Payday loans are not known for being financially friendly to borrowers. However, for at least 1,400 borrowers from payday lenders headed by one man, the 700 percent annual interest charged on the loan led to charges of federal racketeering.
The indictment named a 75-year-old man who operated payday lenders doing business as Easy Cash, Instant Cash USA and My Payday Advance. The man posted a $500,000 bail after his arraignment in Philadelphia. He pleaded not guilty. Also named was a co-defendant.
Federal prosecutors say the man used Native American tribes as the lenders in order to deflect class action lawsuits and to claim tribal immunity from the regulations governing such businesses. According to the indictment, the lenders charged customers around $30 for each $100 that was borrowed.
Prosecutors also said that British Columbia tribal leader was paid $10,000 each month. He would pretend that he owned the companies and when hit with a class action lawsuit, he was say there were no assets. The co-defendant, according to the indictment, entered into a similar agreement with another tribal leader. The co-defendant also pleaded not guilty and posted a $250,000 bail.
According to the 75-year-old man’s attorney, “There are literally dozens of federal and state court cases that support the validity of such a model, including U.S. Supreme Court cases.”
Facing federal charges for any type of crime is serious. The punishments are more severe and there is no parole for those sentenced to federal prison. If you are facing federal charges, it’s important to ensure your legal defense is started as soon as possible.
Source: Aurora Sentinel, “Feds: Payday lender charged 700 percent interest on loans,” April 11, 2016