MyPillow owner Mike Lindell said his company was duped into borrowing $1.6 million at a 409% annual interest rate, the latest sign of financial distress for the far-right pillow salesman.
Lindell, MyPillow, and 18 other corporate entities claim Cobalt Funding Solutions and another company involved in the loan, Streamline Advance, engaged in racketeering by extending a high-interest merchant cash advance — essentially a payday loan for businesses.
Cobalt, Streamline, and two men named as defendants "took advantage" of MyPillow, "a cash-strapped business that needed funds quickly," the lawsuit said. The lawsuit claims that the September agreement to borrow nearly $1.6 million was stacked against MyPillow and risked ruining the company.
The lawsuit was first reported by Law dot com on December 10.
It's at least the third case filed in recent months involving MyPillow and merchant cash advances. In October, a company called Lifetime Funding said Lindell and his companies defaulted on a $600,000 advance barely a month after borrowing it. About a week later, another company, Shine Capital Group, filed a suit saying they defaulted on a $2 million deal signed in July.
Both cases are pending in New York. MyPillow has sought dismissal of the Lifetime case by arguing that the deal's interest rate was so high that it violated state law.
MyPillow and Lindell have been struggling for years. They borrowed $10 million in 2022 and were dumped by lawyers after they couldn't pay their legal bills. Earlier this year, Lindell told NBC News that he didn't have any money and was down to his house and his truck.
The use of merchant cash advances, typically used by struggling businesses with no other options, is a sign that the situation has worsened.
Lindell has also been sued several times related to his political claims. He has insisted for years that the 2020 election was stolen from Donald Trump, and owes more than $5 million to a man who won his "Prove Mike Wrong" contest by showing that his supposed evidence that the election was stolen didn't actually prove anything.
Lindell, Streamline, and Cobalt didn't immediately respond to requests for comment.