Sunday, July 05, 2015

Philly Feds Bust Payday Lending Operator For Allegedly Charging Illegally High Interest Rates; Accused Of Using Federally-Insured Bank & Indian Tribe As Paid Cover In Attempt To Cloak His Outfit With Their Exemption/Immunity From State Usury Laws

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania) (via Public Citizen's Consumer Law & Policy Blog):
  • Adrian Rubin, 58, of Jenkintown, PA, has been charged with participation in a racketeering conspiracy for the operation of a “payday lending” business that allegedly violated the usury laws of Pennsylvania and other states, announced United States Attorney Zane David Memeger. Rubin is charged with one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”), one count of conspiracy to commit mail fraud and wire fraud, and two counts of mail fraud and aiding and abetting mail fraud. It was investigated by the FBI, the United States Postal Inspection Service, and IRS Criminal Investigations.

    According to the information unsealed [], between 1998 and 2012, Rubin owned, controlled, financed, and/or worked for multiple businesses that issued short-term loans, commonly known as “payday loans.” Rubin allegedly conspired with other people to evade state usury laws and other restrictions on payday loans by engaging in a series of deceptive business practices that included:

    (a) paying a federally-insured bank, which was not subject to state laws, to pretend that it was the payday lender;
    (b) relocating his operations to a state considered “usury friendly;” and
     (c) paying an Indian tribe to pretend that it was the actual payday lender as part of a scheme to have the tribe claim that “sovereign immunity” prevent application of state usury laws and other regulations.

    Rubin and his co-conspirators also allegedly went to great lengths to hide Rubin’s personal involvement in the payday lending business because he had a criminal record. It is further alleged that Rubin, with the knowledge of his co-conspirators, incorporated his payday businesses in the names of his father-in-law and a family friend and then forged the signatures of those people on company documents. In total, it is alleged that Rubin and his co-conspirators reaped tens of millions of dollars from the defendant’s payday lending activities, much of which stemmed from the collection of fees that were usurious in Pennsylvania and elsewhere.

    Pennsylvania law makes it a crime to collect interest, fees, and other charges associated with a loan at a rate in excess of 36 percent per year. Payday loans are short-term loans of relatively small amounts of money, usually a few hundred dollars, which borrowers promise to repay out of their next paycheck or regular income payment, such as a social security check. Some loans have finance charges or fees of between 10 and 30 percent of the amount borrowed. Given the short-term nature of these loans, those charges can translate to annual percentage rates of interest (“APR”s) of 260 to 780 percent.
Source: RICO Conspiracy Charged In Payday Lending Case.

For a recitation of the formal charges, see USA v. Rubin.

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