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Great Plains “Tribal” Company Circumvented Lending Laws Class Action

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This class action is one of a number brought against Great Plains Lending and others for predatory lending  practices, including one filed by the Pennsylvania Attorney General. According to the complaint, Great Plains posed as a tribal company in an attempt to circumvent lending laws. The complaint alleges violations of Racketeer Influenced and Corrupt Organizations (RICO) laws and the Electronic Funds Transfer Act.

The class for this action is all persons who took out loans issued in the name of Great Plains, from May 25, 2011 to the present. Excluded are those who live in Pennsylvania and those who are part of other cases against Great Plains.

Great Plains Lending claims to be an entity formed by the Otoe-Missouria tribe. However, the complaint claims that it is merely part of a “rent-a-tribe” scheme, in which payments are made to a tribe to use them as a front for a business. The business then claims it is exempt from state and federal laws because of tribal sovereignty rights.

A long list of defendants are named in this scheme, including Kenneth Rees, Think Finance, Victory Park, GPL Servicing, and Sequoia Capital, related companies, and a number of John Does—unknown or questionable persons and companies who assisted in the scheme.

The complaint claims that Rees and other parties were originally involved in a “rent-a-bank” scheme in which payday lenders used certain banks as conduits for online, predatory loans. When regulators cracked down on these schemes, the complaint says, they turned to the rent-a-tribe model.

Under the rent-a-tribe scheme, the complaint says, the tribal entity—Great Plains—was merely a pass-through; loans were made in the name of the tribe, but funds were supplied and loans were processed by non-tribal entities. Profits were also split among non-tribal entities, the complaint says, with the tribes getting 1% interest in the loans plus a service fee. More detail on the process, and the roles of each of the defendants, are provided in the complaint.

The complaint also goes to pains to demonstrate that Great Plains is not a legitimate arm of the tribe. Among other things, it quotes tribal law on interest rates that Great Plains clearly violates.

The loans that Great Plains made were at exceptionally high interest rates. Rates of loans to the three plaintiffs in the case ranged from 227.88% to 448.73%. The complaint details loan amounts and payments for each, including $3,728.30 in payments from one to pay off a $900 loan.

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