In a landmark decision, the Federal Trade Commission (FTC) has secured a permanent ban against Jonathan Braun, a prominent figure in the merchant cash advance sector. Braun, who was at the helm of the small-business funding company RCG Advances, has been barred from both the merchant cash advance and debt collection industries following a series of deceptive practices that targeted vulnerable small businesses.
For many veterans in the industry, Braun's name and the names of his companies are all too familiar. His past is marred with controversy, including a pardon by the Trump administration for a drug trafficking charge. According to the New York Times, "Once free, Braun returned to lending and racked up new complaints from borrowers who said they were tricked by companies associated with him. Tallying the debts in the cases showed the companies had loaned at least $17 million since Braun’s release, and that’s just the loans that ended up in court."
Now, his deceptive tactics have caught up with him once again.
The FTC's lawsuit against Braun revealed a disturbing pattern of behavior. Braun and his company, RCG Advances (formerly known as Richmond Capital Group), were found to have misled small businesses about the terms of their merchant cash advances. But the deception didn't stop there. The company employed aggressive and sometimes even violent collection practices, threatening physical harm to ensure payments. Furthermore, Braun and his associates made unauthorized withdrawals from clients' accounts and coerced businesses into signing confessions of judgment, allowing them to swiftly secure uncontested court judgments in case of alleged defaults.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, commented on the case, stating, "Mr. Braun and his company targeted small business consumers with an egregious array of tactics, from predatory contract terms to violent threats, and the court’s opinion is a significant win on their behalf." Levine further emphasized the FTC's commitment to protecting small businesses from such predatory practices.
The court's decision not only bans Jonathan Braun from the merchant cash advance and debt collection industries but also mandates him to contact credit agencies to rectify any negative information resulting from his actions. A trial is set for January 2024 to determine the monetary relief for Braun's violations.
While Jonathan Braun's ban is a significant victory for the FTC and small businesses alike, it serves as a stark reminder of the need for vigilance in the commercial finance sector as there are still some businesses out there that operate similarly.