Dealbreaker, “Poor Hasidic Jews Turned Wealthy Cash Advance Guys Wonder If There’s More To Life Than “Golfing And F*cking Beautiful Ladies All Day”, Oct 06, 2015:

According to friends and business partners Abe Zeines and Meir Hurwitz, who decamped to Puerto Rico from Brooklyn for the tax benefits and live in a 6-bedroom house with several girlfriends apiece, there actually might be.

Bloomberg, “How 2 Guys Lost God, Found $40 Mil & sold Wall Street on shady new kind of finance”, Oct 06, 2015:

Zeines and Hurwitz made their money in a field that’s now called merchant cash advance. It’s a legal way to lend money to small businesses at interest rates higher than Mafia loan sharks once charged. Completely unregulated, last year it surpassed the U.S. Small Business Administration as a source of loans for less than $150,000, according to the industry newsletter DeBanked, one of the few places with reliable information. The business was developed a decade ago in a boiler room full of ex-Lubavitcher Jewish teenagers in downtown Manhattan. They figured out how to hook people such as florists and pizzeria owners with promises of fast cash and discovered just how ridiculous the profits could be—even if it meant driving their borrowers into bankruptcy.

Zeines was one of these guys… a curly-haired 33-year-old with a cockeyed grin, he dresses like a tourist, in flip-flops and T-shirts, and speaks with a Brooklyn Yiddish accent that turns -ing into -ink. Zeines knows all the players and all the tricks to separate people from their money, but he styles himself an outsider, someone who appreciates the absurdities of Ivy League-educated financiers getting in on a seedy business.

Zeines kept telling me he was going to sell his company to a hedge fund for tens of millions of dollars. I didn’t believe him, but I told him if it ever happened it would make a good story. Then, one day this spring, I was shown a copy of a letter from Goldman Sachs. It was addressed to Zeines’s company. The bank was offering him $100 million.

             
                Sacking the dung and selling it, mounting Goyim…

Mas. Shabbath 31b

On the house of the Goy [Goy means unclean, and is the disparaging term for a non-Jew] one looks as on the fold of cattle.

Libbre David 37

A Jew should and must make a false oath when the Goyim asks if our books contain anything against them.

Tosefta, Tractate Erubin VIII

When a Jew has a Gentile in his clutches, another Jew may go to same Gentile, lend him money and in turn deceive him, so that the Gentile shall be ruined. For the property of a Gentile, according to our law, belongs to no one, and the first Jew that passes has full right to seize it.

Sanhedrin 59a

To communicate anything to a Goy about our religious relations would be equal to the killing of all Jews, for if the Goyim knew what we teach about them, they would kill us openly.

Ibid:
With no competition, Second Source could charge whatever it wanted. The standard deal it offered small businesses was to borrow $9,000 and pay back $120 a day for six months, or a total of $14,500, equivalent to an interest rate of 250 percent a year. That’s 10 times the legal limit in New York state, which made it a crime in the 1960s to charge more than 25 percent. To get around that, merchant cash-advance companies argue they aren’t actually charging interest—they’re buying the money businesses will make in the future, at a discount. As long as nobody uses the word “loan,” it usually holds up in court, says Robert Cook, a lawyer who advises the industry. Another no-no is chasing down an individual to collect if the business fails. Merchant cash advance is a supercharged version of “factoring,” the age-old practice of trading the right to collect unpaid bills in exchange for cash upfront.

At Second Source, the best customers were the most desperate

Cash advance was no longer a secret. Lots of former colleagues from Second Source were opening brokerages, and venture capitalists and private equity funds were discovering the trade. In February 2011 a lender called OnDeck Capital, which uses algorithms to identify the best borrowers and undercut companies such as Pearl, raised $25 million from Silicon Valley venture firms. CAN Capital, another competitor, raised $30 million in 2012 from early Facebook investor Accel Partners. Others raised tens of millions of dollars more.

Competition brought out Zeines’s ingenuity. Instead of building his own boiler room, he became a wholesaler. He told brokers to send him their shakiest customers. He also came up with ways to squeeze even more money from businesses that already had advances. He offered them a second loan, making it due in just two or three months, so it would get paid off before their existing debt. Other funders would lend only against credit-card sales, but Zeines would fund anyone with a bank account from which he could automatically withdraw payments.

The strategy worked so well, Zeines and Hurwitz say, they were doubling their money a few times a year. They started Pearl with $1 mil and earned $8 million in 2012, their first full year. Profit doubled in 2013, and loan volume reached $100 million.

Ibid:

The borrowers included people like Dermot O’Hare, a 60-year-old immigrant from Belfast, Northern Ireland, who ran an Irish pub with his wife in Susquehanna, Pa. As he was tending bar one day in 2013, worrying about how to get through the winter, a broker called. O’Hare took out one cash advance at about 500 percent, and then another one from Pearl at 400 percent. The daily payments turned out to be unmanageable. O’Hare filed for bankruptcy in February 2014, and a bank foreclosed on the bar. He moved to Ohio to live with his in-laws and took a job at a Lowe’s store. “It broke our hearts leaving the joint, but what can you do?” O’Hare says. “Shame on me for falling for it.”

                                                                 
                                                                                                                                                - Story notice courtesy Stan Hess