This is the third of three related cases alleging that unscrupulous lenders have used Native American tribal sovereignty to get around state usury laws and illegally extract nearly $70 million from Virginia residents in the last four years.
The class for this action is all consumers living in Virginia when they entered into a loan agreement with Plain Green or Great Plains.
The complaint begins by explaining that, to evade usury laws, “payday” lenders used to funnel high-interest loans through “rent-a-bank” schemes, where banks acted as a conduit for a fee. After federal officials began cracking down on this scheme, the complaint says, they moved to “rent-a-tribe” arrangements, funneling the loans through Native American tribes, locating them on tribal lands, and arguing that they are therefore not bound by state laws.
The two “tribal” companies in the case are Plain Green (operated through the Chippewa Cree tribe) and Great Plains (operated through the Otoe-Missouria tribe), which supposedly make the loans.
According to the complaint, however, Haynes Investments provided the initial capital to Plain Green, while Victory Park provided it for Great Plains. A defendant in one of the previous cases, Think Finance, Inc., allegedly provided the infrastructure to make the loans. After the loans are funded, the complaint claims, GPLS, a company without employees, funded by Victory Park, buys 99% of the loans; it then pays fees, interest, or percentages of revenues to the tribe and other players in the scheme. The Automated Clearing House (ACH) Network facilitated the removal of funds directly from borrowers’ bank accounts to make payments on loans.
The forty-page complaint contains a great deal more detail on the workings of the two tribal companies and the roles and actions of each party in the scheme. It alleges violations of two sets of laws.
First, it claims that the defendants conspired in violation of Racketeer Influenced and Corrupt Organizations (RICO) laws, which forbid the “collection of unlawful debt.”
Second, it alleges violations of Virginia laws prohibiting the charging of more than 12% interest on loans. Interest on the loans to the plaintiffs ran as high as 448%. While the loans ranged from $300 to $3,000, the amounts the plaintiffs had paid, at the time of the filing of this case ranged from $711 to over $16,000, credited mostly as payments of interest and fees. According to Virginia law, loans that exceed the 12% rate are null and void and the lenders are not entitled to collection of any principal, interest, or other charges on the loans.