The complaint for this class action alleges that Plain Green and Great Plains Lending tried to use Native American tribes as a front for their lending activities in order to evade Virginia’s lending laws. Although Plain Green claimed to be owned by the Chippewa Cree tribe and Great Plains claimed to be owned by the Otoe-Missouria tribe, the complaint alleges that these were merely “rent-a-tribe” schemes in which the tribes had no participation in any of the daily functions of the companies and simply received a percentage for fronting for the company.
The lending laws, which forbid usury, or the charging of excessive interest on loans, were passed out of public interest. In Virginia, the complaint says, the maximum interest that can be charged is 12%, and one civil remedy for higher rates is so severe that it provides that “[h]owever small amount of usurious interest contracted for, and however large amount of money loaned, the contract is declared void, and the lender forfeits the whole amount of the debt and interest.”
The complaint alleges that Kenneth Rees developed a payday lending scheme to circumvent Virginia laws by pretending that his Plain Green and Great Plains Lending businesses were owned by Native American tribes and that Virginia laws therefore did not apply. In return for the use of their names, the complaint says, the tribes received 4.5% of the revenue from the loans.
The complaint objects to this on several grounds. It says that, while tribal sovereignty protects the tribe itself, the principle does not extend to “economic subdivisions” of a tribe which may merely be commercial businesses, and notes that, in this case, 95.5% of the profits of the businesses went to non-tribal participants. It further claims that the tribes did not participate in the lead generation, funding of loans, loan servicing, or other day-to-day operations of the businesses.
In fact, the complaint claims that the businesses’ conspiring with Rees to evade state lending laws constitutes a violation of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. It further claims that the arbitration and choice-of-law provisions in the companies loan agreements are void because they avoid state and federal laws in favor of “tribal law.”
A number of classes and a subclass have been proposed for this action, including a Virginia RICO class (including all Virginia residents who executed a loan with Plain Green or Great Plains that originated and/or payment was made on or after July 12, 2013), a Virginia Usury Class, a Virginia Usury Subclass, a Declaratory Judgment Class, and a Virginia Unjust Enrichment Class.