Faux Native American Loan Scammers Scalped In Minnesota

America's Sweetheart State Attorney General Lori Swanson has notched her belt and/or purse strap yet again with a suit against CashCall Inc., better known to off-hour TV viewers by the front name Western Sky. You might have seen one of their series of mildly creepy TV spots in the past couple years. They feature a rotating cast of dark-haired female talking heads in native-ish garb and a soundtrack of thunking war drums. Their general patter is all excited about how supposedly a Western Sky loan is different from and superior to a payday loan, and how soon all your problems will vanish once you virtually ink a deal.

This is but the latest ruse from the online lender which in the past three years has been disciplined and sued by the feds and by nine other state regulators "for unlawfully making loans without proper state licensure and in violation of state usury laws", says the Minnesota Department of Commerce. Western Sky borrowers find that their CashCall quickly becomes a massive cash grab for the lender as ludicrous interest fees and penalties stack up. They are pounded with emails and phone calls, presumably to announce more excuses for unfair charges and rate hikes. What's more, no tribal authority issues, manages, or even touches the usurious loans. The Star Trib explains in its detailed article:

    "The rent-a-tribe arrangement has emerged as mounting regulations squeeze the business of providing expensive consumer loans over the Internet and lenders seek new ways to ply their wares. More and more tribes are jumping into the Internet consumer finance business, which can be viewed as an attractive economic development tool for a struggling tribe, not unlike casinos."
. . . . . . . . .
    "The state asserts ... that Western Sky isn’t owned by a tribe and doesn’t exist for the tribe’s benefit but is a South Dakota limited liability company with (owner Martin Webb) as its only member. Tribal sovereign immunity doesn’t protect an individual member, and so doesn’t apply to loans Western Sky makes to Minnesota customers ...."

These facts of course have not deterred CashCall execs from claiming that the White Man's Law can't touch them and they get to charge and do anything they please. According to Legal Newsline, CashCall/Western Sky issued small-potatoes loans at APRs "between 89.68 percent and 342.86 percent. Borrowers also were allegedly charged fees of between $75 and $500." Please show me when any nation's law in this century would have no problem with that.


Attorney General Swanson and Commissioner Rothman Sue California Outfit Over Scheme to Deprive Consumers of State Legal Protections   (press release)
http://mn.gov/commerce/media/newsdetail.jsp?id=206-67522

State sues California-based Internet lender, says it uses tribe as a front for high-rate loans
http://www.startribune.com/business/215178831.html

So these crooks have been bitten by toothless federal and state "regulators" for three years and counting?

Rob $100 from a gas station, got to jail. Trick thousand of victims (invariably poor and unfamiliar with their rights and least able to afford the loss) out of hundreds each, pay a fine.

Crime pays. Thanks Lori ... the mafia could do your job and nobody would be able to tell the difference!

Just incase anyone was curious....

From Western Sky's rates page:
Loan Product    Borrower Proceeds    Loan Fee     APR      Number of Payments       Payment Amount
$10,000            $9,925                    $75                89.68%      84                                $743.49
$5,075             $5,000                     $75               116.73%     84                                $486.58
$2,600             $2,525                     $75               139.22%     47                                $294.46
$1,500             $1,000                     $500              234.25%    24                                $198.19
$850                $500                       $350              342.86%    12                                $150.72


So yeah, if you need $500, you have to pay them $350 up front and then $1808.64 over 12 months. Hell, your first month payment + fee would be $500.72

What percentage of the fees go to pay the fines (aka the government's take)?

I dunno, but it better not be wampum

Nobody said it was a perfect system. The courtroom has two sides even when an AG sits in one of them. Count on the defendant weasels to try every obfuscation and delay tactic possible to wear down the giant before sliding down the beanpole. Reputation damage should eat away at CashCall faster now that so many prominent challenges have been posed.

As to Swanson's record, she's done more in three years to slow the march of tele-phonies than any two of my AGs ever bothered in their entire combined terms. Official consumer defense where I live amounts to press releases saying "Yeah, by the way, there's this scam going around", invariably issued months after the problem is already exposed.

Talk about getting scalped.

Yea---this commercial airs a gozillion times a day, promising (among other things), to: "Consolidate your payday loans and improve your credit rating. Problem solved".

Rubbish. These are the most predatory and usary loans on the face of the planet---and should be outlawed in ALL 50 states.

Problem solved.

I always got a kick out of seeing the guy on the commercial that looked like indian Obama.  But I agree with Alfalfa, these loans should be straight up illegal.

That explains why the tribe said they don't do loans in Minnesota!:)

The problem is really a combination of lack of prosecutorial will and statutory weakness, both of which have strong roots in political corruption. They occur in varying amounts in different jurisdictions but are a constant presence. The bottom line is that these crooks can steal orders of magnitude more money than a street criminal, and all they have to do is share a piece of the action in the form of fines, which is just another line item expense on the P&L.

And it's no coincidence that they're stealing the money mainly from poor people who can least afford it. It's open season on the poor in this failed experiment of a country, both financially and otherwise, and everybody who can benefit is piling on.

Nothing will really change unless these schmucks have to start picking up the soap for Bubba in state and/or federal prisons, and at the rate we're going, nobody who really needs to be incarcerated will ever get it for the reasons outlined above -- prosecutors who lack the will or creativity necessary to take up these matter as criminal, against a backdrop of "laws" which were written by the crooks' lobbyists and hand fed to the other crooks they hired to pass them in the legislatures, which materially impede criminal prosecutions.

In the current political environment, calling out Swanson as a good AG is like calling out the current pope as a good pope. It's kind of an inherent contradiction at worst, and a weak bit of relativism at best ... although you can make a somewhat better case for the legitimacy of the existence of the office of an AG (in theory).

I'm wondering what state courts are going to enforce these loans.    The loan agreement gives the Cheyenne tribe exclusive interpretation and jurisdiction:

"All loans will be subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation. All borrowers must consent to be bound to the jurisdiction of the Cheyenne River Sioux Tribal Court, and further agree that no other state or federal law or regulation shall apply to this Loan Agreement, its enforcement or interpretation."
http://www.westernsky.com/TermsOfUse.aspx

They stand as a sovereign nation enforcing their laws within the jurisdiction of the US, and more importantly, the states.   Even in states that allow PDL loans, the terms and conditions of these loans violate  the laws of many of these states (usury rates, unlicensed operation, etc.)    What state is going to enforce a foreign judgment that violates it's own laws on loan transactions that illegally take place within their own state?    "....no other state or federal law or regulation shall apply."    Yeah, right. Good luck, Tonto.

I don't have a choice but to live in a relative world. If you want high contrast justice, read a comic book, because compromise is all our system offers to the abused. I don't look for saviors in our elected guardians, but it's nice when they offer any sense of leadership on an issue with no easy answers. I'm just waving a little pennant when I see that some AGs work harder than others.

We can argue disparity in what's considered high crime and rightly point out that until predatory lending and illegal debt collection are seen coldly as theft by deception, and inspire routine criminal penalty, not much will change to fulfill the FTC's mission statement. Outrageous loan scammers always manage to gather a contingent of support for supposedly "serving" the (pick any two terms) poor ignorant unbanked minorities. To get to that point of attitude change, the fundamental urge to blame the victim needs reversal.

The framing narrative that, like rape victims, duped borrowers and alleged debtors ultimately create their own problems is echoed in our state courts and first promoted quite thoroughly by the banks we keep subsidizing and bailing out as a reward for bad behavior. We catcall the rogue debt collector for believing that a distressed asset is the same as "stealing from banks", but *where did he get that idea* if not from the very institutions which have created a wildly profitable system of credit entrapment? We can rag on the "problem solved" tagline of Western Sky, translated as "problem worsened", but eventually *must stop* lenders from feeding us the story that we all deserve The Good Life on borrowed labor time.

Enlightened states like Arizona see all usurious loans for what they are and have banned them no matter what they're called. Elsewhere "the free market decides" what's fair for everyone, then forgets to invite the rest of "everyone" to the party. You get exactly the insane humping and biting and trash-eating you ask for when you let banker dogs run loose with no leash or choke collar.

Another prime example of the fox guarding the henhouse...

Seconded.

"The framing narrative that, like rape victims, duped borrowers and alleged debtors ultimately create their own problems is echoed in our state courts and first promoted quite thoroughly by the banks we keep subsidizing and bailing out as a reward for bad behavior".

Isn't that the damn truth. What kills me is they act as if WE started the "Great Recession".