Eight Individuals Arrested by FBI in Small Business Loan Carroting Scam
April 18, 2025
Eight individuals have been arrested by the FBI and charged in connection with a scheme to defraud small business owners out of millions of dollars by charging them money in return for a promise of a large line of credit that would never come.
The individuals charged include: Joseph Rosenthal, Matthew Robertson, Nicholas Smith, James Missry, Paul Cotogno, Blaise Cotogno, Adam Akel, and Nicholas Winter.
As part of the alleged conspiracy the group used the following domain names: oakcapitalgrp.com, oldbridgefunding.com, wsfcap.com, opticapitalgrp.net, and more.
In addition, they used company names and entities that include: Clover Advance Group LLC, FFCG LLC, Advance Source Capital Group dba ASF Capital, WSF Capital Group, Forward Advance LLC, Delta Fund Grp, Oak Capital Grp, United Front Capital, Quick Call Capital, Pine Equities, D&D Equities, ASC Group LLC, and Old Bridge Funding.
“For some victims, the Defendants sent some of the Defendants’ funds to bank accounts provided by the victim,” the criminal complaint states. “The victim was instructed to then repay that same money back to the Defendants over several days, which would in turn improve the victim’s credit score, making the victim more credit-worthy. Further, to secure the loan or line of credit, the victims were required to make a larger, one-time payment comprised of the victim’s own money, which the Defendants typically referred to as a balloon payment. Once the Defendants had recouped their own funds and obtained the victim’s own money via the balloon payment, the Defendants did not extend financing to the victim. Instead, the Defendants kept the victim’s money and broke off communication with the victim.”
The scam had been going on for almost four years, according to the criminal complaint. Several of the names listed above had circulated on an industry message board as likely being involved in a bait and switch LOC fraud scheme.
“These defendants perpetrated a years’ long scheme to defraud hard-working business owners in New Jersey and across the United States, stealing millions of dollars from thousands of victims,” said U.S. Attorney Alina Habba. “These charges reflect our Office’s commitment to holding accountable those who prey on small business owners trying to support their communities and earn a decent living.”
CAPEDGE Launches to Serve Mid-Sized UK Businesses with £500K–£3M Flexible, Fast Business Loans
April 10, 2025Altrincham, UK – 4/10/2025 – A new player has entered the UK’s mid-market lending space. CAPEDGE has officially launched, offering loans from £500,000 to £3,000,000 to mid-sized UK businesses seeking capital for growth, acquisitions, refinancing, bridging, and other strategic initiatives.
Designed specifically to meet the needs of businesses underserved by traditional banks, CAPEDGE delivers:
- More flexibility than banks, including higher loan-to-value (LTV) ratios
- Faster turnaround times, with funding possible in days, not weeks or months
- A relationship-based underwriting approach that looks beyond the numbers
- Larger loan amounts than many non-bank lenders, who often cap out well below £3 million
- The ability to provide short-term bridging loans – including for businesses awaiting a sale, fundraise, or refinance
CAPEDGE is actively building a network of trusted referral partners, including accountants, corporate debt advisors, investment bankers, lawyers, and business brokers, who work closely with growing UK companies.
“CAPEDGE was created to serve a segment of the market that often falls between the cracks of traditional lending,” said David Goldin, CEO of CAPEDGE. “Our value lies in our ability to move quickly and to provide capital where others may not — not because of high risk, but because we take the time to truly understand the business and its potential.”
While CAPEDGE is a new brand, it’s built on a strong foundation: it is part of the Capify family, a well-established alternative finance provider that has been supporting businesses in the UK and Australia since 2008.
For more information or to become a referral partner, visit www.capedge.co.uk.
About CAPEDGE
CAPEDGE is a UK-based alternative lender that provides flexible business loans from £500K to £3M to mid-sized companies. With a focus on speed, certainty, and relationship-driven underwriting, CAPEDGE supports businesses seeking capital for growth, acquisitions, and refinancing. CAPEDGE is headquartered in Altrincham and is part of the Capify group of companies, which has been operating in the UK and Australia since 2008. The UK operation currently employs approximately 85 team members.
For more details about CAPEDGE, visit: www.capedge.co.uk
Media enquiries
Ash Yazdani, Marketing Director
ayazdani@capedge.co.uk
Fundfi Merchant Funding Expands Senior Credit Facility to Accelerate Growth in Revenue-Based Financing
April 7, 2025NEW YORK, NY — April 7, 2025 — Fundfi Merchant Funding, a leading provider of revenue-based financing solutions for small and medium-sized businesses, today announced the successful expansion of its senior credit facility. This strategic financial move will enable Fundfi to increase its funding capacity and support more businesses across various industries.
The expanded credit facility strengthens Fundfi’s position in the alternative lending space and allows the company to meet the growing demand for flexible, revenue-based financing options among entrepreneurs and business owners seeking capital without diluting equity.
“This expanded credit facility marks a significant milestone in Fundfi’s journey and reflects the confidence our financial partners have in our business model and growth trajectory,” said Efraim Kandinov, CEO of FundFi Merchant Funding. “By increasing our lending capacity, we can help more businesses access the capital they need to innovate, expand, and thrive in today’s competitive marketplace. Our revenue-based financing approach continues to resonate with entrepreneurs who value flexibility and alignment with their business performance.”
The increased credit facility will enable Fundfi to extend its reach to underserved markets while enhancing its product offerings to meet diverse business needs.
“The expansion of our senior credit facility provides Fundfi with enhanced financial flexibility and improved terms that will directly benefit our clients,” said Natasha Dillon, CFO of FundFi Merchant Funding. “This achievement reflects our strong financial performance, robust underwriting standards, and the growing recognition of revenue- based financing as a viable alternative to traditional funding options. We’re excited to deploy this additional capital to support innovative businesses that drive economic growth and job creation.”
Fundfi’s revenue-based financing model allows businesses to repay their funding as a percentage of future revenues, creating an aligned incentive structure that adapts to business performance. This approach has proven particularly valuable for seasonal businesses and companies with irregular cash flow patterns.
About FundFi Merchant Funding
Fundfi Merchant Funding is a leading provider of revenue-based financing solutions, helping small and medium-sized businesses access growth capital without sacrificing equity or control. With a streamlined application process and flexible repayment terms, Fundfi has established itself as a trusted financial partner for entrepreneurs across various industries and across the United States and Canada. For more information, visit www.fundfimerchantfunding.com.
Shopify Capital Originates ~$3 Billion in Merchant Funding in 2024
February 11, 2025
Shopify Capital originated ~$3 billion worth of MCAs and business loans in 2024, up by 50% over the prior year. For the sake of comparison, online small business lender Enova originated $4 billion in 2024. Shopify is an e-commerce platform first, however, and is growing on all fronts
“2024 was a stand-out year for Shopify,” said Shopify President Harley Finkelstein. “We seized every opportunity to fuel our growth and it showed in the results quarter after quarter. Heading into 2025, we are committed to making entrepreneurship more common and further establishing Shopify as the go-to commerce platform for businesses of all sizes. With our proven track record, the agility of our platform, and our relentless focus on merchant success, we like our odds in this evolving technology landscape, and are excited about the opportunities it brings for Shopify and our merchants.”
A Glimpse at Simply Funding
January 14, 2025
In around 2018 Jacob Kleinberger began calling merchants for a well known small business finance brokerage—a job he not only enjoyed but one that sparked his curiosity. “I always wanted to understand what my funders were doing,” Kleinberger says. He frequently asked questions to learn how decisions were being made across the board.
Though he worked closely with funders, being on the sales side didn’t give him the full picture. That changed in 2021 when an opportunity arose to join Simply Funding, a direct funder, as a partner. Today, he serves as Head of Operations.Transitioning from broker to funder was an eye-opener, leading Kleinberger to half-jokingly call the funders he used to work with to apologize for the challenges he had unwittingly created. Despite the learning curve, Kleinberger hit the ground running. Simply Funding, founded in 2017 by Bernard Mittelman, was a relatively small operation when he joined, but his mission was to help it grow. “We more than doubled the following year in funding and more than doubled the year after that,” Kleinberger says, reflecting the impact he’s been able to have with the team, which he’s said has been crucial to the success.
“We’re all a team, all here to show off each other’s strong points,” he says. For instance, the company already had a really good core foundation and underwriter in place when he got there.
The company describes itself as an A/B paper shop, with the majority of its revenue-based financing deals involving weekly payments, though they do daily payments as well. They also offer merchant processing splits.
Now a 28-person company, Simply Funding was originally located in Manhattan’s financial district but has since relocated to Jersey City. Kleinberger recalls the transition vividly, flying straight from the AltFinanceDaily CONNECT Miami conference in 2023 to the new office to assemble all the furniture—an ordeal that lasted nearly 24 hours straight. One benefit of the move, he says, is access to a large talent pool in the area. But of course, it had to be accessible for the current team.
“A very big part [of the decision] was I had really good staff, and how would my staff come to work?” he says, since they make the whole operation hum. As a New York native from north of the city, Kleinberger is a commuter himself. The office now is just across the street from the PATH train station on the Hudson River. One can see the Simply team in person in the corporate high-rise there if they drop by.
When asked about the importance of security at Simply, Kleinberger is unequivocal: “It’s the most important.” The company takes no chances with data access, even to the extent that Kleinberger himself refuses to store work-related information on a laptop. He also emphasizes the need for clear, unambiguous rules in business operations to ensure everyone understands expectations and outcomes.
The company has no inside sales force, so Kleinberger gets a thrill when an ISO seeks his help with merchant communication—it reminds him of his early days. However, he remains acutely aware that, since it’s the company’s funds on the line, transparency and directness with customers are non-negotiable. From his perspective, some brokers in the industry walk a fine ethical line, and he and the Simply crew are determined to ensure things are done the right way.
“I do feel like there needs to be something to help make brokers accountable,” he says. Despite the challenges, Kleinberger remains optimistic about the future and is excited about what lies ahead as Simply Funding continues to grow.
“I think 2025 is going to be a sick year,” he says.
Recent Developments at Mulligan Funding
January 9, 2025
Last month, Mulligan Funding announced the closing of a second asset-backed securitization (ABS) totaling $120M and expandable up to $500 million. Business has been great since.
According to a representative of Mulligan, “December was the best month we’ve ever had as a company, capping off our best year since inception. And a large measure of that success is owed to the extraordinary community of ISO partners that we work with – and the incredible relationships we’ve been able to develop with them.”
As part of that, Mulligan Funding has made some changes to continue its success, an explanation of which is quoted here:
“We are continually looking for ways in which to improve our relationships and the level of service we’re able to offer them. And so, in order to continue to improve our level of service and improve the depth of our relationships with our partners, we decided to implement a restructure of our ISO Team and the way in which we manage our partner relationships.
We have established for the first time a regional segmentation of our ISO partners. This has allowed us to rationalize our ISO groupings, and to create smaller, more focused multi-person teams purely dedicated to the relationships in their particular region.
Each team will consist of people with different levels of seniority and very specific roles. Some will be dedicated purely to looking after the relationship at a strategic level; and others will be tasked with handling the transactional details of day-to-day operations.
This regional focus will allow these teams to develop much deeper relationships at all levels of the partner’s business, and to spend more time in front of these partners, developing a better understanding of their needs and wants – something we have historically found challenging, being on the West Coast.”
– Mulligan Funding
Legal Complexities in the Revenue-Based Financing Industry: An Analysis of Recent Court Cases
January 6, 2025Jeffrey S. Paige is the General Counsel of CFG Merchant Solutions. Visit: https://cfgmerchantsolutions.com
Navigating the intricate legal landscape of the revenue-based financing industry has become increasingly complex, with recent court cases providing profound insights into the sector’s regulatory dynamics. Amidst legislative shifts, litigation between funders and merchants, and public enforcement actions, three prominent court cases have recently emerged, each offering further guidance into the nuanced legal dynamics governing this innovative sector.
SBFA vs. DFPI: Constitutional Challenges to California’s Regulatory Framework
In the Small Business Finance Association (SBFA) vs. California Department of Financial Protection and Innovation (DFPI), 9th Cir., Case No. 24-50, SBFA challenged the constitutional validity and federal preemption of California’s Commercial Financing Disclosure Law. Central to SBFA’s stance is the contention that the state’s regulatory framework infringes upon the First Amendment rights of its members. SBFA asserts that the regulations compel its members to disseminate inaccurate disclosures to customers, while simultaneously prohibiting any communication that could rectify or clarify purportedly misleading information. Furthermore, SBFA contends that California’s customized interpretation of the Annual Percentage Rate (APR) conflicts with the federal Truth in Lending Act (TILA), potentially causing confusion among merchants. The DFPI moved for summary judgment to dismiss the complaint.
Updates and Nuances: Recent Ruling on SBFA vs. DFPI
On December 4, 2023, the trial level judge ruled in favor of the DFPI, granting their motion for summary judgment and dismissing the case.
First Amendment Argument: The judge disagreed with SBFA, concluding that the disclosures would help small businesses understand the costs and were neither misleading nor unduly burdensome.
Federal Preemption Argument: The judge deferred to the Consumer Financial Protection Bureau (CFPB)‘s authority to resolve preemption issues. In March 2023, the CFPB ruled that the Commercial Financing Disclosure Law (CFDL) does not conflict with TILA.
The SFBA has filed an appeal of the lower court’s grant of summary judgment with the United States Court of Appeals for the Ninth Circuit. On May 28, 2024, SBFA filed their appellate brief setting forth the facts on the record on summary judgment and their specific legal arguments, emphasizing the reversible errors made by the district court, particularly regarding the false and misleading nature of the compelled disclosures, the controversy surrounding the use of APR metrics on products (like receivables-based funding transactions) that APR was not designed to properly describe, and the lack of justification for the regulations. The preemption argument is not being raised on appeal. Following this, on June 6, 2024, the Appellee DFPI’s unopposed motion for an extension of time to file the answering brief was granted. The answering brief of the DFPI is now due on August 30, 2024.
Given these developments, SBFA’s challenge continues to underscore significant constitutional, substantive, and procedural issues within California’s regulatory framework.
The People v. Richmond Capital Group: Uncovering Predatory Practices
In the case of The People v. Richmond Capital Group, 195 N.Y.S.3d 637 (N.Y. Sup. Ct. 2023, unpublished slip copy), allegations of predatory practices have uncovered crucial legal considerations for revenue-based financing providers. Initially filed by the People in 2020, the court ultimately found for the People, holding that the Defendants in that case were “predatory lenders” making thinly disguised loans with usurious interest. The keys to this decision were the reconciliation duty (which was allegedly never performed by the Defendants despite the mandatory contract provisions and requirement that merchants submit bank statements to Defendants on a monthly basis), the fact that the transactions were explicitly based upon fixed repayment amounts with fixed repayment timeframes (as opposed to revenue based funding products, where remittance of the purchased receivables may vary in amount and duration along with the merchant’s revenue stream), contract provisions such as making a few missed payments or declaration of bankruptcy events of default (shifting the risk of loss off of the funder), and the fact that Defendants always referred to their products as loans, and not a bona fide purchase and sale of future receipts. The reprehensible conduct of certain Defendants who harassed, bullied, and made numerous fraudulent statements to their merchant customers certainly did not help their cause. In September 2023 and February 2024, the court issued further decisions addressing accounting and disgorgement of funds, but the core principles related to reconciliation and data remain the same. It’s unclear if Richmond Capital Group appealed any of these rulings.
U.S. Info Group, LLC v. EBF Holdings: Implications for ISO Behavior and Funder Accountability
2023 WL 6198803 (S.D.N.Y., 2003), a case out of the Southern District of New York involving New York law, involves allegations by a Plaintiff against a receivables-based funder similar to those in Richmond Capital, but with a very different set of facts, and a different outcome. U.S. Info Group attempted a civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim against EBF Holdings, alleging that the receivables-based funding transaction at issue was a disguised usurious loan under New York law.
In September 2023, the court dismissed the case entirely on the funder’s motion to dismiss the third amended complaint. The judge ruled that U.S. Info Group failed to adequately allege facts demonstrating a “RICO enterprise” or widespread fraud scheme involving EBF Holdings and their affiliates. In addition, the Court re-iterated the major hallmarks of a true purchase and sale receivables-based funding transaction: (i) that the contract contained a reconciliation provision (and that the funder actually preforms reconciliations where warranted such that the provision is not illusory); (ii) that the risk of non-performance due to bankruptcy or declined revenue of the merchant always rests with the funder; and (iii) that there is no finite, fixed repayment term, which would be typical of a loan.
Legal Recommendations for Funders
Funders should consult with knowledgeable and capable attorneys in this area of law to establish and effectuate clear provisions in their contracts along with steadfast adherence to their contract terms and best practices.
As for the DFPI and California’s disclosure requirements, they remain the law of the land unless the final, unappealable decision of a court states otherwise. Thus, funders should consult with their attorneys to ensure strict compliance with California’s disclosure law and regulations.
In conclusion, the recent legal battles involving the revenue-based financing industry underscore the need for continuous vigilance, genuine commitment to proper contract terms and best practices in servicing those contracts, and adaptation to emerging regulatory paradigms, in order to ensure sustainable growth and legal compliance within this dynamic sector.
Ready Capital Grows as Leading Non-Bank Small Business Lender
November 10, 2024
“Ready Capital has become a leading national non-bank lender to small businesses providing a full suite of loan options from $10,000 unsecured working capital loans to $25 million plus real estate-backed USDA loans,” said Ready Capital CEO Thomas Capasse during the company’s Q3 earnings call.
Ready, in some ways, has flown under the radar in recognition. On the one hand the company is the top non-bank SBA lender in the country and fourth overall SBA lender in the country. On the other hand, the company has previously acquired Knight Capital, iBusiness Funding, Madison One Capital, select non-SBA assets of Fountainhead, and Funding Circle USA. The result is that the overall organization is a powerhouse with a current public market cap of $1.25B.
iBusiness Funding, once the technology arm of Knight Capital, has played an integral role for the company. For example, when Ready acquired Funding Circle USA, it did it through the iBusiness Funding brand.
“[In 2019, iBusiness Funding was] a leader in unsecured small business lending,” Capasse said on the call. “And then they adopted their tech to the PPP which was very accretive. And since then there’s been the initiative within the SBA to emphasize small loans below $350,000, which many times are minority women-owned businesses, and so that’s been a significant initiative by the SBA& and so what we’ve done is iBusiness has developed a tech stack, which is now being marketed as a third-party underwriting model for banks. Banks just do not focus on that at all. Even if they do SBA loans, it’s mostly for larger loans again above the $350,000 to the $5 million. So the idea with iBusiness is to grow the revenue stream from this software-based business.”
On Funding Circle, Capasse said that the newly acquired subsidiary would be “accretive to earnings once fully ramped.” The numbers offered so far was that $6.6 million growth in Q3 origination income came from small business working capital loans through the Funding Circle platform.
