A lawsuit has been filed against a group of companies and an individual who the suit claims orchestrated an illegal payday lending scheme and attempted to shield themselves from liability by hiding behind a Native American tribe’s sovereign immunity.
A proposed class action has been filed against a group of companies and an individual who the suit claims orchestrated an illegal payday lending scheme and attempted to shield themselves from liability by hiding behind a Native American tribe’s sovereign immunity.
The suit names the following defendants in the lawsuit:
American Web Loan, Inc.;
Red Stone, Inc.;
Medley Opportunity Fund II LP; and
Medley Capital Corporation.
According to the complaint, the defendants offered payday loans to consumers in financial need, designed to provide instant cash coupled with interest rates as high as 737.97 percent. The suit argues that the defendants’ operations violated Virginia’s usury laws, which prohibit lenders from demanding more than 12 percent interest on loans.
The defendants allegedly attempted to provide themselves with “layers of protection from liability” by entering into an agreement with the Otoe-Missouria Tribe that would provide the tribe a cut of the companies’ profits in exchange for the use of its name and, more importantly, its tribal immunity. As explained in the complaint:
“For the past six years, Curry’s companies, namely the MacFarlane Group, Inc., made millions of dollars through loans issued in the name of Defendant American Web Loan—an entity formed under the laws of the Otoe-Missouria Tribe for the dual purpose of avoiding state and federal laws and concealing the role of Curry’s companies. Although American Web Loan is held out as the ‘lender’ of the internet loans, the Otoe-Missouria Tribe had minimal involvement in the operations and received a mere 1% of the net profits from the loans.”
In other words, the defendants “provided the infrastructure to market, fund, underwrite, and collect the loans” while using the tribe as “merely a front” and pocketing most of the profits.