Jury Convicts Payday Lender and His Attorney for Conspiring to Violate State Usury Laws

Payday Lending

 

On November 27, the U.S. Attorney for the Eastern District of Pennsylvania (“USAO”) announced that a jury had convicted two men—the owner of multiple companies that issued and collected on payday loans, and his attorney (the “Defendants”)—of conspiracy to collect unlawful debts in violation of the Racketeer Influenced Corrupt Organizations Act (“RICO”); conspiracy to commit mail fraud, wire fraud, and money laundering; and multiple other related charges.

In the superseding indictment, the USAO alleged that the Defendants provided payday loans in violation of usury laws in Pennsylvania and other states.  The Defendants allegedly targeted financially struggling individuals with misleading communications offering interest rates of more than 700 percent annually.  The USAO alleged that these operations generated over $688 million in revenue from hundreds of thousands of customers between 2008 and 2013.

Additionally, the USAO alleged that the Defendants conspired to evade usury laws by routing loans through banks in Delaware and by paying thousands of dollars to tribal entities who falsely represented themselves as the true lenders to help the Defendants avoid usury and payday lending laws (tribal entities are not typically subject to state usury laws).  Enforcement Watch has covered actions concerning “rent-a-tribe” schemes in posts on August 2016September 2016January 2017, and February 2017.

The Defendants’ sentencing hearings are scheduled for April 2018.  The advisory guidelines provide for a sentencing range of at least 10 years in prison, forfeiture of illegally obtained assets, three years of supervised release, a possible fine, and a special assessment.

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