NEW YORK – The New York Attorney General’s Office has settled with a network of 25 predatory lending companies controlled by Yellowstone Capital and its officers, the New York AG’s office reported.
The settlement will deliver over $534 million in debt relief and provide at least $16 million in restitution to small businesses across New York and the country that Yellowstone targeted with illegal high-interest loans, the AG’s office stated.
The settlement includes a $1.065-billion judgment against Yellowstone, with over $534 million of that paid by canceling all outstanding debts owed by small businesses, including over 1,100 across New York state and over 18,000 nationwide. The companies and the officers also immediately paid $16.1 million to be distributed to impacted small businesses. The Yellowstone companies will be liable for the remaining $514 million of the judgment, the AG’s office said.
“Targeting small businesses with predatory loans and outrageous interest rates threatens the livelihoods of hardworking business owners and their employees,” said New York Attorney GeneralLetitia James. “Yellowstone and its executives lined their pockets at the expense of vulnerable small businesses who turned to them for help. Their predatory loans forced successful companies to close and put New Yorkers out of work. My office has put an end to these predatory loans and secured over $534 million in debt relief for businesses that were harmed.”
James filed a lawsuit against Yellowstone CEO Isaac Stern, President Jeffrey Reece, and the Yellowstone entities in March 2024 after an Office of the Attorney General (OAG) investigation found that they exploited small businesses through fraudulent loans with “astronomic” interest rates, the AG’s office said.
These loans were disguised as merchant cash advances, an increasingly prevalent form of short-term, high-interest funding for small businesses, particularly those that cannot get loans from traditional banks, the AG’s office said.
Under the settlement, the Yellowstone entities are canceling all amounts owed by merchants, totaling $534,552,724, and together with Stern and Reece, have made an immediate $16.1 million payment toward the remaining $514 million judgment that will be distributed to impacted small businesses.
“This cash payment will be increased to $30 million if they fail to comply with the terms of the settlement,” the AG’s office said.