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).
The high-dollar economic woes of Mike Lindell and his small-town Minnesota-based company MyPillow continue apace.
So does the litigation.
Last week, the pro-Donald Trump conspiracy theorist and his once-lucrative business sued several lending companies over the eye-popping repayment terms of a $600,000 merchant cash advance.
Under the terms of the agreement signed in September, Lindell and his company must pay back $16,800 each day.
In the 34-page lawsuit filed on Oct. 25 in Carver County District Court and obtained by Law&Crime, the plaintiffs claim the agreement was “usurious, unconscionable and thus unenforceable.”
Stylized as a racketeering (RICO) complaint, the lawsuit accuses various lenders of issuing a loan under the guise of a contract in which the lenders agreed to “purchase My Pillow’s future receivables at a discount” and in which “My Pillow agreed to repay the face value of its receipts through daily payments.”
The agreement was executed in this fashion, the lawsuit alleges, in order to skirt New York State’s statutory maximum interest rate.
The plaintiffs say the effective interest rate on the “loan” equates to 368% — or 441% if origination fees of $36,000 are considered.
Lindell says he and his companies “bore the risk of non-payment of any receivables and remained on the hook for the entire amount at issue,” which left the lenders with “no risk in the transaction.”
On top of that, the lawsuit alleges, Lindell and his companies “always remained liable for the debt” that was taken out.
“As a result, the [defendants] never made a bona fide purchase of My Pillow’s receivables under the [Merchant Cash Advance] Agreement and the transaction is, in reality, a usurious loan,” the lawsuit reads.
But what looks like an alleged double whammy for the beleaguered bedding vendor — once on the verge of becoming a household name until its founder repeatedly dabbled in electoral systems expertise — is, in fact, something not entirely unlike a triple whammy
Lindell also says he was snookered into making the fraught financial contract with promises of a secondary loan that never materialized.
“Plaintiffs also entered into the transaction as the result of a classic bait and switch,” the lawsuit reads.
To hear Lindell tell it, one of the named defendants, a broker, “represented that to get the other loan on the real estate,” the plaintiffs had to agree to the merchant advance loan with a lender who would then “also make a real estate loan on two properties in Minnesota.”
But, the lawsuit alleges, once the $563,000 — the amount inclusive of the aforementioned fees — was lent out, the primary lender “refused to make the real estate loan that was Plaintiffs’ reason and consideration for entering into” the merchant advance transaction.
The lawsuit also launches a shot across the bow at the entire industry, and business model, of merchant cash advance companies.
From the filing, at length:
The MCA industry specializes in providing struggling businesses with highrisk loans at exorbitant interest rates, disguising those loans as the alleged purchase of future receivables. The MCA industry typically seeks to hide within the gray areas of the law, attempting to take advantage of procedural remedies and loopholes in distant state courts to disguise its predatory lending practices.
…
This is what the MCA companies do. Among other things, they generally require unaffordable daily payments that they know the debtor is unlikely to be able to repay given the extraordinary interests rates and fees the MCA companies demand. They further leverage various legal and contractual processes to guarantee full repayment, thus assuming virtually no risk in the transaction.
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 therefore void and unenforceable.” The filing also seeks various damages — compensatory, direct, and consequential — as well as interest and attorney’s fees.
Law&Crime reached out to the primary lender named in the lawsuit as well as the company that allegedly “induced” the transaction, according to the filing, but no responses were immediately forthcoming at the time of publication.
The interest rates at issue is, of course, one of many economic maladies Chaska, Minnesota-based MyPillow and its founder face.
Lindell and his company have been accused of welching 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 poly-foam 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.”
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