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Payday loan business owner accused of financial crimes

A Pennsylvania resident and businessman has been charged with racketeering in the operation of his payday loan business ventures. Federal authorities assert that he took deliberate action to avoid running afoul of usury laws in Pennsylvania and other states. Furthermore, the 58-year-old businessman is accused of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act, commonly known as "RICO." Should he be convicted of these financial crimes, he could face serious time behind bars, as well as significant fines.

Usury is defined as the practice of lending money at interest rates that are unreasonably high. Most states have their own set of laws in regard to usury, and some states are better suited than others to set up and operate a lending company. Payday lending, which involves issuing small short-term loans that have high rates of interest, is an industry that has been the focus of many legislative efforts. When factored out over the course of a year, some of these short-term loans have an annual percentage rate of as much as 780 percent. That said, these lending sources remain in operation across the nation and serve an important function for individuals who need fast access to cash but are unable to secure a traditional loan.

The payday loan business owner is accused of going to great lengths to avoid running afoul of the usury laws in various states where he owned businesses. He is accused of conspiracy by means of his business relationship with an attorney who provided legal advice, the owner of a payment processing business and an individual who owns and operates multiple other payday lending businesses. It is said that the alleged co-conspirators earned tens of millions of dollars from their business activity.

As this financial crimes case continues, the court will have to consider whether the actions taken by this Pennsylvania business owner crossed the line of criminal behavior. Payday lending is an industry that is reviled by many and viewed as a form of predatory lending aimed at bilking low income borrowers. As the laws regarding these companies continue to change, business owners are faced with moving their operations to more conducive business environments. It is possible that the actions taken by this man were not done in an effort to defraud consumers, but were simply choices made in order to sustain and protect his business interests.   

Source: bizjournals.com, "Montco man charged with racketeering conspiracy in operating payday loan business", Jeff Blumenthal, June 22, 2015

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