The Acquisition Exit: A 48-Month Deal Paid Off in 21
My best YieldStreet investment returned 13.14% in 21 months — and the reasons it worked are nowhere on the tear sheet that sold it
My first YieldStreet investment — $250,000 into a diversified pool of pre-settlement advances — returned $289,248 for a 13.14% IRR against a 13.0% target, in 21 months against a 48-month term.
I bought it off page one. The memorandum ran eight pages, the agreements underneath it far more, and I read all of it in one evening. Then it paid early and in full, which is the most effective way I know of never revisiting a decision. Reading it properly afterward, though, two things came out: the deal was far more conflicted than it had looked, and the clauses that actually returned my money sit in contract language nobody markets.
Neither fact cost me a dollar. I made $39,248 here and lost $87,723 on a law-firm loan on the same platform, and my diligence on both was identical: read the tear sheet, click through the agreements, wire the money. The loss got a second reading, because losses demand explanations. The win did not, because wins don’t. Which is exactly the problem: a bad explanation for a win never gets caught, because nothing ever forces a second look at it.
So this runs in the order it happened: what I bought, what happened to it, and what had been sitting in the paperwork the whole time.
The Numbers
| Invested | $250,000 |
| Returned | $289,248 |
| Net Profit | $39,248 |
| MOIC | 1.16x |
| IRR | 13.14% |
| Estimated term | 48 months |
| Actual term | 21 months |
| Cash movements | 76 in, 1 out |
| Average wait per dollar returned | 14.4 months |
Every line of the transaction record:
From the platform’s own export for this investment: a single $250,000 outflow on December 28, 2017, and 76 distributions between January 2018 and September 2019. The figures above are recomputed from these cash flows rather than taken on trust — $289,248.49 returned on $250,000, a 13.14% internal rate of return over 638 days.
What I Bought
In December 2017, YieldStreet offered Diversified Pre-Settlement Portfolio XXV — a $5.18M participation in a pool of consumer litigation advances originated by LawCash. I signed the subscription agreement on the evening of December 27 and my $250,000 funded the next day.
The tear sheet, which is page one of an eight-page memorandum:
- 13.0% target investor interest rate, estimated term 48 months, payments event-based
- 892 advances across 451 underlying cases — average advance $5,807, average case $11,485
- Loan-to-value of 7.1% against diligenced net case value of $131.3M
- Initial equity buffer of $15.5M — the pool “would have to collect less than 25.0% of its current value for investor principal to be at risk”
- Top ten cases 19.0% of the pool, largest single case 3.8% — so “it is unlikely that any one or select group of cases will have an adverse effect”
- 87.4% investment-grade obligors across 179 obligors, uncorrelated with public markets
- Market-leading originator — LawCash, 105,000+ advances and $475M funded over an 18-year history
No line in that list misstates the underlying documents; I have since checked each one. The file does contradict itself here and there — the $475M is “more than $440 million” on page six, the largest case is 3.8% on page one and 3.2% in the metrics table on page five, and Harvey Hirschfeld’s surname is spelled two different ways between the memorandum and the subscription exhibit — the marks of documents assembled from older ones and never reconciled. None of that changed the outcome.
One number deserves credit. They calculated the loan-to-value case by case and then averaged those, landing on 7.1%. The easy alternative would have been to divide the full $5.18M participation by the full $131.3M of case value, which gives 3.95% — a nicer-looking number they could have used and didn’t. Here the headline ratio was the more honest one. In the law-firm memorandum, it was the opposite.
That list, and a 13% target from a platform I had decided to trust, was the whole of my diligence.
What Happened
The money started arriving in January 2018 and did not stop. Seventy-five distributions over the next 21 months, most of them small, the pool behaving exactly as a book of hundreds of little claims should — a steady drip as cases settled one at a time. By September 2019 those payments had returned $165,437, about two-thirds of my principal, without a missed month.
In August 2018, eight months in, Dennis Shields died from an apparent opioid overdose at 51, in his Trump Tower apartment. He had led LawCash since 2000. He had also been Chairman of YieldStreet, which is to say the same man sat on both sides of my investment — a fact I acknowledged in writing at the time and did not think about again for years.
Thirteen months after his death, the rest of the money came back at once. Given how entangled the two companies were, the obvious inference is that YieldStreet absorbed LawCash and paid its investors out. The notice in my file says something else:
“We are writing to inform you that LawCash has been acquired [. . .] In an effort to protect our investors, we had a clause in our agreements that requires LawCash to repay all outstanding principal and interest for any active investments upon a change of control [. . .] Going forward, we will remain in communication with LawCash and strive to establish the same relationship and comfort level with its management and new ownership.”
Read that carefully: it says LawCash was acquired by someone else, not by YieldStreet. The letter talks about building a relationship with the new owners — not something you write about a company you just bought yourself. Rating-agency filings for a later securitization make the chain explicit: Legal Business Services LLC was “established in 2019 through LBS’ purchase of Westbury Management Group,” which owned LawCash along with Momentum Funding and Ardec. LBS renamed itself Cartiga in November 2021; LawCash is now Cartiga Consumer Funding. Westbury was Shields’s own holding company — he had been its CEO and Chairman — and it was sold the year after he died.
What matters for the money is the mechanism. I wasn’t repaid because the new owner chose to be generous. I was repaid because a change-of-control covenant in the participation agreement converted a slow, event-based, uncertain stream into an immediate obligation for principal plus accrued interest to the sale date, and on September 27, 2019, $123,811.55 landed in a single payment. That clause appeared nowhere in the marketing, because boilerplate creditor protection never does.
That payment, on top of the $165,437 already collected, brought the total to $289,248 — the 13.14% IRR from the opening. There is no mystery in that number, and no skill in it either — the extra 0.14% over the 13.0% target is noise, not a reward for getting paid early. Getting paid late, though, would have cost something real. My 13% was simple interest, not compounding: 13% a year on whatever principal was still outstanding, with no interest-on-interest. A longer wait would have eaten into the yield rather than adding to it — a few points at most, not a disaster.
The real risk was collection, not time: every advance in the pool was non-recourse, so I only got paid if the hundreds of underlying cases produced enough in settlements to cover what I was owed — and that is hard to judge from the outside. The pool was still paying steadily when the covenant cut it short at 21 months. Whether it would have kept paying for the remainder, I never found out. That’s where the paperwork picks up.
What Was in the File
The deal closed, I was paid, and I had no reason to open the file again. When I finally went through it properly — the memorandum, the operating agreement, the subscription disclosures, the audited financials — it described a materially different investment from the one on page one. None of it was concealed; all of it was in plain English, in documents I signed. There are six things, and they compound.
1. Three men sat on every side of the trade
The originator that wrote the advances, the platform that sold them to me, and the entity holding the paper in between were run by the same three people. Exhibit A to the subscription agreement says it outright — and says it in the first person. Under the heading “Conflict Disclosures,” I “acknowledge, agree and consent to the potential conflict of interest described below”:
“YieldStreet, Inc. (‘YieldStreet’) and Manager are part of a family of related entities, including Plaintiff Funding Corporation (‘LawCash’), LC Sales and Servicing, LLC (‘LCS&S’) and Soli Capital, LLC [. . .] which are predominantly controlled, owned and operated by Dennis Shields, Harvey Hirshfield and Michael Weisz.”
Shields and Weisz, it continues, are “both directors and significant shareholders of YieldStreet, Inc.” Weisz was YieldStreet’s President. A trade interview from the time lists Shields as Chairman of YieldStreet, Chairman of LawCash, and CEO and Chairman of Westbury Management Group, LawCash’s parent. He also chaired the board of Esquire Bank, which he co-founded. Two of the three sat on the platform’s board, and the documents call this a related-party transaction in those words. The platform was paid by the family as well: YieldStreet “received an upfront flat listing fee from the Originator for this offering to be listed on such website” — compensated by its own affiliate for marketing that affiliate’s paper.
All of which puts the “market-leading originator” bullet on the tear sheet in a different light. That bullet answers one question: is LawCash good at originating advances? Eighteen years and 105,000 advances say yes. But once I know the same three men control the originator, the platform, and the buyer, the real question becomes whose side LawCash was on — a conflict of interest, not a résumé.
2. The risk was mine, the upside was theirs
My 13% was the whole of my return, everything the pool collected above it belonged to the three men personally, and — the part that took me longest to see — most of the money at risk was mine rather than theirs. The same exhibit lays the chain out end to end, in what is the most valuable paragraph in the file. Reduced to its steps:
| Step | What happens | Economics |
|---|---|---|
| 1 | LawCash advances cash to a plaintiff, non-recourse | ~40% annualized if paid in full |
| 2 | After ~1 year of seasoning, pooled and sold to LCS&S, owned by the three principals in their personal capacities | $1.17–$1.23 per dollar advanced, against ~$1.40 accrued |
| 3 | LCS&S issues a participation to the YieldStreet SPV I invested in | 15.0% gross, less 2.0% fee = 13.0% to me |
| 4 | Everything collected above that fixed return | “retained by LCS&S for the benefit of its principals” |
In step 3, that SPV paid LCS&S $5.18M for a participation in a pool containing $5.04M of cash advanced — a premium of $138,403 that the memorandum discloses as a 1.03x “participation multiple” and never justifies. But “participation” is the operative word: LCS&S didn’t sell the pool, it kept the pool, and simply handed the SPV a fixed 15% claim against it. Which means my $250,000 wasn’t buying a slice of those advances at all — it was a loan to LCS&S, at a rate LCS&S set itself, with nothing securing it.
Here is the whole pool as it stood on the day I subscribed, with the purchase price estimated from the $1.17–$1.23 range the exhibit gives:
| Cash LawCash advanced to plaintiffs | $5.04M |
| What those advances had accrued to on paper | $20.69M |
| What LCS&S paid LawCash for the pool | ~$6.0M |
| — supplied by investors in the SPV | $5.18M |
| — supplied by LCS&S itself, subordinated to the SPV’s claim | ~$0.8M |
Collections then ran in a fixed order, and the order is the whole story. The SPV’s claim came first, and it was sized on what the SPV actually paid, not on what reached plaintiffs: $5.18M in principal — the $5.04M advanced plus the premium — plus interest at 15% a year. Of that 15%, the manager took its 2% fee ahead of my 13%. LCS&S received nothing until the SPV’s claim was fully satisfied, so their $0.8M was gone before I lost a cent — genuine protection for investors in this deal.
That subordination was real, but smaller than it looked: part of their exposure was offset before the deal even began, and it kept shrinking from there. They’d banked the premium the moment the deal closed — pure profit, collected before a single case ever had to pay. And the 2% fee kept paying out as collections came in, so the same three men were recovering money throughout the deal’s life, well before their own $0.8M was ever technically at risk.
LawCash and LCS&S were both theirs, so the sale between them moved money from one pocket to another. Take the group as a whole and only two cash flows crossed its boundary: $5.04M went out to plaintiffs, and $5.18M came back from retail investors — and the memorandum puts a number on what the originator earns on this kind of paper: “north of 20% per annum net of losses.” I was offered 13.0% of it. The gap between the two is the price of my seat in the queue, and it went to the people who built the queue.
My 13% was fixed no matter how the pool performed. But my participation was unsecured and non-recourse, so once a loss was deep enough to burn through their $0.8M, it came straight for my principal. They took a discounted first-loss risk and kept unlimited upside, while I took the full tail risk for a return capped at 13%.
3. The cushion was interest nobody had paid
Every collateral figure on the tear sheet traces back to one number: $20.69M of “current value” — only $5.04M of which was advances that had ever reached a plaintiff, while the other $15.65M was interest and fees that had accrued and never been collected from anyone. The “initial equity buffer” on page one is simply the difference between the current value and my participation. The memorandum explains where that accrual came from:
“The reason for the healthy equity buffer is the Portfolio’s weighted average age of 41 months. The longer an advance is outstanding, the greater the amount of interest and fees accrued on that advance.”
That explanation carries two problems at once.
- A “healthy” buffer just meant a riskier pool: it grew only because the underlying cases hadn’t resolved. A pool that settled next month would show a thin buffer; one stuck in litigation for a decade would show an enormous one.
- Aged advances were a warning sign: a weighted average age of 41 months, against a memorandum that says personal injury cases “can take up to three years on average to resolve,” means the pool underneath my participation was well behind schedule.
On top of that, the ratio of 892 advances to 451 cases points the same way — very nearly two advances per case, meaning the typical plaintiff had already come back for more money once, and a plaintiff who needs a second advance is usually one whose case is dragging.
This doesn’t make the deal a bad one — seasoned non-recourse paper bought at a discount to accrued value can be a perfectly good asset. But the buffer was never a margin of safety in the way I’d read it. It was a clock, not a cushion: a record of how long the money had been waiting to be collected, not something that protected me.
4. Diversified on the surface, concentrated underneath
“892 advances across 451 underlying cases,” “top ten cases 19.0% of the pool,” and “87.4% investment-grade obligors across 179 obligors” sound like real diversification — lots of small, independent pieces, none big enough to matter on its own. Six pages later, the memorandum breaks the same pool down another way, and the picture changes:
| Case type | Share of pool |
|---|---|
| Motor vehicle accident | 30.3% |
| Transvaginal mesh — a “class action,” per the memorandum | 19.4% |
| Labor law | 15.2% |
| Top three of 19 | 64.8% |
Two of those rows show why granularity and diversification aren’t the same thing: one just means many pieces, the other means many pieces that don’t move together.
- Motor vehicle accidents at 30.3% are granular and diversified: hundreds of unrelated fender-benders against hundreds of insurers, with no shared event or defendant that could take them all out together. That part of the pool did what it was advertised to do, and it is what produced the steady monthly drip.
- Transvaginal mesh at 19.4% is granular but not diversified. The memorandum calls it a class action; it’s a mass tort — hundreds of separate cases, each owned by its own plaintiff, but every one of them tied to the same legal theory against the same handful of manufacturers. That shared theory is the concentration — group those hundreds of small cases under one docket and they add up to 19.4% of the pool.
The case-level statistic, which caps any single case at 3.2%–3.8% of the pool, was built to catch one risk — a single giant case going bad — and it does that. It was never built to catch hundreds of small, correlated cases failing together, which is exactly what a mass tort is. I’d been treating granularity and diversification as the same word.
It isn’t just case type, either. The 179 obligors tell the same story from another angle: an obligor is whoever owes the settlement money, usually the defendant, and the largest of them is Johnson & Johnson at 12.2%. J&J owns Ethicon, the manufacturer named as a defendant across the mesh litigation. “87.4% investment-grade” is a statement about solvency — it tells you what fraction of the obligors are financially healthy enough to pay if they owe money. It says nothing about concentration — how much of the pool’s value depends on any single company. If the mesh litigation is concentrated in a handful of obligors, then “diversified by case type” and “diversified by obligor” aren’t independent checks anymore: they’re the same underlying risk, sliced differently, while looking like two separate reassurances.
5. Unsecured, and every protection waived
My participation was unsecured. The risk factors say so plainly, under the heading “Unsecured Participation Interest”:
“The Company holds a participation interest, which is not directly secured against specific assets [. . .] if the Originator becomes insolvent, then the Company’s participation interest could be superceded by the senior creditors of Lenders.”
Map the defined terms onto the entities they name: the Company is the SPV I invested in, the Originator is LawCash, and Lenders is the German banking group that was LawCash’s primary lender, on a facility of up to $50M, with its interest “secured by the Assets” — the advances themselves. So my participation was a claim against a pool LCS&S owned, and if LawCash went bankrupt, that claim was in danger.
Why did LawCash matter here? By the time I subscribed, the pool had already been sold to LCS&S — but that sale was between affiliates, never tested by an outside buyer, and nothing in the file shows the bank’s lien being released when it happened. If a court ever found the sale wasn’t a real transfer, the bank’s claim would survive it and get paid before mine. That’s what “could be superceded by the senior creditors of Lenders” actually meant: LawCash’s own lender, still in the queue, on a pool I thought had already changed hands.
Three more clauses each stripped away a separate protection:
- No fiduciary duty: Section 4.02(m) eliminates the manager’s duties of care and loyalty entirely — the one duty built for a conflict like this, switched off by the same three men it would have restrained.
- Redemption on demand: Section 5.06 let the manager redeem my interest “at any time, with or without notice,” paying out only capital plus accrued interest. It cost me nothing here, but it meant I couldn’t count on earning that 13% for the full term, or on choosing when to exit.
- No information rights: Section 12.10 had me waive my statutory right to company information, leaving me with only what the manager chose to disclose “in its sole and absolute discretion.” Which is why, across the entire hold, I never saw a single case-level number.
The financials made that blindness complete: my position was valued at par — capital in, minus principal returned, adjusted for nothing else. A healthy pool and a failing one would have shown the identical number. If the cases underneath had been going bad, I would have found out only when the cash stopped.
So the position I actually held was this: capped at 13% simple interest, unsecured, with no fiduciary duty running to me, redeemable whenever the manager chose, entitled to no information, reported at cost no matter what the cases did, and with the residual promised to insiders — against the full non-recourse credit risk of the pool.
6. The price the family had set was already stale
The audited financials add one more thing the marketing didn’t: the SPV had already acquired the entire $5.18M participation two months before I subscribed, financed by revolving notes that investor subscriptions later repaid. This is called warehousing, and it’s standard practice: it was disclosed, Section 4.08 waives the conflict, and locking in an asset before syndicating it is how a platform secures its allocation. There’s nothing wrong with it by itself — but here it created two problems.
The price was set by insiders, not the market. The seller financed the whole purchase, the buyer was the seller’s own affiliate, and the price I would pay was fixed two months earlier, before any outside investor existed to check it. The price was never tested against anything. My subscription in December just paid that price, unchanged — in substance, my $250,000 didn’t buy a portfolio of advances; it retired debt the SPV owed its own affiliates for a purchase that had already happened without me.
Even if the price had been set fairly, it would still have been two months old. My return was fixed at 13% regardless of price, so this isn’t a complaint about overpaying against some benchmark. What mattered was the cushion — the gap between what the pool could actually collect and what it owed me — because that gap moves as cases settle, stall, or fall apart. Two months probably didn’t move it much on a pool this old. But every statistic I was shown described the pool as it stood before the SPV even owned it, and nothing in the structure would have told me if that cushion had already started shrinking.
Warehousing did have one upside. Because the pool was already bought before I wired, my $250,000 started earning its 13% the moment it landed, replacing a slice of the revolving notes rather than waiting for the raise to reach its $5.18M target. Three days after I wired, the raise was still $985,000 short of that target — and none of that gap cost me a day of interest.
Two Clauses, Not a Process
Every number on page one was true, and none of them explain why I got my money back. Two clauses did: a change-of-control covenant that triggered repayment years early, and a subordination clause that would have absorbed losses ahead of my principal if the pool had come up short. Neither was on the tear sheet, because neither was a selling point. The subordination, in particular, was never put to the test — I was paid in full after 21 months, long before any of the risks in the file had time to turn into a real loss.
None of that makes the deal bad, and it doesn’t make my diligence good. I gave the whole file one evening and missed what mattered in it, and on the next loan I bought, a little over three months later, the identical habit cost me $87,723. The difference between those two outcomes was never in what I did. It was in what happened to be sitting in the paperwork I skimmed past.
It worked. I had nothing to do with why.
Commentary and personal experience — not investment, legal, or tax advice. Investing carries risk, including total loss of capital. Always do your own due diligence.
