Legal Briefs
15 Months in Prison for Fake LOC Scam Run by “Funder”
December 17, 2024Yisroel (“Scott”) Heber was sentenced to 15 months in prison for his role in a fake LOC scam, followed by 3 years of supervised release. Prosecutors said he lured small business victims into making upfront loan payments in exchange for getting a large loan afterwards, which wouldn’t come. As part of the sentencing Heber was also ordered to pay $921,594.75 in restitution, forfeit $240,000, and pay a fine of $25,000.
Consumer Debt Collection Protections to Apply to Commercial Debts in California
September 9, 2024
SB1286 is on its way to the California governor’s desk. In the era of state-based commercial finance legislation this bill stands out for its unique focus on the collections process.
“Existing law, the Rosenthal Fair Debt Collection Practices Act (RFDCPA), prohibits debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts and requires debtors to act fairly in entering into and honoring those debts,” the bill’s authors wrote. “This bill would recast those provisions to expand the scope of those provisions to additionally prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of covered commercial debts…”
In a CounselorLibrary BizFinLaw Alert, Hudson Cook attorneys Kate Fisher and Bob Gage, wrote of it:
What would this bill mean for you if you provide financing to California businesses? First, don’t assume that the law won’t apply to you just because you originated a debt. The RFDCPA, unlike most debt collection laws, applies to a person collecting its own debt in its own name. Second, be aware that the bill defines “covered commercial credit transaction” broadly enough that any business that owes you money, regardless of the form of the transaction, might have rights under the RFDCPA if the original amount financed or lease amount was $500,000 or less. If you determine (or your lawyer tells you) that some debts owed to you might be covered if the bill goes into effect, then you’ll need to see what new obligations the law imposes on you.
Dream Data Services Files Chapter 7 Bankruptcy
August 29, 2024Dream Data Services LLC filed a voluntary petition for bankruptcy last week. The New Jersey-based company had claimed to sell MCA leads including Submissions with all of the merchant’s information. Alan Tunit was declared as the sole member of the LLC. Dream Data Services claimed on its petition that it only had assets of between $0 – $50,000 and liabilities of $100,001 – $500,000.
Debt Settlement Attorney Sanctioned by Court
July 29, 2024A self-proclaimed merchant cash advance debt settlement attorney was sanctioned in the New York Supreme Court for frivolous conduct attributed to making an overtly false and/or misleading statement of fact.
The attorney is Dominick R. Dale, who is defending a merchant in an action brought by a revenue based financing company in Index No: EF000224-2024. According to court documents, Dale sought to move a case filed by plaintiff in Orange County, NY (which the contract specified as the forum) to either Kings County or New York County on the basis that defendant was not a resident of the State of New York, had no connection to the state, and that the forum selection clause in the agreement was invalid.
The irony is that the defendant did actually reside in Orange County, NY.
In the order granting plaintiff’s cross-motion for sanctions, the judge ruled that the defense attorney’s motion to transfer venue was “solely based on the distance between defense counsel’s office and the courthouse” because the 71 mile distance was apparently too far for him to want to travel.
The case is still ongoing.
Dale, who is listed under the name Law Office of Dominick Dale, Esq. in the action, also goes by the name “Merchant Cash Advances Law Firm” with an advertised focus on debt settlement.
Ponzi Schemer Continued to Run Ponzi Scheme From Prison Phone
July 22, 2024Don’t syndicate with New Beginning Global Funding LLC, New Beginning Capital Funding LLC, and Lion Heart Capital Group L.L.C.
That’s because these entities were just named in a federal plea agreement as belonging to Johanna Garcia, a now-convicted ponzi schemer currently serving time in Miami’s federal detention center. Readers might remember her as being the mastermind behind a fake MCA company known as MJ Capital Funding. Garcia raked in more than $190 million as part of a fake syndication/investment scheme from thousands of duped investors. The SEC shut the company down in 2021 and she was charged criminally last year.
She did not go down quietly. Apparently after the SEC shut down her entities she simply set up new entities and kept going. When she was finally arrested and jailed awaiting trial she continued the ponzi from the prison phone and email.
In a proffer signed by Garcia, it’s stated that “Garcia and her co-conspirators told investors that their money would be used to fund general contractors who worked on commercial and residential properties through merchant cash advance loans. In truth, bank records show that there was little to no merchant cash advance activity, and the money raised was used to pay off previous investors.”
Garcia, and those that participated in the scheme with her, used MCA as a cover for their scheme. She was not actually known to people in the industry nor actually worked in it.
Fake LOC Scam Results in Guilty Plea
July 17, 2024Yisroel (“Scott”) Heber pleaded guilty last month for his role in a fake business line of credit scam. In April, the US Attorney for the Southern District of NY and the US Secret Service alleged that Heber and a co-defendant posed as a lending company and induced victims to make payments related to loans that they promised they would get but never actually came through with. Heber pleaded guilty to Conspiracy to Commit Wire Fraud.
Prosecutors called it an “advance-fee merchant cash advance fraud scheme through which they agreed to defraud victims of a total of more than $1.5 million.”
The case against Heber’s co-defendant is still ongoing.
Law Firm Sued Over “Debt Relief” Practices
July 9, 2024Another alleged “debt relief” law firm is under fire by a small business lender. This time the lender is National Funding and their latest lawsuit names not only a borrower that breached a loan agreement as a defendant but also a New York based law firm named J.S. Fritzon Law Firm, P.C.
According to the Complaint filed in San Diego County of California’s Superior Court, after the defendant law firm identifies National Funding’s customers, they contact them, offer to provide debt relief services, and attempt to persuade them to breach their obligations.
“As part of this effort, Non-Borrower Defendants routinely make misleading representations to National Funding’s customers, including by promising to save them money by settling their obligations to National Funding for a discounted amount when Non-Borrower Defendants have no legitimate basis for making such a promise and no reasonable expectation of being able to fulfill such a promise,” it says.
Among the causes of action against that defendant in particular are Intentional Interference with Contractual Relations, Unfair Competition, Conducting Business as a Prorater Without a License, Unauthorized Practice of Law, and Violation of Uniform Voidable Transfer Act.
The case number is 37-2024-00021246-CU-BC-CTL.
Smart Business Funding Prevails in Trademark Lawsuit
July 3, 2024Smart Business Funding, the trademark owned by Collins Cash Inc, has officially survived a trademark infringement challenge brought by BillFloat Inc dba SmartBiz. Both companies began using their respective marks a decade ago and the two even had a partnership referral agreement at one point. However, in 2020, SmartBiz sent Smart Business Funding a Cease & Desist letter on the basis that it was allegedly infringing on its mark and causing confusion in the market. While they are both engaged in small business financing, each offers different products. SmartBiz eventually filed a lawsuit.
After the original trial went in favor of Smart Business Funding, the decision was re-examined on appeal. There, the United States Court of Appeals for the Ninth Circuit affirmed the original ruling. The Smart Business Funding mark does not infringe upon SmartBiz.
