The pioneer in payday loan industry was indicted in court due to an alleged racketeering scheme. The move is only part of the U.S initiative to put an end to abusive practices in the lending industry.
As reported by Consumerist, the US Attorney's Office for the Eastern District of Pennsylvania said that Charles Hallinan has been charged with two counts of conspiracy that violates the Racketeering Influenced and Corrupt Organizations Act (RICO) which is related to his lending operations. Hallinan's business was said to generate more than $688 million from the year 2008 and 2013
The case also charged a Delaware lawyer, Wheeler Neff and a Canadian citizen who was a hereditary chief of the Mowachaht tribe in British Columbia, Randall Ginger. These lending companies claim that they are helping the needs of the consumers but contrary to this, borrowers end up with a large debt due to the very high-interest rate that they impose as per Reuters.
Another payday loaner in Scott Tucker who is a race car driver was also charged with the same case by the federal prosecutors in Manhattan. Tucker was alleged of running a $2 billion payday lending enterprise that catered to $4.5 million consumers. Tucker pleaded not guilty in court.
The case against Hallinan charged him with operating, financing and owning more than 12 payday lending businesses from the year 1997 to 2013. His lending business issued loan interest that exceeds 700 percent. Both Hallinan and Neff allegedly conspired in order to escape the state law that prohibits such loans by paying three natïve tribes to include that of Ginger's. Both used this method in order to gain immunity.
According to Delaware Online, the attorney that represents Nerf said that his client was very surprised that federal prosecutors would attack the legal validity of the Tribal Lending model by trying to criminalize their lending activities.
Hallinan's Apex 1 Company was charged with a class action suit by the Indiana borrowers'. He then paid Ginger $10,000 every month for him to pretend that he owned Apex 1 and that it had no assets. This particular case, however, settled for $260,000, a small amount compared to the actual worth of the case.
