UPDATE: At a hearing on Nov. 12 before Judge Karen Marston of the United States District Court for the Eastern District of Pennsylvania, Judge Marston ruled against both the injunction and the temporary restraining order that Mazzoni was seeking. Afterward, the judge set a status conference for Dec. 11, 2024.
Mazzoni Center, a nonprofit health-care organization that specifically serves LGBTQ+ people, has been named in two lawsuits by two funders, Fundkite and LCF Group, for breaches of contracts. Mazzoni has filed a lawsuit against both lenders as well. Both companies are “merchant cash advance” funders — providing small businesses with funding in exchange for a portion of future earnings.
According to one lawsuit filed on Sept. 23, 2024, the LCF Group, Inc. entered into an agreement with Mazzoni and Rachelle Denise Tritinger, formerly of Mazzoni, on Sept. 11, 2024 whereby Mazzoni sold $362,500 of future receivables to LCF for $250,000 minus origination fees, resulting in a lump sum deposit of $234,570. Tritinger was Mazzoni’s Chief Financial Officer at the time the agreement was entered.
LCF underlines in the suit that the company is not a lender and that Mazzoni did not borrow money from the funding company. LCF asserts that the company has not issued a loan but instead purchased a portion of Mazzoni’s future revenue in exchange for the lump sum cash advance.
In this agreement, a repayment plan was allegedly developed which would allow LCF to debit 12% of the Mazzoni’s daily revenue from an authorized bank account. Estimated payments noted in the contract were a little over $6,000 per day.
The complaint notes that Mazzoni blocked LCF’s access to this account on Sept. 12, 2024 — just one day after the funds were disbursed — and alleges that Mazzoni was in breach of contract for “defaulting on its performance obligations, representations, and warranties to LCF.”
In the event of a breach of contract, LCF asserts that the guarantors — which include Mazzoni and Tritinger — are obligated to pay a fee of 33.33% of any outstanding balance at the time of default. LCF is seeking $367,535.00 in damages from the guarantors, along with $120,821.25 for attorney fees plus interest.
In a court document, Mazzoni asserts that LCF’s business model “may be illegal or usurious under the applicable law.”
Mazzoni also asserts that Tritinger did not have the authority to enter into this agreement with LCF. Mazzoni denies having defaulted or breached agreements on the basis that “no valid agreement exists.”
When asked for a statement or to confirm details about the case, a lawyer representing LCF said, “We do not comment on ongoing litigation.”
According to the second lawsuit, which was filed on Sept. 23, 2024, Fundkite entered into a Revenue Purchase Agreement with Mazzoni just 12 days prior — on Sept. 11, 2024.
Fundkite’s business model is similar to that of LCF in that the company does not consider itself a lender and asserts that Mazzoni did not receive a loan. The lawsuit notes that Mazzoni sold $690,000 of its future receipts in exchange for a lump sum payment of $500,000. The actual disbursement after origination fees was $479,815. Mazzoni received the payment on Sept. 12, 2024.
According to Fundkite’s website, repayment plans are based on a percentage of the business’s gross sales until a loan is fully repaid. The repayment plans, which are unique to each individual business and contract, include options for weekly repayments based on weekly revenue. The lawsuit notes that Fundkite estimated those payments to be almost $25,000 per week.
Pursuant to the agreement, Fundkite alleges that Mazzoni was required to deposit all its sales receipts into a specific bank account, which Fundkite had authorized access to collect funds from. However, when the lending company attempted to access the account, the attempt was declined by the bank with the note “CORP CUSTOMER ADVISES NOT AUTH.”
The lawsuit alleges that Mazzoni diverted sales receipts and that its “refusal to turn over the diverted receipts” constitutes a breach of contract. The lawsuit notes that a downturn in revenue or impending bankruptcy would not be viewed as breach of contract.
In the event of a breach of contract, the lawsuit notes that the contract allowed Fundkite to demand repayment in full plus additional fees and charges — including an additional administration fee in the amount of 25% of outstanding debt. The company is now demanding $862,500.
Representatives for Fundkite did not respond to requests for comment.
Tritinger, who is again specifically named as a guarantor in the suit, was Chief Financial Officer of Mazzoni when both loans were obtained. In the documents she signed with Fundkite, she asserts that she is a majority owner of Mazzoni, which Mazzoni denied in their own lawsuit against both funding companies.
Tritinger, who could not be reached for comment, is no longer employed by Mazzoni.
According to a court document, Mazzoni asserts that Tritinger did not have actual or apparent authority to enter into agreements with LCF or Fundkite.
A spokesperson for the Mazzoni Center sent PGN the following statement in response to the cases:
“While we cannot comment on active litigation or on human resources matters, our nonprofit will uncompromisingly fight as we continue to serve some of the most vulnerable LGBTQIA+ Philadelphians. We will not allow the alleged actions of a rogue former employee and unscrupulous lenders to derail our important work of providing dignified health services to the LGBTQIA+ community, including free or discounted services for those without the resources to pay — which we have done for the last 45 years and intend to do for the next 45.”
Mazzoni has filed lawsuits against these two companies — including restraining orders.
In a court document, Mazzoni asserts that Tritinger did not have authority to enter into contracts with a value greater than $10,000 without advance approval of Mazzoni Center’s president and executive officer.
In one court document, Mazzoni states that Tritinger had already spent much of the money disbursed by both funding companies by the time Mazzoni discovered her actions. The document also states that Mazzoni offered to repay LCF and Fundkite in the amount that each had transferred to Mazzoni — but the offers were rejected by both companies, who pursued legal action for breach of contract instead.