Richmond Companies Required to Pay More Than $77 Million to Small Businesses for Usury and Outrageous Interest Rates.
New York Attorney General Letitia James today announced a historic court judgment against three merchant cash advance companies, Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding (Richmond companies) and their principals, Jonathan Braun, Tzvi Reich, Robert Giardina, and Michelle Gregg, for usury and fraud due to illegally high-interest, short-term loans and undisclosed fees. The judgment amount against the Richmond companies is more than $77,298,631, and follows the major court victory Attorney General James secured in September 2023, which included the cancellation of all outstanding debts of the small businesses. The Office of the Attorney General (OAG) filed a lawsuit against the Richmond companies for violating multiple state laws, including Executive Law § 63(12), due to their illegal, high-interest loans disguised as merchant cash advances.
“This historic judgment should send a clear message that anyone who takes advantage of small businesses in New York will regret their greed and actions,” said Attorney General James. “Small businesses in New York and throughout the nation are major job creators, but they face enormous challenges and companies that prey on them hurt our entire economy. I am proud to have secured this decision for over $77 million to be returned to small businesses that have suffered because of the Richmond companies.”
In June 2020, Attorney General James sued the Richmond companies for hurting small businesses in New York and throughout the nation. The OAG investigation uncovered that the Richmond companies were loaning money to small business owners at astronomically high interest rates and over short terms, illegally charging undisclosed fees, debiting excess amounts from merchants’ bank accounts, and fraudulently obtaining judgments against merchants by filing false affidavits in New York state courts. One example presented to the court showed that the Richmond companies loaned $10,000 to a small business and required its owner to pay back $19,900 within 10 days, through daily payments of $1,999. As a result of the large daily payments and the short, 10-day repayment term, the annual interest rate for the merchant cash advance, including fees, came close to 4,000 percent — almost 250 times the legal interest rate.
The September 2023 court decision required the Richmond companies to stop collecting on their outstanding debt and to repay thousands of small businesses the unfair interest they had to pay. The decision by Judge Andrew Borrok of the New York State Supreme Court for New York County follows the Richmond companies’ refusal to provide an accounting and full history of monies collected as part of the September 2023 court decision.
This case was led by Assistant Attorneys General Jack Figura and Dami Obaro with assistance from Assistant Attorneys General Adam Riff and Christopher L. Filburn, and Attorney General Fellow Emily Smith, under the supervision of Deputy Bureau Chief Laura Levine and Bureau Chief Jane Azia of the Division of Economic Justice. Data analysis was provided by former Data Scientist Chansoo Song under the supervision of former Deputy Director Megan Thorsfeldt and former Director Jonathan Werberg of the Research and Analytics Department. The Division of Economic Justice is led by Chief Deputy Attorney General Chris D’Angelo and overseen by First Deputy Attorney General Jennifer Levy.