Cash-Advance Firm Yellowstone Sued by New York for $1.4 Billion

Yellowstone Capital, a pioneer in a form of high-risk lending called merchant cash advance, was sued by New York’s attorney general for $1.4 billion for allegedly making illegal loans to small businesses.

For years, Yellowstone lent money at rates that exceeded usury limits – sometimes more than 800% annualized, according to the lawsuit filed in New York state court in Manhattan Tuesday. Like other cash-advance companies, Yellowstone claimed those rules didn’t apply because the transactions were “advances” on businesses’ future revenue rather than loans.

They “pretended to offer a helping hand, but instead provided only illegal, ultra-high-interest loans,” Attorney General ...