West Virginia Attorney General Darrell McGraw's office is seeking $3.9 million from a payday loan lender for making and collecting payday loans in violation of a court order, according to a lawsuit filed Tuesday.
Government Employees Credit Center (GECC) Inc., based in Delaware, owner Vincent Ney and related companies, according to the lawsuit, continued to collect GECC's loans in West Virginia after a February 2007 court order instructed them to stop.
The suit also names now-defunct collection agency PD Recovery Inc., its parent corporation Dollar Financial Group of Pennsylvania, and their owner Jeffrey Weiss. The complaint states none of the companies are licensed to do business in West Virginia.
The lawsuit seeks a judgment against GECC and Ney for fines that have accrued since the original court order. The suit also asks that all of GECC's loans be voided; all payments collected be returned to West Virginia consumers; and that GECC's collection agencies - PD Recovery and Dollar Financial - also return all payments collected and be penalized for collecting without a license in violation of the November 2007 injunction.
McGraw's office first sued 14 Internet payday lenders - including GECC - in November 2006 after the companies refused to disclose their account records in response to investigative subpoenas.
After a hearing, the Kanawha (W.Va.) Circuit Court ordered GECC to stop making and collecting loans in West Virginia. GECC defied the order, prompting McGraw's office to charge GECC with contempt. At a Nov. 20, 2007, hearing, Kanawha Circuit Judge Paul Zakaib set a fine of $3,000 per day until GECC complied.
McGraw's office last week sued two other collection agencies - Ezell, Williams and Associates dba D&R Recovery, of Bolingbrook, Ill., and owners Charles L. Dickey and Charles L. Dickey III plus Frontier Financial Group of Henderson, Nev., and owners Salvatore Mazzara, Shane F. Donofrio, and Paula Englebrecht - for collecting Internet payday loans without a license and for ignoring the attorney general's investigative subpoena. The companies collected Internet payday loans originated by a now-defunct company, Money and More, that signed a settlement agreement on April 17, 2009, with McGraw's office agreeing to void all of its loans.
According to a press release, since McGraw's Consumer Protection Division began an investigation of the Internet payday lending industry and its collection agencies in 2006, the Attorney General's office has reached settlements with 109 Internet payday lenders and their collection agencies, resulting in nearly $2.5 million in cash refunds and cancelled debts for 8,044 West Virginia consumers.
Last week, in another collections-related case, McGraw's office announced a settlement with a New Jersey lawyer and his Pennsylvania-based collection agencies to cancel nearly $8 million in alleged debt they tried to collect from more than 1,900 West Virginia residents, see story.