Wednesday, September 20, 2023
The court ruling, in a case filed in 2020 by New York Attorney General Letitia James, also held principals of the three firms liable for harming small businesses with what were purported to be MCAs, but "were in fact illegal, high-interest loans with astronomical and illegal rates," the AG's office said in a statement.
Those principals are Robert Giardina, Jonathan Braun, Tzvi Reigh and Michelle Gregg. The three companies acted "in concert with each other, and for a significant period of time, in fact, working out of the same physical office space right next to each other on the same transactions despite purportedly being part of different companies," the court decision noted.
Although the loans were described as MCAs, and the companies collected bank statements ostensibly to determine required payments "this was a total sham," the court wrote. "The predatory lenders either admitted that mandatory reconciliation never occurred or invoked the Fifth Amendment privilege against self-incrimination."
Additionally, the contracts borrowers signed were written in such a way as to ensure defaults, the court asserted. "The record makes clear that the predatory lenders made sure that they were getting repaid no matter what and that the risk of actual ownership of the accounts receivable never passed to the predatory lenders." Lenders collected money they weren't entitled to, the court noted, such as for national holidays.
The court also ordered three companies—Richmond Capital Group LLC, Ram Capital Funding LLC and Viceroy Funding Capital LLC —to promptly cancel tens of millions of dollars of existing loan agreements, repay late fees, and terminate any liens or judgements secured against borrowers.
"Small businesses are the backbone of our economy, and of all the challenges they face to stay open, predatory lenders shouldn't be one of them," AG James said in a statement.
The AG's office cited one example—a $10,000 loan that was to repaid in 10 days through daily payments of $1,999. The large daily payments, combined with the short repayment term, resulted in an annual interest rate for that MCA, including fees, of nearly 4,000 percent, the AG's office noted. Usury law in New York defines interest rates exceeding 25 percent as criminal usury.
The New York decision mirrors a settlement reached last year between RGC, Ram, Giardina and the FTC, that included a $2.7 million judgement. A similar settlement was reached between Reich and the FTC; a case against Braun is pending.
The FTC alleged that "RCG, Giardina and others stitched together a blanked of misrepresentations that cloaked the true nature of the transactions." And when borrowers didn't pay up, they often were threatened with physical violence, according to the FTC.
The three firms and their principals were permanently banned from engaging in small business lending and debt collection by the FTC. 
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