Articles by deBanked Staff
Payday Loan King Scott Tucker Loses FTC Fight: Must Pay $1.3 Billion
October 2, 2016
Deceptive payday lending has come at a steep price for one Scott Tucker, who was briefly an accomplished professional race car driver. On Friday, September 30th, United States District Judge Gloria M. Navarro ordered a judgment be entered in favor of the FTC in the amount of $1,301,897,652. That concludes a case that had carried on for four years.
The $1.3 Billion judgment is no doubt a bad omen for Tucker as he awaits his criminal trial in New York. He was arrested earlier this year in February and charged with multiple counts of conspiracy, collection of unlawful debts and false TILA disclosures. In that case, US Attorney Preet Bharara seeks a forfeiture of at least $2 Billion. An initial accounting of his assets subject to forfeiture are his ferraris, porsches, a private jet, homes and more than a dozen bank accounts, according to the indictment.
That should be a big blow to Tucker considering that an asset freeze has forced him to rely on court-appointed attorneys in the criminal case. However, the FTC alleged last month that Tucker was still managing to live a lavish lifestyle that included steakhouses, country clubs, and spa visits. Documents filed in the FTC case show that as recent as July 22nd, the court was still ordering newly discovered bank accounts related to Tucker to be frozen. Given the billions sought in damages, one local newspaper in Kansas City, named The Pitch, questioned back in May where all of the money went.
We may soon find out. The judge’s order in the FTC case not only banned Tucker and his co-defendants from participating in consumer lending for life but also ordered that he must identify all business activities for which he performs services whether as an employee or otherwise and any entity in which he has an ownership interest in. The FTC was also awarded the authorization to obtain additional discovery without court consent and the permission to pose as a consumer, supplier, or other individual or entity to the defendants or any individual or entity affiliated with the defendants without the necessity of identification or prior notice.
The judgment was entered in case number 2:12-cv-00536.
Personal Network Lender Able Lending Raises $100 Million As Debt
September 28, 2016
Austin, Texas-based small business online lender Able Lending has secured $100 million in debt financing from San Francisco-based investment firm, Community Investment Management (CIM).
Able prefers lending to entrepreneurs who raise part of the funds from their personal network of family and friends that Able calls ‘Backers.’ These ‘backers’ typically fund as much as 10 percent of most Able loans whose term loans go up to $1 million with rates starting at 8 percent for companies with revenues over $100,000.
In June this year, the startup committed to deploy $5 million to fund companies in the Dallas-Forth Worth area right about the time when its rival San Francisco-based Vouch Financial closed shop. Vouch made personal loans based on a ‘vouching network’ of sponsors.
“During a time when investors’ confidence in alternative lending has plunged, this investment is a vote of confidence in our loan model and our team,” said Able Lending CEO Wills Davis in a statement. The company estimates that it will fund approximately 500 small businesses from the CIM deal.
Shark Tank Star Barbara Corcoran Stars in OnDeck TV Commercial
September 27, 2016Real estate mogul Barbara Corcoran is going beyond Shark Tank to help small businesses, this time by appearing in TV commercials for OnDeck.
“All small business owners have grit and perseverance. That’s a given. What they sometimes lack is access to capital. That’s where OnDeck becomes so valuable. OnDeck has the services and solutions that entrepreneurs need to meet daily challenges and grow their business,” said Ms. Corcoran in an OnDeck announcement. “I’m delighted to communicate the good news to small businesses that, thanks to OnDeck, financing their dreams is easier and faster than ever.”
See both versions of the commercial below:
Corcoran isn’t the only Shark Tank star to promote a small business lender. Kevin O’Leary, for example, is a spokesperson for IOU Financial, Lori Greiner is a spokesperson for Kabbage, and Kevin Harrington actually co-founded Ventury Capital.
Podcast: The Current State of Marketplace Lending and Investing – By Pepper Hamilton LLP
September 26, 2016Law firm Pepper Hamilton LLP has released a podcast discussing the current state of marketplace lending. Of note is the recent CashCall decision as it pertains to “true lender” status. They also touch upon Madden v Midland Funding, a discussion on the recent FDIC guidance and the CFPB complaint portal.
Listen below:
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Lendio Improves Access to Capital, Continuing Marketplace Trend
September 22, 2016
Small business loan marketplace Lendio partnered with Detroit-based working capital financing company Supplier Success to improve capital access to businesses owned by minority and women owners.
“By joining forces with Supplier Success, we’re able to expand our capabilities to provide minority business owners easier access to financing,” said Brock Blake, CEO and co-founder of Utah-based, Lendio.
Supplier Success is the latest addition to the string of partners the company already works with. In August, the company announced that it had facilitated over $250 million in funding transactions and of that, $55 million was originated in Q2 alone. Partnerships with GoDaddy and Staples originated $14 million and $4 million respectively.
Loan marketplaces have been quick to board the partnership wagon, forging customer-share deals to expand their reach. Recently, Conshohocken, Pennsylvania-based small business lender CapitalFront partnered with Lenders One, a marketplace for mortgage brokers to offer unsecured business loans on the Lenders One platform.
Lenders One is a mortgage banking cooperative with 250 members including credit unions and community banks. Under the customer-sharing partnership, CapitalFront will offer funding to self-employed residential mortgage customers.
“Roughly 20% of mortgage borrowers are self-employed business owners,” said Brian Simon, CEO of CapitalFront in a statement. “The relationship between CapitalFront and Lenders One allows the cooperatives members to differentiate their services and strengthen their relationships with their customers by offering borrowers access to capital for their business needs.”
Denver-based Marketplace Lender P2Bi Secures $10 Million Credit Facility
September 20, 2016Denver-based marketplace lender P2BInvestor (P2Bi) closed a $10 million credit facility with Pittsburgh-based mortgage service company Urban Settlement Solutions.
Founded in 2012, P2Bi provides revolving lines of credit of up to $10 million to businesses. With an average line of $1 million, the company’s customers include businesses in retail, manufacturing and consumer goods packaging. They have originated $300 million since 2014. “Partnering with Urban Lending Solutions proves our ability to fund large facilities to established businesses through our marketplace model,” said Krista Morgan, CEO and cofounder of P2Bi in a statement.
This investment follows a round of $50 million funding the company raised in March this year.
Do Marketplace Lenders Need to Take Balance Sheet Risk?
September 20, 2016At the recent altfi conference in NYC, Rhydian Lewis from RateSetter and Rob Young from OnDeck debated the need for marketplace lenders to take balance sheet risk. (see the video below)
According to Georgia Quinn of Crowdfund Insider, “noteworthy absentees [at this conference] from former years were SoFi, Dealstruck, OurCrowd, Symbid, LendKey, Biz2Credit, OneVest, Realty Mogul, Assetz Capital, CommonBond, Seedrs, Crowdcube, P2BInvestor, and Zopa.” She speculated that it might have something to do with the Lending Club scandal from earlier this year.
Altfi is a UK-based company, competing against many other industry conferences in the US. Competition among conferences probably had more to do with a low turnout than anything else. For a list of upcoming conferences that should have a good turnout, see the upcoming schedule HERE.
Windset Capital Winding Down
September 18, 2016
An email sent out on Friday by Paul Phillips, announced that Riverton, UT-based Windset Capital will be winding down their funding operations this week. Phillips is the company’s business development manager.
“Windset will no longer accept new loan applications effective Monday, September 26, 2016. Windset will complete and fund all open and valid approvals and will continue to service all of the loans in its portfolio, for the entire duration of their terms.”
Phillips’ email explains a hard truth. “In our opinion the working capital loan market has become unhealthy, reflecting current and trending competitive patterns that we believe no longer maintains an acceptable balance between risk and pricing,” he says. “In addition, as an organization, we have multiple growth opportunities in our equipment finance businesses that are more compelling.”
Windset launched in in 2013 with the idea that they could provide businesses with at least two years in business with working capital loans up to $250,000.
“After three years of serving the short-term working capital market and dedicating 100% of Windset’s resources to the broker/ISO community, we have made the strategic decision to exit the working capital loan market and focus solely on our growing equipment finance businesses.” said Barry Shafran, Chesswood’s President and CEO.
Winset is owned by Chesswood Group Limited, whose portfolio of companies includes the notable Pawnee Leasing.
“While we have continued to manage Windset profitably, our longer term outlook on the changing fundamentals of the working capital loan market have made us uncomfortable with the risk-return profile. We appreciate the many relationships we have made since 2013 and we will continue to fund all of our partners’ approved applications,” said Windset and Pawnee Leasing President Gary Souverein.
