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MobiLoans “Rent-a-Tribe” Illegal Lending Scheme RICO Class Action

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This is yet another case about the “rent-a-tribe” usurious lending scheme run primarly by Think Finance, LLC and its associates. This time, the defendant is MobiLoans, LLC and the complaint alleges violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act.

Several classes have been proposed for this action:

  • The RICO Class for this action is all individuals in Virginia, Indiana, or states with similar laws who took out a consumer loan with MobiLoans.
  • The Virginia and Indiana Classes are all Virginia or Indiana residents, respectively, who made a payment on any loan product originated by MobiLoans. 
  • The Unjust Enrichment Class is all individuals in Virginia, Indiana, or states with similar laws who took out a consumer loan product with MobiLoans and paid any amount in principal, interest, fees, or other charges.
  • The Declaratory Judgment Class is all persons who received a loan in the name of MobiLoans when they lived or were located in Virginia, Indiana, or states with similar laws that make the loans void.

“Rent-a-tribe” schemes are an effort to allow predatory to circumvent state caps on interest rates. Think Finance (which is not a defendant in this case) made arrangements with a number of Native American tribes to use their tribal sovereignty to shield its illegal lending. 

According to the complaint, it made one such arrangement with the Tunica-Biloxi Tribe of Louisiana. The complaint claims that the loans were made in the name of MobiLoans, supposedly a tribal company but actually a front for Think Finance and its associates. 

The tribe did not play a meaningful role in the company’s day-to-day operations nor share any of the risk of the venture, the complaint says; all it did was form MobiLoans, revise its tribal code to permit the lending scheme, and receive a small percentage of the revenues in exchange.

The complaint claims that Think Finance provided the infrastructure to run the lending operations, including “the software, risk management, application processing, underwriting assistance, payment processing, and ongoing service support” for the loans, presenting the arrangements to the tribe on take-it-or-leave-it basis.

Within a few days after a loan was made, the complaint says, it was purchased by one of Think Finance’s associates, GPL Servicing, Ltd (GPLS). GPLS also raised money from investors for more loans, preserving the bulk of the profits for the non-tribal participants. TC Administrative Service, a Think Finance subsidiary, provided administrative services for the loans.

The interest on the loans made were significantly greater than those permitted by state interest rate caps, the complaint says, and the participants were not licensed to lend in any state or subject to state oversight. 

Among other things, the complaint claims violations of RICO laws, which forbid the collection of unlawful debt, as well as of state usury laws, 

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