Served by Richmond Capital Group: 8 Documents to Pull Before You Respond

If you have been served by Richmond Capital Group, the short answer is to pull eight documents before you respond: the summons, the public rulings against Richmond, your agreement, your reconciliation requests, your bank statements, the guarantee, any confession of judgment and your broker’s messages. A reply from you called an Answer is due back to the court and Richmond’s attorneys within a prescribed time limit. If you don’t provide an Answer within that time, Richmond can get a judgement against you by default.

1. The summons and complaint

The summons is a notice to you that Richmond is suing you, and it usually comes together with the complaint. The complaint lays out Richmond’s version of the facts and describes what they think you owe them. Figure out when you were served and how long you have to respond. In state court in New York, you have 20 days to answer from the date of personal service, or 30 days by most other methods of service. In Federal court, the usual time limit is 21 days.

2. The rulings against Richmond

Richmond lost a big court case on merchant cash advances. In a massive lawsuit filed by New York Attorney General, a state appeals court held that Richmond’s agreements were illegal usury in over 3,000 deals that Richmond called “merchant cash advances.” In September 2023, the trial court ordered Richmond to cancel many of its contracts, stop collections, return overcharges and interest. But a New York appeals court threw out a $77,289,631 money award in favor of the State of New York. The court ruled that the Attorney General had not subtracted the principal amount of money paid out by Richmond. The case was sent back to the trial court to recalculate the award.

In the summer of 2022, RCG Advances, formerly Richmond Capital Group, and its owner settled with the Federal Trade Commission and were permanently banned from the merchant cash advance and debt collection businesses. RCG and its owner were ordered to pay more than $2.7 million. In June 2023, the federal Second Circuit Court of Appeals held that a RCG merchant cash advance was actually a usurious loan. The court also upheld a federal RICO money award to the merchant.

3. Your own agreement

Get out your merchant cash advance agreement with Richmond and look it over. The agreement describes Richmond’s promises to you and what you promised to do. Your bank statements can show what Richmond actually did. Terms used in the contracts do not decide if an agreement is a loan or not. You could call it a bowl of soup, but that wouldn’t stop it being a cup of coffee. The amount Richmond took each day was fixed in the agreement, not based on the ebb and flow of receivables and not a good faith estimate of what a merchant’s daily receivables might be. Check your own documents and see if they agree.

4. Your reconciliation requests

If you asked Richmond to explain its charges or how much you owe, it’s important to find those requests and its answers. Richmond’s agreements say that reconciliation on request is at Richmond’s “sole discretion.” That means that if you ask them for a recalculation, they can just say no. The appeals court reviewing the New York Attorney General’s case cited evidence that reconciliation requests were denied. A written denial of your request for a reconciliation could help show that what you really got was a loan.

5. Your bank statements

Get out your bank statements covering the period when Richmond took payments. Bank statements show what you got, what you were charged, and what your payback amounts are. They can also show the date and amount of every payment that Richmond took out. Together with your agreement, the bank statements can prove how your debt was really repaid. The New York appeals court reviewing the Attorney General’s case found that Richmond’s owner directed the withdrawals to take place over holidays. Go through your bank statements, mark all the withdrawals made on holidays, and add up the total debits made against what you received.

6. The personal guarantee

If you are a business owner or an officer of the company that signed the agreement with Richmond, you will probably also have signed a personal guaranty as part of the agreement. The personal guarantee is a separate promise to pay back any money not repaid by the company. The guarantee is another contract that Richmond might try to enforce against you. The agreement’s default clauses kick in when there is a repeated failure to pay installments, when the business shuts down, or when there is a bankruptcy. If a default clause has been triggered, the amount of the contract that’s still unpaid can become due in full. The court in the New York Attorney General’s case relied on the default clause in its analysis.

7. Any confession of judgment

A confession of judgment is a formal statement by you that you owe money to Richmond. In its case against RCG Advances, the FTC alleged that the company used confessions of judgment to improperly seize assets. Under a 2022 settlement with the FTC, Richmond was ordered to vacate judgements against former customers and release any liens it held on their property. In New York, a confession of judgment has to be filed within three years of the date that you signed it. The confession also has to be filed in the county where you lived either when you signed it or when the confession was filed.

Your rights may not be lost forever. A default judgment can be vacated for excusable default within one year after being served with notice that the judgment was entered. Vacatur is also allowed with no set deadline to overturn a judgment where there was no jurisdiction or for a fraud on the court. A New York appellate court found that Richmond’s owner executed fraudulent affidavits to get judgments against merchants.

8. Your broker’s messages

If a broker or agent placed you with Richmond, you may have discussed the terms of the deal with the broker. Find any messages that show who was told what to expect from the agreement, when that was promised and how the deal was supposed to work. The trial court found that Richmond made false representations about the deal and used high-pressure sales tactics to induce merchants to take the funds. The court also found that, despite claims that he was merely a broker, one man sometimes funded the deals, serviced the loan repayments, and collected what was owed.

It’s easier to gather your evidence while the fight is coming your way than to have to hunt it down later to overturn a judgment. The agreement could turn out to be a loan and subject to limits on usury.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.