AG James Successfully Sued Northern Leasing foPredatory and Deceptive Practices Under New York Anti-Fraud Law 63(12)
New York Attorney General Letitia James announced that the Office of the Attorney General (OAG) has secured over $4.6 million in restitution for small businesses affected by predatory and illegal schemes conducted by spinoff companies of Northern Leasing: NLS Equipment Finance LLC (NLS EF) and Leasing Expenses Company, LLC (LEC). Northern Leasing and its affiliates rented credit card processing equipment to small businesses. The restitution is the result of lawsuits brought by OAG under a key New York anti-fraud law, Executive Law 63(12), against NLS EF, LEC, and the individuals behind them for deceptively and illegally trapping small businesses in overpriced leases for this equipment.
“Small businesses are at the heart of communities across our state, and when they are taken advantage of, we all suffer as a result,” said Attorney General James. “Northern Leasing and the individuals who ran it spent years preying on small businesses with their fraud. They tried to continue these schemes using different names, but we put a stop to that, and now those companies will have to pay back millions of dollars to the small businesses they took advantage of. I will continue to go after anyone who tries to profit off small business owners with predatory and fraudulent schemes.”
In June 2020, Attorney General James won her lawsuit against Northern Leasing, several of its affiliated companies, and those involved in its operations. The court found that Northern Leasing committed “persistent fraud” when it targeted small family-owned businesses, such as flower shops, hair salons, automotive repair shops, and restaurants, and trapped them in overpriced, uncancellable lease agreements for credit card processing equipment. The court also found that Northern Leasing abused the judicial process by suing to collect on these leases in New York, when the vast majority of its customers were located out-of-state. As a result, Northern Leasing and its affiliates were ordered to cancel their contracts, stop leasing credit card processing equipment, and stop collecting debts under their leases. Northern Leasing was also ordered to cease operations and dissolve.
In November 2020, OAG brought another, separate lawsuit after discovering that Northern Leasing’s owners and officers had created two new entities – NLS EF and LEC – to continue defrauding small businesses using the same scheme barred by the court. In February 2021, Attorney General James secured a judgment against NLS EF and LEC ordering them to stop engaging in the same fraudulent practices as Northern Leasing and stop enforcing the equipment leases that were canceled by the June 2020 decision.
As a result of these decisions, Attorney General James has secured over $4.6 million in restitution for impacted small businesses. On September 25, 2024 the New York County Supreme Court entered a judgment against NLS EF and LEC for $2,671,562.21 to be paid as restitution to the small businesses harmed by their fraud. This is in addition to $2,014,979.95 OAG has already collected in restitution from the same companies.
Attorney General James has been a state and national leader in helping protect small businesses against fraud. In March 2024, Attorney General James sued over 30 lenders for targeting small businesses with illegal, fraudulent loans. In February 2024, Attorney General James secured a historic court judgment of more than $77 million against Richmond Capital Group, Ram Capital Funding, and Viceroy Capital Funding (the Richmond companies) and their principals who were harming small businesses through high-interest loans and undisclosed fees following a September 2023 court judgment against three merchant cash advance companies. In April 2023, Attorney General James shut down two websites that impersonated the New York State Department of State and significantly overcharged aspiring small business owners and users for services provided for free from state government. Also in April 2023, Attorney General James released a guide to help businesses adopt effective data security measures to better protect New Yorkers’ personal information.
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