By Jonathan Stempel

NEW YORK (Reuters) – New York Attorney General Letitia James said on Wednesday her office won a $1.065 billion judgment against Yellowstone Capital, a cash advance provider accused of predatory lending, as apart from a deal that gives small businesses more than half a billion. debt relief dollars.

James sued Yellowstone, now known as Delta Bridge Funding or Cloudfund, last March, saying its network of companies falsely told traders it would buy certain percentages of future earnings, known as cashouts, and that they could get refunds on loan payments if business slows down.

The attorney general said Yellowstone instead charged fixed sums from merchants’ bank accounts, typically over 60 to 90 business days, resulting in “unfathomable” effective interest rates that often reached triple digits, reaching up to to 820%.

Rates above 16% are considered usurious in New York.

The deal includes the cancellation of $534.5 million in debt from more than 18,000 small businesses nationwide, including about $36 million owed by more than 1,100 small businesses in New York and $16.1 million from dollars paid by Yellowstone and its officers.

Yellowstone is responsible for the $514.3 million still outstanding. It was not immediately clear how that sum would be collected.

The Attorney General’s lawsuit against Delta Bridge Funding, Cloudfund and Yellowstone co-founder David Glass continues.

“Yellowstone and its executives lined their pockets at the expense of the vulnerable small businesses that turned to them for help,” James said in a statement. “His predatory lending forced successful businesses to close and put New Yorkers out of work.”

Eric Kanefsky, Yellowstone’s attorney, said his client was happy to settle. Attorneys for Delta, Cloudfund and Glass did not immediately respond to requests for comment. James’ office did not immediately respond to a separate request for comment.

In December 2023, Yellowstone agreed to pay $5.6 million and forgive $21.8 million in debt to settle claims by the New Jersey attorney general that it defrauded the companies.

(Reporting by Jonathan Stempel in New York; Editing by Aurora Ellis)