Staten Island ferry concession operator accuses lender of fraud [Updated] – Commercial Observer

Update: The lawsuit described in this article has since been dismissed by the plaintiffs, who do not confirm any wrongdoing on the part of Itria Ventures or Biz2Credit.

The family that owns most of the restaurants in Staten Island Ferry terminal has charged its lender with fraud and violating the Racketeer Influenced and Corrupt Act (RICO) over its nearly $ 2 million business loans, according to court documents.

Aminohd Himani, Siraj Himani and Salman Himani filed a lawsuit against the merchant cash advance lender Itria Ventures for fraud, usury and civil violations by RICO on loans Itria has lent to the Himanis since 2014, according to the lawsuit.

Siraj Himani, his lawyer Abraham Borenstein, could not be reached for comment. Itria’s parent company, Biz2Credit, told Commercial Observer that the lawsuit was “without merit” and was only filed to gain “leverage” in the loan negotiations.

“All of these allegations are completely unfounded,” said Rohit Arora, the CEO of Biz2Credit, adding that the interest rates on the Himani family loan were fully in line with New York guidelines. “We will fight it very vigorously. “

The Himanis have Pizza Plus, The River Dock Café, Haagen dazs, Ferry House Cafe, The brass faucet and The Panini Grill in the St. George Ferry Terminal, which is on the Staten Island side of the boat. As of 2014, they borrowed $ 500,000 from Itria for Pizza Plus and signed a Future Receivables Sale Agreement (FRSA) with the lender, according to court documents.

Instead of a traditional loan, an FSRA sells the future sales of a business in exchange for an influx of money. The state caps annual interest rates for these agreements at 16% for those under $ 250,000 at 16% and 25% for those up to $ 2.5 million.

Under the Pizza Plus deal, Itria purchased $ 725,000 in future sales and was to pay 4.96% of Pizza Plus’s future receivables every two weeks to Itria, according to court documents.

The Himanis made several deals with Itria until 2017, with an FSRA of $ 175,000 bearing a bi-weekly rate of 46.59% of future receivables, according to court documents. In 2017, the family refinanced all of their loans – which Itria said were $ 2.4 million – to get an additional $ 400,000. The new three-year loan had an interest rate of 12 percent. That’s when the trouble started.

The Himanis accused Itria of forging the loan documents as well as their signatures to show they owed about $ 500,000 more than they actually did and then allegedly failed to provide proof. of the amount remaining on the loans, according to court documents.

Itria denied having falsified documents at CO and Arora said the company sent “tens of thousands of emails”, including financial statements, to the Himanis.

“After the refinancing, the plaintiffs asked Itria’s defendants for a statement of the amounts allegedly owed,” the lawsuit said. “Itria refused to provide the complainants with such accounting on the information on the remaining balance and the payments in progress. [were]. “

Things got worse when the coronavirus pandemic hit. Although businesses are crippled by COVID-19, Itria sent a notice of default on July 20 demanding $ 50,000 and a payment of $ 51,250 for next month, according to court documents. However, Itria said the Himani family voluntarily paid $ 50,000 in July to remedy a default of $ 101,250 and promised to make the same payment in August.

Arora and her lawyers added that they only sent the default notification after the Himani businesses reopened and the family received PPP loans and then stopped communicating with Itria and provided no financial information. to “negotiate a reduced payment plan”. Arora denied that Itria engaged in aggressive collection practices.

“Despite the payment they made, they still have arrears of almost $ 100,000, but we haven’t pressured them,” Arora said, adding that the company was working with the Himani family to structure them. interest payments or extend the term of the contract. to lend.

The Himani family paid the $ 50,000 for July but refused to pay the August bill. Instead, they hit back with the lawsuit claiming Itria’s FSRA documents are “in effect loans at an interest rate higher than the maximum allowable interest rates,” the lawsuit claims.

He also accused Itria of using the FSRA “to operate a ‘payday loan’ business that violated” usury laws under the RICO Act.

“Itria strongly contests the many false allegations made by the Himanis in the lawsuit, and indicates that she will pursue the action against the Himanis and their businesses, including the counterclaims, to the fullest extent of the law,” the said. Itria’s lawyers in a statement on Monday. “In addition, Itria was actively working with the Himanis to reach an appropriate payment agreement. The Himanis brought their complaint without notice or warning to Itria, apparently to gain influence in their negotiations. “

Merchant cash advance companies have increased in recent years with banks less willing to lend money to small businesses, NBC News reported. In 2015, merchant cash advance operators provided about $ 8 billion to small businesses, but the number jumped to about $ 19 billion in 2019, according to NBC News.

Operators have come under fire amid the pandemic for their aggressive collection practices with the Federal Trade Commission (FTC) and Attorney General Letitia james deposit lawsuits against several companies. (Itria has not been charged by the FTC or the attorney general with any wrongdoing.)

“We should take a close look at the marketing claim that these payday-type products are ‘flexible’ with payments contingent on a small business’s credit card receivables,” said the FTC commissioner. Rohit Chopra said in a statement earlier this month. “In reality, this structure can be a sham, because many of these products require fixed daily payments, and lenders can file ‘admissions of judgment’ on any slowdown in payments, without notice or due process for borrowers.”

During the pandemic, merchant cash advance companies have aggressively turned to the courts to demand payment from small businesses, typically asking for attorney’s fees as well as the amount owed, NBC News reported.

Arora denied that Itria provided “payday loans” or engaged in improper lending practices. He said the Himani family – who donated a video testimonial praising Biz2Credit in 2015, was silent for four weeks before hitting Itria with the lawsuit.

“They were misguided by a lawyer to file this case,” Arora said. “The opposing party’s lawyer will write anything.”

Itria has filed more than 50 lawsuits in New York courts since March against companies across the country, court records show. Arora disputed the number and said most cases were in the works before the pandemic. In one case, Itria filed a complaint days after a Florida company missed a payment. Itria disputed the qualification of this action, which it then withdrew, and said it only intervened after the company made a single payment to Itria and then cut off all communication.

The company added that most of the cases have been cleared to welcome customers during the coronavirus pandemic or after arriving in settlements.

UPDATE: This story has been updated to include comments from Itria and her lawyers.

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