Truth Tracker: Merchant Cash Advances (Part 2)

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Retirement Media Inc. Presents: The Truth Tracker. Over the last couple of weeks, the Truth Tracker revealed the dangers of Merchant Cash Advances for high-risk borrowers and high-risk lenders in the Philadelphia region. This week the Truth Tracker expanded its view to Texas, as a February enforcement order from the Texas State Securities Board has connected A Better Financial Plan (a Philadelphia Sales Firm) and the predatory alternative lender Par Funding (based in Philadelphia) to a Texas sales firm, Merchant Growth & Income, LLC.

There are potentially forty or more companies raising capital for Par Funding by issuing high-risk promissory notes for Merchant Cash Advances just like A Better Financial Plan.

Merchant Growth & Income, LLC engaged in the sale of high-risk unregistered securities – promissory notes – to investors and allegedly forwarded investors funds to A Better Financial Plan or Par Funding. The enforcement order was levied against Merchant Growth & Income, LLC, A Better Financial Plan and Par Funding for not being registered agents or dealers in the sale of high-risk, unregistered securities. Further, the Texas State Securities Board issued the enforcement because Merchant Growth & Income, LLC did not disclose the regulatory issues of both A Better Financial Plan and Par Funding, as well as, providing misleading information to investors.

As reported by the 2020 enforcement order, Par Funding has used Merchant Growth & Income, LLC and others to raise more than $270 million dollars in the past year for Merchant Cash Advances. In the case of A Better Financial Plan and the Merchant Growth & Income, LLC, the high-risk, unregistered promissory note investments are virtually identical. Both firms use limited liability companies to issue the high-risk, unregistered promissory notes and the guarantees on investors’ contracts are practically the same. Merchant Growth & Income, LLC offers five classes of promissory notes (Classes A through E), compared to the three classes offered by A Better Financial Plan for Merchant Cash Advances.

Investments in a Class A Promissory Note show a return of 8% annually which requires an investment of $74,000-$124,000. Class B Promissory Notes show a return of 10% annually and range from $125,000-$249,000. Class C Promissory Notes show a return of 12% annually for investments of $250,000-$399,000. Class D Promissory Notes carry a return of 13% annually if $400,000-$499,000 is invested and finally; Class E Promissory Notes give the investor a 14% annual return on any investment made above $500,000.

A Better Financial Plan offers three classes on their Merchant Cash Advance high-risk promissory notes with the lowest rate of return being 10% for investments made between $100,000-$249,000; 12% for investments made from $250,000-$500,000, and 14% annual returns for any investment made above $501,000.

The enforcement order asserts that Merchant Growth & Income, LLC has not disclosed regulatory issues relating to A Better Financial Plan or Par Funding to their clients. Not only did A Better Financial Plan receive enforcement from the Pennsylvania Department of Banking and Securities for being an unregistered agent, but so did Par Funding for their role, as well as receiving enforcement from the State of New Jersey. Par Funding is also involved in a pending federal court case involving a Texas company that claimed that the predatory alternative lender charged illegal high-interest rates, and used deceptive tactics to prey on the Texas small business.

Further misleading information from Merchant Growth & Income, LLC alleges that they are telling investors that A Better Financial Plan or Par Funding is responsible for paying the investors returns – when in reality, the high-risk promissory note contracts state that Merchant Growth & Income, LLC is responsible. According to a promissory note contract obtained by the Truth Tracker from a client of A Better Financial Plan, Par Funding, nor Merchant Growth & Income, LLC, or any company for that matter is listed as the responsible party for paying the returns on their investment. Yet, it was the client’s understanding from the advisors at A Better Financial Plan that their investment would gain their returns from Merchant Cash Advances issued by Par Funding.

It is also alleged that Merchant Growth & Income, LLC – just like A Better Financial Plan – forwards invested funds to Par Funding for Merchant Cash Advances, with the returning funds from Par Funding being used to pay investors annual returns. The enforcement order states that Merchant Growth & Income, LLC may be lending the money to A Better Financial Plan first as part of a management agreement, however, prior research conducted by the Truth Tracker suggests that the money is most likely being forwarded directly to Par Funding. 

Once again, A Better Financial Plan is connected to violations in the securities industry as Merchant Growth & Income, LLC has been ordered to cease and desist from offering high-risk unregistered promissory notes, as well as, ceasing the spread of misinformation about their investments. Clients of both sales firms are unaware of how their investments are managed, how they gain their monthly returns and unaware of the regulatory issues that have been brought against both A Better Financial Plan and Par Funding. According to the Texas State Securities Board, this kind of misinformation is labeled as fraud and deceit.

The Merchant Cash Advance industry is filled with fraudulent, deceitful tactics and is exemplified in the Texas enforcement order based on the actions of A Better Financial Plan, Merchant Growth & Income, LLC and Par Funding. Guaranteeing certain returns based on a principal investment is more like a high-risk pay-to-play investment strategy and without proper education from the Sales Firms, investor’s funds could be left at risk with high-risk predatory Alternative Lenders.


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