- 1Appellate Division, First Department ruled heavily for the NY Attorney General on Feb. 19, 2026
- 2Court found no reconciliation was performed in practice and usurious intent was clear
- 3Underlying judgment against Richmond and affiliates was $77 million, from February 2024
New York's Appellate Division, First Judicial Department, has ruled heavily in favor of the state Attorney General in the appeal of a $77 million judgment against Richmond Capital Group and affiliated entities. The decision is dated February 19, 2026.
Background
Richmond was never part of the mainstream merchant cash advance industry. It drew headlines for years over its alleged connection to Jonathan Braun, who is back in prison. After the FTC took action, a federal court permanently banned the company and its owner from the MCA and debt collection industries in June 2022. The New York Attorney General then brought its own action and won a $77 million judgment in February 2024. Richmond appealed.
What the court said
On reconciliation, the court found that although the MCAs had mandatory monthly reconciliation provisions, none was performed in practice. Daily payments were fixed rather than good-faith estimates of receivables, there was no persuasive evidence of ad hoc reconciliations at merchants' request (which were at the funders' sole discretion), and the record showed such requests were denied. Repeated nonpayment or breach, including a merchant interrupting or ending its business, made the full uncollected amount due and let the funders enforce personal guarantees. Usurious intent was clear as a matter of law, the court said, because without reconciliation the rates could be calculated from the face of the contracts.
On unconscionability, the court held the MCAs both procedurally and substantively unconscionable. It wrote that the MCAs' “exorbitant and criminally usurious interest rates,” among other factors, made the substantive unconscionability plain. On the procedural side, it said it is not dispositive that many merchants were sophisticated or had MCA experience, because the respondents misrepresented the terms and nature of the MCAs and used high-pressure tactics.
Substantive unconscionability is clear from the MCAs’ exorbitant and criminally usurious interest rates, among other things.
Wider implications
Some conclusions are specific to Richmond's circumstances but merit a wider look. This is not legal advice; readers should consult experienced counsel, such as Hudson Cook, LLP, Murray Legal PLLC or others listed here.
Source reporting: deBanked.
