"Tribal Sovereignty" Issue
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.
This is the fourth complaint these same plaintiffs have filed for this “rent-a-tribe” usury scheme, each time against a different group of defendants. This time, defendants are Mark Curry, Brian McGowan, Eric Lau, and Sentinel Resources, LLC. The class action claims they have violated Racketeer Influenced and Corrupt Organizations (RICO) laws as well as Virginia’s usury laws.
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 complaint for this class action outlines yet another “rent-a-tribe” arrangement in which a Native American tribe allegedly acts as a front for a payday loan scheme to charge astronomical interest rates to get around state or federal usury laws. Not only is the tribe not truly involved, the complaint says; the fees charged have been excessive and RICO charges should be considered.
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. Under the scheme, the complaint says, 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. The complaint alleges violations of Racketeer Influenced and Corrupt Organizations (RICO) laws and the Electronic Funds Transfer Act.
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 forty-page complaint contains a great deal of detail on the workings of the two tribal companies and the roles and actions of different parties in the scheme. The complaint alleges violations of (1) the Racketeer Influenced and Corrupt Organizations (RICO) laws, which forbid the “collection of unlawful debt” and (2) Virginia laws prohibiting the charging of more than 12% interest on loans.
This class action involves a payday loan scheme that combines interest rates in excess of 400%, a snarl of interlocking companies, and a “rent-a-tribe” agreement that attempts to use Native American tribal rights as a shield against federal and state usury laws. The name of defendant Kenneth Rees as well as the general outline of the case will be familiar to those who know of the other class action filed against Plain Green and Great Plains a couple of months after this one. The complaint alleges that defendants violated RICO laws as well as Virginia’s usury laws and asks, among other things, that the loans be declared null and void.
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 funding, servicing, or any of the daily functions of the companies and simply received a percentage for fronting for the company.