NEW YORK (8/13/14)--State prosecutors in New York have brought charges against 12 companies and their owner, alleging the businesses violate New York's law banning payday lending.
Prosecutors indicted Carey Vaughn Brown, Ronald Beaver and Joanna Temple and the 12 companies they own on 38 counts of criminal usury and one count of conspiracy.
New York defines a payday loan as "payday loan is a relatively small, high-cost loan, typically due in two weeks and made with a borrower's post-dated check or access to the borrower's bank account as collateral," according to the state's Department of Financial Services. It is illegal in New York to charge more than 25% interest per annum on any loan less than $2.5 million.
"Payday lending is a short-term fix that can result in a lifetime of debt and credit problems," said District Attorney Cyrus Vance in a statement. "The exploitative practices--including exorbitant interest rates and automatic payments from borrowers' bank accounts, as charged in the indictment--are sadly typical of this industry as a whole."
Brown is accused of using the Internet to creating multiple companies between 2001 and 2013. He is accused of establishing one such company, MyCashNow.com, Inc. as a website and offshore corporation to accept online applications for payday loans while avoiding compliance with laws in individual states.
Other companies created by Brown performed loan processing and underwriting, processed electronic transactions to extend the loans and move funds between companies, as well as provided support for the payday lending business, creating the impression of multiple independent companies.
The state alleges that the companies in fact functioned as a completely enclosed operation controlled by the defendants.
Use the resource link below to read the complete announcement from the New York County District Attorney's office.