Mike Lindell enthusiastically approves as he drives by a gathering of people showing their support for former President Donald Trump on Tuesday, April 4, 2023, in West Palm Beach, Florida. The image was captured by AP Photo/Wilfredo Lee.
MyPillow CEO Mike Lindell is putting another lender on notice that the terms of a recent loan to his bedding company are “usurious, unconscionable, and thus unenforceable.”
Last week, in Carver County District Court, the pro-Donald Trump election denier sued named and unnamed defendants over a triple-digit interest rate on a $1.559 million loan taken out in September.
Daily payments on the balance are in excess of $45,000 per day, the lawsuit says. The total amount to be repaid is over $2.261 million.
The 34-page lawsuit filed on Dec. 2 is almost an exact replica of a late October lawsuit making similar allegations. Both lawsuits accuse lending companies of issuing loans with “exorbitant interest rates.” Both lawsuits are stylized as racketeering (RICO) complaints.
Also, like the prior lawsuit, Lindell uses the filing to generally criticize the entire industry, and business model, of merchant cash advance companies, describing them as “predatory” lending outfits that aim to “hide within the gray areas of the law.”
In this instance, Lindell and MyPillow are suing Cobalt Funding Solutions, a New York City-based cash advance company.
Yet again, Lindell and the vast array of incorporated entities that have collectively sued the lender — along with an associated broker, investors, and employees — say the loan was not only usurious but hidden beneath the promise of a different transaction altogether.
“While couched as the purchase of future receivables, the Agreement’s terms and conditions, as well as the Defendants’ actions since that time, demonstrate that despite the disclaimers in the Agreement and the incorporated guaranty, no actual sale of receipts ever took place, and the form Agreement is merely a sham intended to evade the applicable usury law,” the lawsuit reads. “Cobalt never made a bona fide purchase of My Pillow’s receivables under the Agreement and the transaction is, in reality, a usurious loan.”
The agreement was executed in this fashion, the lawsuit alleges, in order to skirt New York State’s statutory maximum interest rate.
“[D]espite the many false statements and contract terms allegedly to the contrary, the financial arrangement between Cobalt and My Pillow is a loan, and not a merchant cash advance,” the lawsuit reads.
The plaintiffs say the effective interest rate on the “loan” equates to 409.1% — with “an even greater amount of hidden interest” if the $124,760 “origination fee” is factored into the lending math.
All of this combined, Lindell says, amounts to a conspiracy in violation of federal law — specifically the federal RICO statute.
“Plaintiffs have now learned that the arrangement with Cobalt was made based on Defendants’ concerted misconduct and fraudulent statements, that the entire nature of the transaction was misrepresented, that the loan was usurious, unconscionable, and thus unenforceable, and that the Defendants’ coordinated misconduct violates RICO,” the lawsuit goes on.
“The disclosures Defendants made about the loan are clearly fraudulent (for example, the Agreement’s representation that this arrangement is not a loan),” the lawsuit continues. “Each Defendant agreed to facilitate, conduct, and participate in the conduct, management, or operation of the Enterprise’s affairs in order to commit wire fraud through a pattern of racketeering activity.”
With the lawsuit, Lindell aims to obtain a court order declaring his agreement with the lenders “unconscionable and unlawful,” usurious under New York law, “and thus void and unenforceable,” and the lenders in violation of federal RICO law. The filing also seeks various damages — compensatory, direct, and consequential — and for those damages to then be tripled. The lawsuit also requests interest and attorneys fees.
Law&Crime reached out to the primary lender named in the lawsuit, but no response was immediately forthcoming at the time of publication.
The interest rates dispute is one of many economic maladies that the Chaska, Minnesota-based MyPillow and its founder presently face.
Lindell and his company have been accused of going back on their debts — an apparent knock-on effect of Lindell personally and loudly maintaining that certain conspiracies cost Trump the 2020 election.
In a long-running lawsuit, Lindell Management LLC has been repeatedly rebuked by the courts for its refusal to pay the winner of a “Prove Mike Wrong” challenge.
In that disastrous contest, engineer Robert Zeidman — himself a supporter of Trump — picked up the metaphorical gauntlet thrown down by the one-time QVC star. Despite severe doubts about his own abilities, Zeidman bested Lindell over false claims about election data.
In March, a Minnesota county judge ruled against MyPillow in an eviction hearing — finding that the company owed over $200,000 in unpaid rent for a warehouse in Shakopee.
In October 2023, Lindell confirmed that MyPillow had been “decimated” by defamation lawsuits Dominion Voting Systems and Smartmatic filed against several pro-Trump figures who insisted the voting machine companies orchestrated a plot to hand the 2020 election to President Joe Biden. As a result of being one such voice, Lindell said, his company had “lost hundreds of millions of dollars.”
