Markets Wired

The Federal Trade Commission is taking action against two New York-based companies engaged in small-business financing, along with several of their owners and officers, for allegedly using deception and threats to seize personal and business assets from small businesses, non-profits, religious organizations, and medical offices.

The FTC filed a complaint against RCG Advances, LLC—formerly known as Richmond Capital Group, LLC, and also doing business as Viceroy Capital Funding and Ram Capital Funding—and a related entity and individuals. The complaint alleges  that, since at least 2015, the defendants have deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances they provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay. The FTC also has alleged that defendants have made unauthorized withdrawals from consumers’ accounts.

The defendants’ websites falsely claim that their cash advances require “no personal guaranty of collateral from business owners,” meaning that the people obtaining financing on behalf of companies would not have their personal possessions treated as collateral in the transaction. In fact, their contracts did include such provisions.

The defendants also require businesses and their owners to sign confessions of judgment as part of their contracts, which allow the defendants to go immediately to court and obtain an uncontested judgment in case of an alleged default. The complaint alleges that the defendants unlawfully and unfairly use these confessions of judgment to seize consumer personal and business assets, in circumstances not expected by consumers and not permitted by the defendants’ financing contracts. The complaint alleges that the defendants make threatening calls to consumers, including telling one consumer that they would “break his jaw” if he did not make his payments and, in another case, threatening to ruin a consumer’s reputation by falsely accusing him of being a child molester, if he did not pay.

The defendants also fail to deliver the full amount of financing promised by withholding an array of upfront fees from the funds they deliver to customers, despite promising “no upfront costs” on their website, the FTC has alleged. The fees can range from hundreds to tens of thousands of dollars, and are either poorly disclosed in contracts or not disclosed at all. The complaint further cites internal company emails showing the defendants directing their agents to charge higher fees to consumers than allowed by the contract.

The FTC’s complaint names as defendants RCG Advances, LLC (formerly known as Richmond Capital Group, LLC and also doing business as Viceroy Capital Funding and Ram Capital Funding); Ram Capital Funding LLC; Robert L. Giardina; Jonathan Braun; and Tzvi Reich.

The FTC would like to thank the New York Attorney General’s office for their assistance with this investigation.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.