Owner of Payday Lenders, Attorney Hit with Federal Criminal Indictment

A man alleged to be the owner and operator of a group of payday-lending companies and an attorney alleged to have submitted false affidavits and structured sham arrangements have been indicted by a federal grand jury in New York. In addition to charging the defendants with criminal violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) (and seeking $2 billion in restitution), the indictment charges them with criminal violations of the Truth in Lending Act (TILA).

According to the indictment, the companies violated the laws of various states by making Internet payday loans to consumers at interest rates in excess of 700 percent per annum, more than double the permitted rates, and, in certain of such states, failing to obtain required licenses. The indictment alleges that the defendants entered into sham business relationships with three Native American tribes to defeat lawsuits filed by numerous state regulators. These relationships were allegedly structured to create the false appearance that the loans were made by the tribally owned companies, and thereby allowed the defendants to avoid the application of state usury laws based on tribal sovereign immunity. While the indictment makes passing reference to a prior relationship with a Delaware bank, the charges are limited to the tribal programs.

http://www.jdsupra.com/legalnews/owner-of-payday-lenders-attorney-hit-87217/