State laws regulate lenders, requiring that they be licensed and specifying a ceiling on the amount of interest they can charge. But in recent years, some have tried to get around these laws, and any regulation whatsoever, by falsely claiming that their loan companies are owned by Native American tribes and taking advantage of sovereignty laws. The complaint for this class action details one such “rent-a-tribe” scheme, which it says violated the Racketeer Influenced and Corrupt Organizations (RICO) Act.
The class for this action is all persons who entered into a loan with Big Picture Loans, while living in Oregon, where the loan originated or payment was made on or after September 11, 2013.
Plaintiff Richard Smith, Jr. took out a loan with Big Picture Loans, LLC in December 2017. The loan was for $1,500 and required him to make bi-weekly payments of $337.91, which added up to an interest rate of 527%. Smith was not aware that the anticipated finance charges for the loan, not including the repayment of the principal, would be over $7,000.
Smith lives in Oregon, but the terms governing the loan were outside of Oregon’s lending laws, because Big Picture had associated itself with the Lac Vieux Desert Band of Lake Superior Chippewa Indians.
However, the complaint claims that Big Picture is not really a tribal enterprise, and that the company was formed by Matt Martorello, who is not a member of the tribe. Martorello also founded a company called Bellicose Capital. The complaint alleges that Bellicose obtained the investment capital for Big Picture, serviced the loans, and took the majority of the revenue from Big Picture.
In April 2016, Bellicose was sold to, transferred to, or merged with Ascension Technologies, a subsidiary of Tribal Economic Development Holdings, LLC. The complaint says that the change was only nominal and designed to shield Bellicose’s illegal practices.
According to the complaint, the company still funnels a substantial amount of its income to Martorello and others who are not members of the tribe and operates without input from the tribe. A Bloomberg Business Week article in 2016 alleged that the tribe gets only 2 percent of the revenue from the business. Most of the company’s business operations, the complaint says, are in Atlanta, Georgia or Puerto Rico, where Martorello claims to live.
The complaint claims violations of Oregon’s lending laws, as well as federal RICO laws. The RICO laws have provisions against the collection of unlawful debt.