$20.3 Million and the FTC's First Jury Trial: Inside the Case Against Merchant Cash Advance Operator Jonathan Braun

A federal court has entered a judgment requiring merchant cash advance operator Jonathan Braun to pay $20.3 million in monetary relief and civil penalties, following the first trial by jury the Federal Trade Commission has ever conducted.DOCUMENTED

The judgment follows a January 2024 trial in which a jury found that Braun, in his role with small-business funding company RCG Advances — formerly known as Richmond Capital Group — knowingly violated the Gramm-Leach-Bliley Act by deceiving small businesses about the amount of funding the company would provide to, and collect from, them.DOCUMENTED

How the alleged scheme worked

The FTC sued Braun in June 2020, alongside four other defendants, charging that he deceived small businesses and other organizations by misrepresenting the terms of the merchant cash advances his company provided.DOCUMENTED A merchant cash advance gives a business money upfront in exchange for a larger amount repaid through automatic daily withdrawals from the business's bank account — a financing structure common among small businesses that may not qualify for traditional bank loans.REVIEWED

According to the complaint, once businesses signed on, Braun and his co-defendants used unfair collection practices to compel repayment, including making unauthorized withdrawals from consumers' accounts and, in some instances, threatening physical violence.DOCUMENTED The businesses and their owners were also required to sign confessions of judgment as part of their contracts — legal documents that allowed the defendants to go immediately to court and obtain a judgment against a business without notice or a hearing if the business fell behind on payments.DOCUMENTED

The trial and its findings

Evidence presented at trial showed Braun bragging to colleagues about instances in which he collected more from customer accounts than was actually owed under the factoring agreements.REVIEWED The jury found that Braun knowingly violated the Gramm-Leach-Bliley Act, which governs how companies handle consumers' financial information, by deceiving small businesses about the funding amounts involved.DOCUMENTED

The court entered a judgment of $3,421,067 to redress the harm Braun's conduct caused to small businesses, using a random sample of evidence to approximate the scale of the harm — a methodology Braun contested, arguing for a more precise, individualized damages calculation rather than a statistical estimate.REVIEWED Separately, noting what it called Braun's "utter disregard and contempt" for consumers, including his use of threats and profanity toward small business owners, the court imposed $16,956,000 in civil penalties.DOCUMENTED

Officials' reaction

"I agree with the Court's assessment regarding the egregiousness and deliberateness of Braun's extensive lawbreaking," said Samuel Levine, then-Director of the FTC's Bureau of Consumer Protection. "The FTC is committed to protecting small businesses, and the $20.3 million judgment sends a powerful message that lies and deception will not be tolerated in the marketplace."DOCUMENTED

The court cited Braun's "utter disregard and contempt" for consumers — including threats and profanity directed at small business owners — in imposing nearly $17 million in civil penalties on top of consumer redress.

Why the case reached a jury at all

Most FTC enforcement actions resolve through settlement or summary judgment rather than a full jury trial, since the agency typically has significant leverage to negotiate a consent order once a complaint is filed. The Braun case reached trial because Braun continued contesting the FTC's claims and its damages methodology even after a 2023 summary judgment had already found him liable and imposed a permanent industry ban, leaving the jury to resolve the remaining disputed questions about the scope of financial harm and appropriate penalties.REVIEWED The other four original defendants in the case settled earlier, resulting in industry bans and more than $2 million returned to consumers before Braun's case ever reached a jury.REVIEWED

A small-business-specific enforcement priority

The Braun judgment sits alongside a broader set of FTC actions targeting merchant cash advance companies for allegedly deceiving small business owners about financing terms, reflecting sustained scrutiny of an industry that operates largely outside traditional banking regulation and often serves businesses with limited access to conventional credit.REVIEWED Because merchant cash advances are structured as a sale of future receivables rather than a loan, they frequently fall outside interest-rate caps and disclosure requirements that apply to traditional lending — a regulatory gap the FTC's enforcement in this area has repeatedly targeted through deception and unfair-practices theories instead.REVIEWED

Why the confessions of judgment mattered so much

The confessions of judgment businesses were required to sign as part of their contracts gave Braun's company an extraordinary legal shortcut: rather than filing a lawsuit and proving a business had actually defaulted, the company could go directly to court and obtain a judgment with no notice to the business and no opportunity for it to contest the claim beforehand.REVIEWED That mechanism, combined with the unauthorized account withdrawals the FTC alleges, meant small business owners often discovered they owed money, or had already had funds seized, before they had any real chance to dispute the underlying figures — a structural imbalance the FTC's case specifically targeted as central to the alleged unfairness of Braun's collection practices.REVIEWED

For small business owners evaluating any merchant cash advance offer, the Braun case underscores the importance of understanding exactly what a confession of judgment authorizes before signing one, since it can waive many of the procedural protections a business would otherwise have if a funding company later claims a default. The FTC's continued scrutiny of the merchant cash advance industry, evident in the string of related cases brought against Braun's co-defendants and other operators in the years since, suggests the agency views the combination of confessions of judgment and aggressive automatic withdrawals as a recurring pattern warranting sustained attention rather than conduct isolated to a single bad actor.REVIEWED

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