|By Ellis Smith, Chattanooga Times Free Press, Tenn.|
|McClatchy-Tribune Information Services|
Not even cease-and-desist orders sent to the payday companies from the attorneys general of
But now that
Legal experts have acknowledged that if the usury charges against payday lender
"I do think there's a problem in
The payday case echoes the implosion of an alleged family Ponzi scheme in
A bill under consideration in
Those loans also would be illegal in
"It is usury, and if the prosecutors were of a mind to go after this guy, they could put him away for a long time just for having multiple victims of usury," Pickrell said. "It's a matter of prosecutorial resources or motivation rather than some flaw in existing law."
WHITE COLLAR BLUES
A survey of news releases issued by Cooper's office from 2011 to 2014 shows that many of
In each year, only a handful of
On the other hand, payday lenders have no problem spending money in political and law enforcement circles. Nationally, payday lenders spent
Brown, a former
He has been generous with local civic and charitable organizations, too.
Brown gave to the
Brown had relationships with charities Focus on the Family, Precept Ministries and the pro-life
CIRCLE OF INACTION
But Brown was giving away money that several states maintain he earned illegally. A
"We do not know why the matter was not pursued more aggressively by the
Such secrecy is not unusual, and is designed to protect the reputations and identities of businesses and individuals who are never charged with a crime or are found to be innocent after an investigation, officials have said.
A highly placed source inside Brown's business, who spoke privately given Brown's record of suing employees, told reporters that Brown was negotiating a "consent decree" with the TDFI. But no such decree was ever made public, and TDFI general counsel
Months later, Brown stopped making loans in
A spokeswoman for
But retiring DA Bill Cox said he never received a referral from the TDFI indicating that criminal prosecution was warranted.
"It may be against the law, but not everything that's against the law is a crime," Cox said.
"Typically, when conduct is alleged to be criminal in nature, the department collaborates with various law enforcement agencies," Hughes wrote in an email. "Judgments are based on several factors including the nature and severity of the conduct to determine how and whether to prosecute the alleged crime. It may also be determined that the specific activity in question does not sufficiently fall within the criminal statutes."
On the other hand, the heavy workload required to secure a misdemeanor conviction may have dissuaded prosecutors, said
"If you have someone, and it really sticks in their craw that this ought not to be done, then they might devote the resources and the time to secure a conviction and convince the public as to why this is a moral outrage," Aarons said. "So part of it might be that we have yet to get that crusader in white to make sure that the people struggling financially are not further victimized."
Payday loans are extremely popular among consumers. And nontraditional lenders receive far fewer consumer complaints than mainstream banks and mortgage lenders, according to the TDFI's annual report.
"We're seeing more states refusing to legalize payday loans, and some states that used to legalize them and now they're not," she said. "This is a question that the public in
A blanket ban on payday loans would be like a blanket ban on the mortgage business after
"Does that mean that mortgages are bad? Does that mean that every mortgage by big mortgage banks is criminal? No, it means the regulators say they did some things that went astray of the law," Covert said. "Every payday loan is not bad; every payday loan is not illegal."
"We follow all federal, state and local laws at great cost to us, we don't make the profit that other people make, and we spend a lot more on regulation and compliance than other people do," Covert said.
Brown's syndicate made plenty of profit, pulling in about
Brown claimed that his loans were legal because he was operating from the Internet and was subject to more permissive federal, rather than state, rules governing interest rates. He asserted that he was immune to state laws under the Interstate Commerce Clause, which would have given federal rather than state agencies the power to regulate his business.
Brown went to great lengths to avoid falling under state statutes.
For the payday lending website FourSeasonsCash.com, Brown worked with
Those legal tactics and their legal champion, Brown's attorney
PAYING FOR PROSECUTION
Payday lenders' complex corporate structures and legal maneuvers, combined with prosecutors' lack of funding and legislative support to enforce state rules, is leading some policymakers to push for regulations with more teeth. But such solutions are still in the planning stages.
A bill filed in the
"Protecting consumers from predatory lenders -- whether they claim to operate in
However, with just days left in the legislative session, the bill has not been considered by the
The short-term solution -- enforcing existing state laws -- would likely require specific funds earmarked by legislators to combat white-collar crimes, similar to money dedicated for
"There are choices," he said.
"When we decide where we spend our money, and how we organize our officers and prosecutors into teams, we are deciding what crimes are going to be prosecuted. When you increase resources for prosecuting certain offenses, you're going to get more prosecution."
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