Skip to main content

Three individuals and a maze of corporations have been indicted in New York for felonies involving payday lending.  Conspiracy, and 38 specific counts of Usury are charged.  This criminal network extended "loans" for which the per annum effective interest rate typically ranged from 350-650%.  A 1290% annual interest rate was charged on one loan in the indictment.

Here's a copy of the indictment:

Here is a link to NYT's coverage:

8:39 AM PT: Per the indictment, the conspirators were repeatedly advised by state agencies and officials, beginning in 2003, that their activities were illegal, but continued to operate until 2013, when their bank (not identified in the indictment) ceased processing payments for the syndicate (no doubt under threat of legal action).

In 2012 alone, the conspirators had $500M in funds flow through their scheme.

In 2012 38% of the U.S. population was "unbanked or "underbanked," the average "underbanked" household spent $2500, or 10% of gross income, on interest and fees for "alternative financial services."

It's time to bring back postal banking:

9:50 AM PT: One mechanism being used at the federal level to disrupt these criminal activities is a DOJ program (aimed at reducing fraud facilitated by banks) known as Operation Choke Point:

Hat tip to Deep Texan for reminding me about this.

Originally posted to benamery21 on Tue Aug 12, 2014 at 08:46 AM PDT.


How do you see usury law and these indictments?

0%0 votes
2%3 votes
0%1 votes
9%11 votes
17%20 votes
9%11 votes
58%67 votes
0%0 votes
0%1 votes

| 114 votes | Vote | Results

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Excellent. This is a start. (18+ / 0-)

    The bastards who ran this little maze of usury should be locked up for a few decades.  

    Then we should have a wave of these prosecutions nationwide, and federal usury laws where state laws are not sufficient.

    Zero tolerance for predators who prey on the weak.

    We got the future back. Uh-oh.

    by G2geek on Tue Aug 12, 2014 at 02:44:39 AM PDT

    •  Predators always prey on the weak. (3+ / 0-)
      Recommended by:
      gerald 1969, ichibon, Lujane

      It's their common mode, because predators are cowards (bullies). They never pick on someone who might/can fight back.

      Money makes it possible to engage in indirect theft, to predate on a symbolic level. After all, currencies are just symbols of obligation and debt. What usury does is take a cut that hasn't been earned -- thievery.
      The legal theory under which such theft occurs is that, if the victim agrees to give up some or all of what he's got, it's no different than a mugging perpetrated without a gun. Informed consent. "I told you I wanted your money and you agreed to give it to me."

      Ultimately, such behavior would not be possible if the supply of money were not artificially constrained by the issuers (Congress) and the accumulators/hoarders (banks). If every person were issued the necessary supply of currency to mediate basic transactions (a situation elders on Social Security now enjoy), then lenders could not thrive.
      Since the material components of currency (certified IOUs) are now infinitely available, any scarcity that's experienced has obviously been artificially created. For what purpose? To impose hardship on certain populations. For what purpose? To demonstrate the powers of individuals not similarly constrained.

  •  sadly, that spike of interest in the 70s allowed (7+ / 0-)

    the undoing of many usury laws.  These "lenders" were no different then old style mafia "loans"

  •  A good start. (8+ / 0-)

    Warms the cockles of my heart, it does.

    I wish they'd go after them under RICO. Especially in states like mine, where "reforms" seemed to make payday loans with 800% APRs easier, rather than more rare.

    Tipped & rec'd, with thanks to the diarist.  Let's hope it's a trend.

    •  Which state? n/t (2+ / 0-)
      Recommended by:
      benamery21, kfunk937

      Information is abundant, wisdom is scarce. ~The Druid.
      ~Ideals aren't goals, they're navigation aids.~

      by FarWestGirl on Tue Aug 12, 2014 at 07:34:45 AM PDT

      [ Parent ]

      •  Ohio. (0+ / 0-)

        When I was researching background on payday loans a couple of years ago (it was after the Consumer Credit Protection Act, so ~ 2007? but maybe as late as 2010, when the Teabaggers took over our Statehouse), I found that state-to-state regulations varied widely. And Ohio had recently passed "reforms," which left, if one had the patience (and maybe a translator to assist), such gaping loopholes that predatory lenders ended up being enabled, rather than curtailed. My guess is that it was a feature, not a bug.

        IIRC, Sherrod Brown has also directed some attention to the issue from time to time - that's my Senator!

        In any case, I thought at the time that federal action against individual egregious lenders might be possible under RICO, somewhat as had been done in the past to -prosecute- deliver wrist slaps to insurance companies . . . seems fitting that laws designed to prosecute organised crime be applied to the organised criminals in our midst. Like, say . . . bankers.

        Not a lawyer. But I can dream, right?

    •  they are not exactly all crimes (1+ / 0-)
      Recommended by:

      that's why.

      -You want to change the system, run for office.

      by Deep Texan on Tue Aug 12, 2014 at 09:35:05 AM PDT

      [ Parent ]

    •  Can't tip any comments in this thread, (2+ / 0-)
      Recommended by:
      benamery21, kfunk937

      for some reason.

      Let's take two pet progressive issues: marriage equality and increasing the minimum wage.

      I remember vividly, not so many years ago, when these were both far-out concepts, ones the "serious" political discourse in this country didn't admit. They were the province of the "fringe."

      Today, these ARE burning-hot, "serious" issues in the progressive community, and they are seriously debated in wider political circles.  

      Hey, hey. Times do change.

      May it be the same with predatory lending.

      "Come, come, whoever you are. Wanderer, worshiper, lover of leaving. It doesn't matter. Ours is not a caravan of despair. Come, even if you have broken your vows a thousand times. Come, yet again, come, come." --Rumi

      by karmsy on Thu Aug 14, 2014 at 08:35:46 AM PDT

      [ Parent ]

  •  Solution is clear: change the law (8+ / 0-)

    so that it no longer interferes with the holy free market. It's an outrage, I tell ya, having big gummint tell fine capitalist businesses what they can and can't do in the name of making a couple of dimes.

    Here in RI, we've been unable to get a bill through to limit interest to 36% annual rate. Ten times that is common.

    And the primary market seems to be members of the military -- apparently they are desperate, or gullible, or have the most stable paychecks for repayment, or something.

    •  It would be interesting if someone (4+ / 0-)
      Recommended by:
      ColoTim, KenBee, Lujane, kfunk937

      could put together a map of all the payday lenders and then overlay that on a map delineating neighborhoods by income.  I suspect a strong correlation would be the result.

      I live in an economically depressed area, there are three payday/title loan outfits within a couple of mile where I live.

      Banks are predatory enough, I don't have a term descriptive enough for the payday predators.

      A person's word used to be their contract, now people use contracts to get out of keeping their word.

      by bitpyr8 on Tue Aug 12, 2014 at 11:40:55 AM PDT

      [ Parent ]

      •  Well of course it would. In fact, do you know one (2+ / 0-)
        Recommended by:
        Lujane, kfunk937

        way to tell how the economy is doing?  By watching TV (over the air is fine, no need for cable/satellite TV unless you already have it) and making note of how many payday/title loan and money for gold type ads come on.

        You have watched Faux News, now lose 2d10 SAN.

        by Throw The Bums Out on Tue Aug 12, 2014 at 02:51:50 PM PDT

        [ Parent ]

  •  john oliver (7+ / 0-)

    had a good segment on payday lending this week.

  •  Thanks for this. We need it to be the beginning of (5+ / 0-)
    Recommended by:
    benamery21, DRo, Lujane, KenBee, kfunk937

    a trend.

    Information is abundant, wisdom is scarce. ~The Druid.
    ~Ideals aren't goals, they're navigation aids.~

    by FarWestGirl on Tue Aug 12, 2014 at 07:37:05 AM PDT

    •  Amen. (5+ / 0-)

      Investigation of this abusive "lender" began under Elliot Spitzer.  Letters from Spitzer's office warning that they were engaged in illegal activity began in 2003 (two years after the scheme began and before it had grown and developed).  If it took over a decade to even lodge an indictment of this clear illegality, what else is going on in the shadows.

      Of course, there are many states where this is ostensibly legal.

      Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

      by benamery21 on Tue Aug 12, 2014 at 09:11:54 AM PDT

      [ Parent ]

  •  1290% interest is only capitalism and (2+ / 0-)
    Recommended by:
    benamery21, KenBee

    the "free market" at work.

    •  You haven't seen the genius of capitalism (5+ / 0-)
      Recommended by:
      Deep Texan, DRo, KenBee, Sychotic1, kfunk937

      at work until you've seen a "check cashing, payday lender, title loan, etc" on each of the 4 corners of the major intersection nearest your home.  Clearly they were simply meeting the needs of the market in competitive fashion.  No mis-allocation of resources here.

      Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

      by benamery21 on Tue Aug 12, 2014 at 09:04:41 AM PDT

      [ Parent ]

      •  Sadly on the four corners of neighborhoods with (2+ / 0-)
        Recommended by:
        kfunk937, benamery21

        least access to banking services and most limited  economic resources. Those with the most taking from those with the least. Capitalism at work.

        Homelessness is a product of a lack of resource application and planning, a lack of affordable housing and our weak safety net, not an individual flaw or moral weakness.

        by ArizonaProgressive on Wed Aug 13, 2014 at 02:12:57 AM PDT

        [ Parent ]

  •  Money is Free Speech so Usury is .... (1+ / 0-)
    Recommended by:

    is unconstitutional. Thank you Supreme Court.

    Or at least that is what these idiot's lawyers will be selling.

  •  Operation Choke Hold (1+ / 0-)
    Recommended by:
    ceased processing payments for the syndicate (no doubt under threat of legal action).
    Conservatives are freaking out about it. They are targeting plenty of non-criminal organizations.

    -You want to change the system, run for office.

    by Deep Texan on Tue Aug 12, 2014 at 09:33:59 AM PDT

    •  Requiring banks not to facilitate fraud (3+ / 0-)
      Recommended by:
      ichibon, KenBee, kfunk937

      Any abuses are by private banks, regulators are simply asking banks to fulfill their longstanding duties to the public.

      Sometimes co-conspirators who profit from fraud get nervous if asked to produce documents and begin to cut ties.

      Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

      by benamery21 on Tue Aug 12, 2014 at 09:45:14 AM PDT

      [ Parent ]

      •  wouldn't fraud need to be proven? (0+ / 0-)

        i have no problem with it but this has more meat than benghazi imho.

        the payday lenders need to be fought. not so sure about them taking away bank accounts for porn stars.

        -You want to change the system, run for office.

        by Deep Texan on Tue Aug 12, 2014 at 10:19:03 AM PDT

        [ Parent ]

        •  That is an action of an individual bank (0+ / 0-)

          At least per available documents and statements of minority members, DOJ is not investigating porn stars or gun shops via Choke Point, not all industries deemed high-risk by FDIC are part of Choke Point.  Prudence by an individual bank in reference to accounts exhibiting high levels of disputed charges, is a commercial matter.

          Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

          by benamery21 on Tue Aug 12, 2014 at 10:24:51 AM PDT

          [ Parent ]

          •  how do you know? (0+ / 0-)

            -You want to change the system, run for office.

            by Deep Texan on Tue Aug 12, 2014 at 11:04:38 AM PDT

            [ Parent ]

            •  Do you think the DOJ (1+ / 0-)
              Recommended by:

              is lying when they say that none of their Choke Point cases involve(d) guns or porn?

              I don't believe the DOJ farther than I can throw them on a lot of topics, but lying that specific wouldn't make a lot of sense here in the middle of a House investigation.

              Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

              by benamery21 on Tue Aug 12, 2014 at 11:18:46 AM PDT

              [ Parent ]

  •  From my upcoming book: (2+ / 0-)
    Recommended by:
    Sychotic1, kfunk937

    "We keep you alive to serve this ship.  So row well.  And live.  Charlton Heston and Ben Hur popped into my head at that moment.  Fuck The Godfather; Ben Hur is the film with all of life’s answers.  I don’t really mean fuck The Godfather.  Mea Culpa.  I apologize.  It’s just that all of the mafia rackets are legal and run by respectable established big Companies.  They’re the gangsters now.  But the biblical message endures, even though it’s weaponized and brandished like a Bushmaster these days.  In fact, even Planet of the Apes is more prescient and enduring than The Godfather.  “Yep, just hit the requisite financial targets, and management gets to keep their jobs right up and down the chain.”  I understand how that works.  It’s a modified version of the old Gordon Gekko/Asset ‘Management’ model of running a business into the ground as you sell off the assets.  These guys actually run the operation, though.  They don’t just liquidate and shut down the whole damn thing while laying off everybody, vaporizing their pensions, and trotting off into the sunset with a cool half a bill.  They keep the operation running, but they run it like a Roman slave ship."


    “It’s almost funny.  You had people streaming into this country for decades; from China, from Russia, to escape those brutal regimes, to escape communism.  Those same people are still coming here, but now they come to escape the brutality of nascent Capitalism!  And imagine, they come here, looking for a better life, maybe some protection.”

    If I am not for myself, who will be for me? If I am only for myself, what am I? And if not now, when? Rabbi Hillel the Elder, Ethics of the Fathers. Corporadeus

    by Floyd Blue on Tue Aug 12, 2014 at 10:12:21 AM PDT

  •  Other. An essential concept that has been (3+ / 0-)
    Recommended by:
    ColoTim, KenBee, kfunk937

    neglected for so long that few people even know of it anymore.

    This indictment is almost certainly about something other than these parasites bleeding people, since this is standard practice all over the nation, and has been for longer than I've been alive.

    Oregon passed a law a few years ago that capped interest (@39% IIRC) and they seem to be doing just fine. None of the predicted chaos that was given 4-wall coverage by business and the media during the run-up, came to pass.

    BTW, for those of you that subscribe to them, all three of The Big Books of God forbid the charging of interest.

    "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

    by Greyhound on Tue Aug 12, 2014 at 10:12:50 AM PDT

  •  A tale of two countries (2+ / 0-)
    Recommended by:
    Deep Texan, kfunk937

    Felony charges in NY, but in many states totally legal and on every street corner.

    Title pawn being most prolific, often 3 or more on the same block. So bad you have to be very careful when buying any used car in a private sale - as often the seller will not even have the title, or it's bogus - because of unpaid title loans.

    “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

    by RUNDOWN on Tue Aug 12, 2014 at 10:25:16 AM PDT

    •  Totally legal is a bit of a stretch (3+ / 0-)
      Recommended by:
      RUNDOWN, KenBee, kfunk937

      Every state has a maximum interest rate on the books, but most are inoperative in these scenarios due to created loopholes not spelled out by statute.  Many of these operations could be treated as technically illegal by an aggressive prosecutor.  It would be better if legislative action were taken to make such practices indisputably illegal.

      Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

      by benamery21 on Tue Aug 12, 2014 at 10:40:01 AM PDT

      [ Parent ]

  •  I think we should do with banking (1+ / 0-)
    Recommended by:

    what we did with health care: require Americans to have a free checking account, with a bank, a credit union, or through the public option of a USPS bank. Private banks would compete for business, and they'd have the opportunity to upsell further loans and services.

    I'm living in America, and in America you're on your own. America's not a country. It's just a business.

    by CFAmick on Tue Aug 12, 2014 at 10:59:55 AM PDT

    •  Recent piece (NPR?) indicates poor people (0+ / 0-)

      typically spend 10% of income, just. to. pay. bills. Largely due to lack of a checking account (and access to online billpay, electronic funds transfers, direct deposit to checking, and other things more financially stable people take for granted). So they pay fees -- coming and going -- then typically use gas to carry cash or money orders from one place to another, etc.

      I like your idea! In the short term, before everyone has that, I try to educate on basic banking literacy and how it makes life (just a little, but worth it) less difficult, even when living cheque-to-cheque.

  •  We'll see if this flies. (3+ / 0-)
    Recommended by:
    Deep Texan, Sychotic1, kfunk937

    Normally, this would be headed straight for summary dismissal because state usury laws do not apply to banks based elsewhere, even if their customers are in the state.  However, presumably the defendants didn't have a properly qualifying bank.  That still means they have a jurisdictional/choice-of-law problem, but that at least gets them in the courthouse door.

    They also seem to want to prosecute the defendant's lawyers for advising them that this behavior was legal, which is really, really questionable.

  •  Hopefully Technology will eventually put (1+ / 0-)
    Recommended by:

    these scams out of business, there was an interesting article in wired last week of one such effort...

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site