Mike Lindell, the CEO of MyPillow, has filed a third lawsuit accusing a lending company of engaging in “unconscionable and fraudulent” practices. This lawsuit, filed in Carver County District Court, challenges a $2 million loan that MyPillow received in July 2024 from Merchant Capital. Lindell claims the loan was usurious, with an interest rate of 385%, and alleges that the terms violate both New York and Minnesota laws. This legal action is the third of its kind, following similar lawsuits filed in October and December 2024, all of which target the merchant cash advance (MCA) industry for allegedly preying on struggling businesses with exorbitant interest rates.
The lawsuit filed on January 17, 2025, describes the loan as a “sham” intended to evade usury laws. Lindell argues that despite the loan being presented as a purchase of future receivables, it is in reality a high-interest loan that is illegal under New York law. The loan agreement stipulated daily payments of over $41,000, which would total more than $3.91 million over the life of the loan. Lindell and his business entities claim that the loan was disguised as a purchase agreement, with the terms hidden behind misleading language.
According to the lawsuit, Merchant Capital bore minimal risk in the transaction, as MyPillow remained liable for the debt and Lindell personally guaranteed repayment. If MyPillow was unable to repay, the lender could pursue Lindell and MyPillow’s assets. The plaintiffs argue that this arrangement is not a genuine sale of future receivables but rather a loan with usurious terms. The lawsuit also alleges that MyPillow paid approximately $200,000 in hidden fees, which further inflated the effective interest rate beyond what is legally allowed.
The lawsuit outlines several disputed terms, including provisions that allowed the lender to withdraw money directly from MyPillow’s bank accounts and restrictions on the borrower’s ability to transfer or sell assets without the lender’s permission. Additionally, the loan agreement required MyPillow to cover the lender’s attorney fees in case of litigation, while not offering the same protection for MyPillow. The agreement also included an irrevocable power-of-attorney, granting the lender significant control over the borrower’s operations under certain conditions.
Lindell criticizes the MCA industry as a whole, calling it predatory and claiming that these companies exploit legal gray areas to disguise high-interest loans as purchases of future receivables. He argues that these loans are structured to ensure full repayment, regardless of the borrower’s ability to repay, thus minimizing the lender’s risk while burdening businesses with unmanageable debt. Lindell also contends that these companies typically do not engage in meaningful underwriting of the borrower’s receivables before issuing funds, further indicating that the transactions are actually loans rather than sales.
The lawsuit seeks a court order declaring the loan agreement void and unenforceable, citing its usurious nature under New York law. Lindell also demands compensatory, direct, and consequential damages, with a request for those damages to be tripled under federal RICO law. Additionally, he seeks interest and attorney’s fees. The legal action aims to hold the lenders accountable for what Lindell and his business entities view as fraudulent and predatory lending practices.
