NLS Equipment Finance and Leasing Expenses Company Attempted to Perpetuate Same Scheme Blocked by OAG’s Prior Suit and Victory
NEW YORK – New York Attorney General Letitia James has won another major victory to protect small business owners in New York and across the country from predatory and deceptive business practices. A decision and order, issued yesterday afternoon, granted a petition filed by Attorney General James last November, which sought to — among other things — permanently block NLS Equipment Finance LLC; Leasing Expenses Company, LLC; and a number of related entities and individuals from engaging in fraudulent practices and enforcing fraudulent equipment leases that were rescinded pursuant to a June 2020 court order in an earlier proceeding brought by the Office of the Attorney General (OAG). Since 1991, and until its fraudulent scheme was halted by the OAG’s earlier proceeding, Northern Leasing deceptively and illegally induced small businesses into abusive and overpriced financing leases for inexpensive credit card processing equipment.
Attorney General James said: “This decision demonstrates that efforts to evade the rule of law will not be tolerated and that we will continue to hold fraudulent businesses’ feet to the fire, even after a victory. Despite being ordered to shut down last year, Northern Leasing and the individuals behind it attempted to continue their fraudulent practices, but this order sends a clear message that creating new corporate entities to continue deceptive and illegal practices that have been outlawed will never be acceptable practice. Much-needed money will now be put back into the pockets of struggling small business owners around the country, many of which continue to suffer from the impacts of the COVID-19 public health crisis.”
In the earlier proceeding, the OAG alleged that Northern Leasing Systems, Inc. (Northern Leasing), its affiliated companies, and its principal, Jay Cohen, engaged in fraudulent conduct by targeting small, family-owned businesses — such as flower shops, hair salons, automotive repair shops, bodegas, delis, restaurants, and bars — and trapped them into overpriced, never-ending lease agreements for credit card processing equipment. The lawsuit further alleged that Northern Leasing abused the judicial process by suing to collect on these leases in New York City Civil Court. Deputy Chief Administrative Judge George J. Silver — as a co-petitioner in the proceeding — sought to vacate default judgments obtained by fraud, deception, or other improper means.
The June 2020 New York County State Supreme Court ruling found that the OAG proved that Northern Leasing engaged in fraudulent and illegal conduct, including finding that Northern Leasing’s method of procuring its lease agreements was deceptive and “created an enterprise conducive to fraud.” The court granted sweeping relief, including the rescission of hundreds of thousands of leases and restitution to defrauded merchants. Additionally, the court ordered a permanent injunction against Northern Leasing and the other entities from conducting the business of equipment finance leasing or the collection of debts under equipment finance leases and blocked them all from purchasing, financing, transferring, servicing, or enforcing equipment finance leases. That decision was recently affirmed by the New York State Appellate Division of the Supreme Court, First Department.
In November 2020, the OAG brought forward another, separate proceeding after discovering that Northern Leasing’s owners and officers had created two new entities — NLS Equipment Finance and Leasing Expenses Company — to continue defrauding small businesses using the same scheme barred by the court in the prior litigation, as well as to continue collecting on leases rescinded by the June 2020 court order.
The companies found liable by this ruling — also issued by the New York County State Supreme Court — were operated by former Northern Leasing Chief Financial Officer Ariel Schachter and former Northern Leasing officer Sara Krieger, and were owned by trusts that benefited the families of Northern Leasing’s owners, Jay Cohen, and Leonard Mezei. The court found that these companies had “risen on [Northern Leasing's] ashes” in an earlier December ruling that granted a temporary restraining order barring them from collecting on any equipment leases.
In yesterday's decision and order, the court found that the different entities’ efforts to differentiate their business operations from those of Northern Leasing Systems did not “negate their liability” and — if allowed to prevail — “would all but obliterate the spirit and purpose” of the June order granted by Justice Lucy Billings. The court ordered Northern Leasing and the other entities to disgorge any funds acquired as a result of their fraudulent practices and to make restitution to victims of their scheme.
The parties named in this proceeding include Leasing Expenses Company LLC; NLS Equipment Finance LLC; Leonard Mezei; Ariel Schacter; Sara Krieger; Jay Cohen; a Jay Cohen Family Trust; Fieldston Capital LLC; and JS Ventures Holding LLC.
This matter was handled by Assistant Attorney General Mark Ladov and Special Counsel Mary Alestra, under the supervision of Deputy Bureau Chief Laura J. Levine and Bureau Chief Jane M. Azia — all of the Consumer Frauds and Protection Bureau. The Consumer Frauds and Protection Bureau is a part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.
Source: Press Release Date: February 27, 2021 Attorney General’s Press Office/212-416-8060 email@example.com