Five months after the "godfather of payday lending" was sentenced to a 14-year prison term and stripped of $64 million in assets after a jury found him guilty of effectively extorting and exploiting nearly 1.5 million low-income borrowers, and just days after Bloomberg published the final installment in a series of investigative reports describing how small-business cash advance lenders transformed New York Courts into a debt collection machine - and widely engaged in fraud and abuse, including inventing loan defaults out of thin air to seize exorbitant sums from their unsuspecting customers - the New York State Attorney General is launching a civil probe into abuses by pay day lenders targeting contractors, truck drivers and other small businesses in the state.

According to Bloomberg, Attorney General Barbara Underwood is investigating merchant cash-advance companies who engage in fraud or have abused the state court system. Underwood office kicked off their investigation last week by subpoenaeing one of the state's largest cash-advance companies, Yellowstone Capital.

Underwood accused Yellowstone - which refused a Bloomberg request for comment - of defrauding and deceiving small business owners by using deceptive fine print that effectively robbed the company's borrowers of their right to legal recourse.

"It’s reprehensible to defraud, deceive and harass small-business owners through predatory debt-collection practices and the abuse of our court system," Underwood said in a statement to Bloomberg News that didn’t provide details. "If a company is engaging in fraudulent and deceptive conduct, we want to know."

Underwood said her office has been monitoring the industry "for some time" but only decided to act after Bloomberg published its investigation. The civil probe is still in its early stages. Some of these lenders charge usurious interest rates as high as 400% annually - higher than the rates charged by Mafia loansharks. Companies get around restrictions on lenders by categorizing their "loans" as cash advances on future business receipts - a technicality that courts have largely protected.

These companies have been using a legal agreement called a "confession of judgment" to turn NY's courts into a debt-collecting racket where companies are left with virtually no recourse against fraudulent claims.

Over the past few years, a group of these firms have turned New York courts into a debt-collection machine that’s draining the bank accounts of thousands of small businesses. The lenders require customers to sign an obscure legal document called a confession of judgment in which they forfeit their right to defend themselves in court. Armed with one, a lender can accuse borrowers of not paying and legally seize their assets before they know what’s happened. Some states have outlawed these confessions, but New York recognizes them no matter where the borrower is located. Since 2012, cash-advance companies have obtained more than 25,000 judgments in New York worth an estimated $1.5 billion, according to data on more than 350 lenders compiled by Bloomberg. In interviews and court filings, borrowers across the country describe lenders who’ve forged documents, lied about how much they were owed or fabricated defaults out of thin air.

The probe is in its early stages, and Bloomberg's sources said it could result in no action. But given all of the bad press surrounding pay day lenders, we imagine the state will do everything in its power to drive them out of business - leaving a gulf in the market for providing "cash advance"-type loans that banks will have every incentive to fill.