MakwaFinance.com Facing ‘Rent-a-Tribe’ Class Action in Illinois Over Loan Interest Rates

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A proposed class action lawsuit claims the operators Makwa Finance and certain affiliates of the online lender are involved in an illegal “rent-a-tribe” scheme whereby they have extended loans with unlawful interest rates to Illinois residents.

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Although those who run Makwa, LLC—which does business as Makwa Finance—claim that the company is owned by the federally recognized Lac Du Flambeau (LDF) Band of Lake Superior Chippewa Indians, the non-tribal lenders are, in fact, “hiding behind tribal sovereign immunity” to sidestep state interest rate caps, the 22-page lawsuit alleges.

The suit also names as defendants LDF Holdings, LLC, another online lender purportedly owned by the same tribe, and its president, Jessi Lee Phillips Lorenzo. Per the case, ZenResolve, LLC—a debt collector for many alleged “tribal” lenders, including Little Lake, Target Finance, Lendumo and Minto Money—is also involved, and though it apparently merged with co-defendant Granite Acquisitions, LLC in 2020, the business has reportedly continued under the name of ZenResolve.

The defendants are alleged to have made loans to consumers through MakwaFinance.com with annual percentage rates of over 600 percent. These “criminally usurious” loans were made in the name of the Wisconsin-based tribe by whom Makwa Finance falsely claims to be owned in order to skirt federal and state laws, the filing contends.

However, the lawsuit charges that “sovereign immunity, even if legitimately invoked, still does not turn an otherwise illegal loan into a legal one.”

According to the suit, the Illinois Interest Act stipulates that loans issued by unlicensed entities at above nine percent interest are illegal and void. The case adds that, in fact, a loan made at more than 20 percent interest is considered a felony under Illinois law.

The plaintiff, an Illinois resident, took out an $825 loan from MakwaFinance.com in March 2020 with an annual percentage rate of over 686 percent—well above the legal interest rate cap, the complaint states. In addition, the filing alleges that defendant ZenResolve has since violated the Fair Debt Collection Practices Act by “knowingly attempt[ing] to collect a usurious and illegal high-interest consumer loan, declared void by Illinois law.”

The lawsuit looks to represent:

“(a) [All] individuals with Illinois addresses (b) to whom a loan was made in the name of Makwa, LLC doing business as Makwa Finance at more than 9% interest (c) which loan has not been paid in full;”

“(a) [All] individuals with Illinois addresses (b) to whom a loan was made in the name of Makwa, LLC doing business as Makwa Finance at more than 9% interest (c) which loan is still outstanding or has been paid on or after a date two years prior to the filing of suit;” and

“(a) [All] individuals with Illinois addresses (b) to whom a loan was made in the name of Makwa, LLC doing business as Makwa Finance at more than 18% interest (all of its loans qualify) (c) which loan was made on or after a date 4 years prior to the filing of suit.”

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