of Funds Rate increased from 5.9% to 6.8%, the 15+ Day Delinquency Ratio decreased from 7.8% to 6.7%, the Net Charge-off Rate decreased from 14.9% to 10.9%, and their average APR increased from 44% to 46%.
During the Q&A, OnDeck CEO Noah Breslow said that they had a strong quarter with Chase originations and that their second major bank is on track to be announced later this year.
Hearing on Commercial Financing Disclosures Scheduled in California State Senate
May 7, 2018Update: Link to the LIVE stream is here
The Senate Judiciary Committee for the State of California will convene for a hearing on the commercial financing disclosures bill at 1:30 PST on May 8th. SB-1235, as its known, previously survived the Senate Committee on Banking and Financial Institutions when it was debated and contested on April 19th. (a video of that hearing is available here)
deBanked will attempt to stream the hearing or provide a link to it when it begins. Check back here for more details.
Judge Grants Restraining Order Against Deceptive Funding Company
May 6, 2018
JTT Funding, the company previously accused of having forged a Confession of Judgment, stands accused now of stealing the identity of a rival funding company. On May 3rd, New York Supreme Court Judge W. Franc Perry granted an injunction against JTT Funding from using the name, logo and likeness of Accel Capital from its marketing and contract materials.
Similar to the forged COJ suit (which was brought by FundKite), JTT Funding did not answer or contest the claims.
Plaintiff Accel Capital demonstrated in their papers that an agent of JTT was using a gmail address with “accelcapital” in the name and the company’s logo in its contracts. When a merchant funded by JTT Funding (who pretended to be Accel) inadvertently contacted the real Accel Capital, the scheme was revealed.
JTT Funding went on to ignore Accel’s Cease and Desist letter, court papers say, which led to the lawsuit and demand for an immediate injunction.
According to the Financial Times, JTT Funding is owned by Queens-born mixed martial arts fighter Jim “The Tyrant” Boudourakis. In his October 2017 interview with the publication, Boudourakis said, “There was a learning curve, going from being a fighter to a salesman. But I’m good with people.” FT also reported that his company had 18 full-time salespeople and was funding $4 – $5 million per month.
In the FundKite suit, it is alleged that Boudourakis’ first name Jim is an alias.
The Accel Capital suit can be found in the New York Supreme Court under Index Number: 153447/2018
