Strapped for cash, MyPillow CEO Mike Lindell took at least two merchant cash advances. Because Lindell’s companies defaulted on payments, suits were filed in New York alleging MyPillow-related entities and Mike Lindell as a personal guarantor defaulted on the loans.
Sometimes businesses that do not qualify for traditional loans look for alternative forms of funding. Merchant cash advances (MCAs) provide an immediate cash infusion but come at a cost. MCA companies provide cash advances in exchange for an agreement that allows for immediate draws on bank accounts, liens on merchant accounts, and personal guarantees from officers. MCAs are not technically loans, which means they aren’t regulated by the federal government or New York. Although they aren’t regulated by the state, New York Attorney General Letitia James has gone after some MCA companies.
Until recently, many MCAs were enforced in New York, regardless of where the lender and borrower were located. Judgments were immediately entered upon default due to confessions of judgment executed by the guarantors and debtor companies. A few years ago, New York changed the law stopping judgments based upon confessions of judgment executed outside of New York state.
The Cases Against MyPillow and Mike Lindell
Two cases were recently filed against MyPillow entities and Mike Lindell in October 2024. The first, filed by Lifetime Funding, alleges incomplete payment of an advance of $600,000. In exchange, MyPillow entities and Lindell were to repay $840,000. Although a portion was repaid, just under $600,000.00 remains unpaid. The case can be viewed on the New York Court website.
The second filing, filed in late October by Shine Capital Group, alleges an advance of $2 million was given in exchange for $2.9 million to be repaid. A sum of $678,323.60 remains unpaid. Mike Lindell has not responded to either New York lawsuit and has filed a case in Minnesota against Lifetime Funding instead.
Lindell’s case names Lifetime Funding, its officers, the business broker who brought him the deal, and more. The allegations, which are more of a federal nature, allege RICO violations and more.
If Lindell does not win, there will be two large New York judgments against the already cash-strapped MyPillow companies with Lindell as a personal guarantor. Could the suits based on the defaulted loans brought against Mr. Lindell and his companies prompt the President-elect to consider regulating the MCA industry on a federal level? We will have to wait and see.
Frank, Frank, Goldstein and Nager does not enforce MCAs. Rather, we defend and assist in vacating judgments on defaults entered by MCA companies. If you have a question about defending an MCA case or wish to vacate a default judgment entered against you by an MCA lender or another party, contact us by email or call +1 (212) 686-0100.
