AG Ellison’s office files lawsuit against lenders charging up to 800% interest on loans
(KSTP) – The Minnesota Attorney General’s Office has filed a federal lawsuit against the individuals controlling three online lenders, alleging exorbitant lending rates and consumer fraud.
Bright Lending, Green Trust Cash, and Target Cash Now all operate under the control of the Island Mountain Development Group, which has issued thousands of loans to consumers in Minnesota charging between 400% and 800% annual interest, according to a news release from the Attorney General’s Office.
Interest rates that high are not legal under Minnesota’s usury laws and other federal laws.
The lawsuit includes 45 consumers who signed up for small loans when they needed cash, only to learn they would need to pay back considerably more than what they borrowed.
One of those people, an Oakdale woman, said she received a $700 loan from Bright Lending and made five payments of around $423 to pay back the loan, but after paying over $2,000 on the $700 loan, Bright Lending told her almost all of her payments had gone to cover the loan’s interest.
Another complainant from Willmar said that, after taking out a $550 loan, “I made payments to Green Trust Cash of $255 per month for three months, which totaled $765. These payments were very difficult for me to afford. I expected that my $550 debt would be paid off by then, but the $765 I paid mostly went to paying off the high interest on the loan. Because of the interest, I could not afford to continue making payments, so I contacted the Minnesota Attorney General’s Office (AGO) to ask for help.”
When the victims complained about the interest, they were falsely told that Minnesota law capping rates do not apply because the lenders operate online and are owned by Native American tribes. However, the release from Minnesota Attorney General Keith Ellison’s office said these lenders’ schemes are illegal and their statements to consumers were false.
The sovereign status of the lenders’ owner, however, prevents a direct lawsuit against the tribal entity itself. It also limits relief available to an injunction that stops further illegality by the company’s controlling officers; monetary relief and penalties are not available, according to a spokesperson for the Attorney General’s Office.
A webpage for the Island Mountain Development Group lists defendant Geno LeValdo as the current chairman of the business, adding that during the last 13 years, the company has made over $30 million.
“As Attorney General, it’s my job to protect consumers and legitimate businesses from businesses that break the law and take advantage of people who take desperate measures to afford their lives. These businesses have been engaging in the worst kind of predatory lending and I’m glad to bring this lawsuit to stop the harm they are causing and help people afford their lives. Let this serve as a warning to any other businesses charging these illegal and outrageous interest rates: if you break the law and cheat the people of Minnesota, we will put a stop to it and hold you accountable.”Attorney General Keith Ellison