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Lenders Charging 'Mafia-Style' Interest Rates Facing NY State Investigation

Five months after the "godfather of payday lending" was sentenced to a 14-year prison term and stripped of $64 million in assets after a jury found him guilty of effectively extorting and exploiting nearly 1.5 million low-income borrowers, and just days after Bloomberg published the final installment in a series of investigative reports describing how small-business cash advance lenders transformed New York Courts into a debt collection machine - and widely engaged in fraud and abuse, including inventing loan defaults out of thin air to seize exorbitant sums from their unsuspecting customers - the New York State Attorney General is launching a civil probe into abuses by pay day lenders targeting contractors, truck drivers and other small businesses in the state.


According to Bloomberg, Attorney General Barbara Underwood is investigating merchant cash-advance companies who engage in fraud or have abused the state court system. Underwood office kicked off their investigation last week by subpoenaeing one of the state's largest cash-advance companies, Yellowstone Capital.

Underwood accused Yellowstone - which refused a Bloomberg request for comment - of defrauding and deceiving small business owners by using deceptive fine print that

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