A Pennsylvania man, known for helping to usher in the payday loan movement, has been charged with racketeering for his alleged part in a scheme that bilked more than $688 million from consumers and defrauded 1,400 others from a million-dollar settlement. 

The U.S. Attorney’s Office for the Eastern District of Pennsylvania on Thursday announced that Charles Hallinan had been charged with two counts of conspiracy to violate the Racketeering Influenced and Corrupt Organizations Act (RICO) relating to his payday lending operation.

According to the recently unsealed indictment [PDF], Hallinan, Delaware lawyer Wheeler Neff, and Randall Ginger, a Canadian citizen who was a hereditary chief of the Mowachaht/Muchalaht First Nation in British Columbia, took part in a scheme that generated more than $688 million from consumers from 2008 to 2013.

Hallinan owned, operated, financed, and/or worked for more than a dozen businesses, including Easy Cash, My Payday Advance, and Instant Cash USA, between 1997 and 2013 that issued and collected debt from small, short-term payday loans.

The companies allegedly charged customers about $30 for every $100 they borrowed. These charges put the annual interest rates on the loans at more than 700%.

The indictment alleges that Hallinan and Neff conspired to evade laws that deem such loans as usurious by, among other things, paying thousands of dollars each month to three Native American tribes to pretend that they were the actual payday lenders and claim that “tribal sovereign immunity” shielded their conduct from state laws and regulations.

The two men are also accused of assisting another payday lender, Adrian Rubin — who has been charged elsewhere — to evade state anti-usury laws by entering into sham contracts designed to give the false impression that a Native American tribe was the true lender.

Hallinan also allegedly worked with Ginger to defraud nearly 1,400 people into abandoning a lawsuit against one of Hallinan’s operations valued at more than $10 million.

In 2010, a class action lawsuit was filed in Indiana against Apex 1 Processing, a payday lending company that Hallinan ran out of offices in Bala Cynwyd, Pennsylvania.

According to the indictment, Hallinan offered to pay Ginger $10,000 every month to pretend that he owned Apex 1 and that Apex 1 had no assets, so the plaintiffs would settle their lawsuit for pennies on the dollar. Neff allegedly facilitated that scheme.

The case against Hallinan, Neff, and Ginger is part of a larger crackdown by the FBI and regulators on abusive lending practices.

If convicted of all charges, Hallinan faces a possible 12 years in prison, while Neff and Ginger both face at least eight years in prison.

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