Mike Lindell gives a thumbs up as he passes by a rally for supporters of former President Donald Trump, Tuesday, April 4, 2023, in West Palm Beach, Fla. (AP Photo/Wilfredo Lee).
MyPillow CEO Mike Lindell is attempting a hat trick of litigation aimed at alleged “usurious” lenders over multimillion-dollar payday loans taken out by his struggling bedding business.
Late last week, in Carver County District Court, the pro-Donald Trump election denier sued several named and unnamed defendants over a massive 385% interest rate and other terms which the lawsuit alleges makes the loan “illegal” under both New York and Minnesota law.
This is the third such lawsuit — stylized as a racketeering conspiracy (RICO) complaint — in which Lindell has leveled claims against a bevy of merchant cash advance lenders who offer flagging businesses short-term liquidity boosts in exchange for potentially hefty profits.
The 28-page lawsuit filed on Jan. 17 is substantially similar to the two other lawsuits — filed in October and December 2024. All three accuse the merchant cash advance (MCA) industry of preying on struggling businesses by issuing “high-risk loans at exorbitant interest rates.”
The loan in question was based on an agreement signed between My Pillow, on one side, and Merchant Capital, on the other side, in July 2024. The Lindell-owned business received $2 million.
Daily payments on the balance are in excess of $41,000 per day, the lawsuit says. The total amount to be repaid is over $3.91 million.
Once again, Lindell and the vast array of incorporated entities that have collectively sued the lender — along with an associated broker, investors, and partners — say the loan was not only usurious but hidden beneath the promise of a different transaction altogether.
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“While couched as the purchase of future receivables, the terms and conditions of the MCA Agreement, as well as the Defendants’ actions since that time, demonstrate that despite the disclaimers in the MCA Agreement, no sale of receipts ever took place, and the form agreement was merely a sham intended to evade the applicable usury laws, here New York law,” the lawsuit reads.
The filing goes on to explain further in this vein:
Merchant Capital’s alleged risk in these transaction is virtually nonexistent because My Pillow, as the borrower, always remained liable for the debt and My Pillow and Lindell (as the alleged guarantor) bore all the risk of non-payment from any receivables, while Merchant Capital only bore the risk that the non-payment of receivables would leave My Pillow unable to pay on the loan, at which point Merchant Capital would go after Lindell as the guarantor as well as virtually all of My Pillow’s other assets. As a result, the MCA never made a bona fide purchase of My Pillow’s receivables under the MCA Agreement and the transaction is, in reality, an illegal, usurious loan.
“Plaintiffs have now learned that the transaction with Merchant Capital was made based on Defendants’ fraudulent statements, that the entire nature of the transaction was misrepresented, and that the transaction is in reality a loan that is usurious, unconscionable, and unenforceable,” the filing continues.
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The lawsuit also alleges My Pillow paid some $200,000 “in so-called ‘fees,’ representing an even greater amount of hidden interest.”
In turn, the plaintiff argues, the resulting interest rate is far in excess of that which is allowed under Empire State law.
In this instance, Lindell says, the terms were “particularly egregious.”
The lawsuit offers a laundry list of disputed terms such as the right of the lender to withdraw money directly from the borrower’s bank accounts; a provision “preventing the borrower from transferring, moving, or selling its business or any of its assets without permission” from the lender; a provision that obligates the borrower to pay attorneys fees in the event of litigation “but not the way around” along with potentially onerous contingency and other legal fees; and an “irrevocable power-of-attorney” under enumerated circumstances.
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Like both of the prior lawsuits, 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.”
“Among other things, they generally require unaffordable daily payments that they know the debtor is unlikely to be able to repay given the extraordinary [interest] rates and fees the MCA companies demand,” the filing reads. “They further leverage various legal and contractual processes to guarantee full repayment, thus assuming virtually no risk in the transaction.”
The filing goes on like this, at length:
To facilitate their predatory conduct, MCA lenders make every effort to disguise their MCA agreements as the “purchase” of a business’s future receivables or revenue streams (and the accompanying guaranties are similarly disguised) when the transactions evidenced by those MCA Agreements (and the guaranties) are in fact illegal, usurious loans.
But here, the plaintiff says, those efforts were threadbare.
Lindell claims none of the defendants “engaged in any meaningful underwriting process as to the My Pillow’s receivables before agreeing to provide funds, demonstrating that the transaction at issue is a loan, and not a purchase of My Pillow’s future receivables.”
Notably, Lindell himself now identifies as a citizen of Texas. He says the “unconscionable and fraudulent” agreement was executed in Carver County — the home base of My Pillow, Inc.
Law&Crime reached out to the primary lender named in the lawsuit, but no response was immediately forthcoming at the time of publication.
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.
