‘Rent-a-Tribe’ Class Action Alleges American Web Loan, Five Others Made Millions Collecting Debt from Usurious Loans in W.V.

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An amended proposed class action alleges American Web Loan, four other companies, and one individual have unlawfully engaged in a “rent-a-tribe” scheme by which they’ve utilized Native American tribal entities to ostensibly cloak usurious payday loans in sovereign immunity.

The suit alleges the defendants—American Web Loan; AWL, Inc.; Red Stone, Inc.; Medley Opportunity Fund II LP; Medley Capital Corporation; and Mark Curry, an individual who controls the latter four companies—have made millions on the collection of unlawful debt related to usurious loans subject to a longstanding West Virginia public policy against such. 

“In addition to making illegal loans, the collection of usurious debt is, in and of itself, an unfair or unconscionable debt collection practice in violation of [West Virginia law],” the lawsuit claims. 

According to the case, Curry, an entrepreneur with no linage connected to the federally recognized Otoe-Missouria Tribe, and his companies have for the past several years made millions on loans issued through American Web Loan, an entity formed under the laws of the tribe. Although American Web Loan is represented as the “lender” of internet loans with exorbitant interest rates, the Otoe-Missouria Tribe had “minimal involvement” in the process and received merely one percent of the net profits from the loans while Curry’s companies “reaped nearly all the profits” and did all the leg work, the complaint claims.

“Curry participated in and oversaw the illegal lending enterprise rendering him personally liable,” the case, filed in Ohio County, West Virginia Circuit Court on October 22 and removed to federal court on December 15, alleges. 

The lawsuit claims that through a series of arrangements between American Web Loan and non-party MacFarlane Group—an entity Curry “sold” to defendant Red Stone, Inc., a company owned by the Otoe-Missouria Tribe, in an attempt to “shield MacFarlane Group’s illegal business practices”—defendants Medley Capital Corporation and Medley Opportunity Fund II, L.P. provided the capital to extend high-interest loans through the alleged rent-a-tribe enterprise and, in return, reaped big profits from investing in the scheme. 

These profits were reinvested by the Medley defendants to “expand the portfolios of American Web Loan,” resulting in the unlawful collection of debt from West Virginia consumers, the complaint alleges. 

Under West Virginia law, the maximum legal rate of interest that may be charged for loans is eight percent, the lawsuit says. State law is designed to protect consumers from predatory lenders, including those who have sought to sidestep lending statutes by entering into partnerships with Native American tribes as a means of using their tribal immunity as a shield, according to the suit. 

Per the case, the terms of the defendants’ standard loan agreement pegged the interest rates charged to proposed class members at “significantly greater” than eight, 18 or even 31 percent APR.

“For example, Defendants charged [the plaintiff] with an APR of over 500%,” the suit says, alleging the terms of the plaintiff’s loan are “outrageous and are plainly offensive to the public policy and law of West Virginia” and warrant harsh punishment. 

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