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U.S. Charges Pennsylvania Man in Payday Loan Racketeering Scheme

PHILADELPHIA, PENNSYLVANIA - MAR 26: City street view with urbanA prominent businessman has been charged in violation of usury laws in Pennsylvania and other states. This is part of a widespread federal crackdown of usury and abusive lending practices across the United States.

Described as a businessman who established strategies that payday loan providers have used for years to avoid state regulators, Pennsylvania entrepreneur Charles Hallinan faces indictment after being accused of charging customers more than 700 percent on payday loans.

Philadelphia U.S. Attorney Zane Memeger notes that Hallinan generated nearly $700 million in a five-year time span by allegedly violating racketeering laws, mail fraud, wire fraud, money laundering and international money laundering. The 75-year-old, as well as other individuals, was accused of owning a dozen payday loans firms, defrauding close to 1,400 people between 2008 and 2013.

The two other individuals named in the indictment are Wheeler Neff, a Delaware-based attorney, and Randall Ginger, a chief of the Mowachaht/Muchalaht First Nation in the Canadian province of British Columbia. Hallinan and Neff are scheduled to appear in court this week, while Ginger will have his day in court at another date.

It’s alleged by prosecutors that Hallinan and Neff worked together to evade state laws by getting three native tribes, including Ginger’s, to say they were the payday loan lenders. The purpose behind this move was so Ginger and others could claim sovereign immunity.

It was discovered in a class action lawsuit against one of Hallinan’s firms, Apex 1 Processing, that Hallinan offered Ginger $10,000 per month to say he owned Apex 1 and that the company had no assets. The suit brought by Indiana borrowers settled for $260,000, far less than the initial $10 million case.

Attorneys for Hallinan and Neff have not released a comment. The lawyer for Ginger has not been identified.

Reportedly, Hallinan was one of the first people to offer same day payday loans over the phone in the 1990s. These tactics were regularly described as “rent-a-bank.”

The charges come as the U.S. governments clamps down on the payday loan industry. Investigators accused payday lenders of charging sky high interest rates, fees and loan rollovers, while participating in greater unscrupulous business practices. At the present time, 14 states as well as the District of Columbia have a ban on payday loans.

In February, Manhattan federal prosecutors charge that race car driver Scott Tucker ran a $2 billion payday lending company that took advantage of more than four million consumers.

nterestingly enough, there is a connection between Tucker and Hallinan. Tucker has pled not guilty.

Meanwhile, Kansas City’s Richard Moseley faces charges of wire fraud and racketeering in a $161 million Internet lending scheme.

Since 2014, five payday lenders have faced charges.

Payday loan businesses provide borrowers with an agreed amount of credit that is meant to be paid within two weeks. Proponents say it helps those who usually do not have access to credit from a financial institution to pay their rent, car, bills and other things. Critics argue that borrowers regularly end up with immense sums of debt because of the rates and fees applied to the loans. All over the world, governments are cracking down on the payday loan industry.

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