Yisroel Heber (a.k.a. Scott Heber) and Yechiel Meshi-Zahav have been indicted for allegedly running a loan fraud scheme from multiple entities that targeted small businesses and defrauded them of at least $2 million, according to a press release from the U.S. Department of Justice. Here's a closer look at the scheme and the funding companies involved.
The Funding Companies
The indictment details how Heber and Meshi-Zahav allegedly used multiple funding companies to lure victim small business owners. These companies include:
Blue Ribbon Funding
Tru Capital Funding
Fund Capital LLC (a.k.a. “Fund Cap LLC”)
Ameriquest Capital
How the Scheme Worked
The scheme was an advance-fee loan scam. When seeing the details of the case it's hard to imagine how the defendants were planning on getting away with this besides running and hiding. Here's how it allegedly unfolded:
Setting the Trap: Heber and Meshi-Zahav, posing as representatives of the funding companies, contacted small businesses.
Promise of Loans: They promised these businesses loans but required upfront fees before they sent the loan in portions over several weeks. (This is a very unconventional loan structure).
Extracting the Money: Once the victims provided their bank account information for the supposed fees, Heber and Meshi-Zahav allegedly withdrew thousands of dollars from those accounts.
No Loans Issued: The promised loans never materialized, leaving the victims financially drained.
Why This Matters
This case highlights the dangers of advance-fee loan scams that prey on small businesses with the promise of financing. Remember, legitimate lenders won't ask for upfront fees before approving a loan. The structure or name of this type of financing is hard to put a label on it with the information given from the indictment. By cracking down on such schemes attached to business loans, authorities are sending the message that they will continue to seek out those who are hurting small businesses by committing illegal acts.
Main Message: Protecting Your Business
Here are some key points to remember when seeking funding for your small business:
Research the lender thoroughly. Verify their legitimacy with official sources (see our Funders List or other lender lists).
Never pay upfront fees. Legitimate lenders don't require them.
Be wary of unrealistic promises. If a loan offer seems too good to be true, it probably is.
By following these steps and staying vigilant, you can protect your business from becoming the next target.