Pennsylvania Attorney General Kathleen G. Kane's office filed a lawsuit Thursday against a Texas-based operation for allegedly running an illegal online payday loan scheme.
The suit also names several collection agencies as defendants, including the Washington-based law firm of Weinstein, Pinson and Riley PS, Cerastes LLC and National Credit Adjusters LLC - companies allegedly used to collect debts derived from the illegal loans.
Primary defendants in the case include: Think Finance Inc., TC Loan Services LLC, Elevate Credit Inc., Financial U LLC and former CEO Kenneth E. Rees. The operation allegedly targeted consumers using three Native American tribes that functioned as the apparent lender, as a cover, according to the lawsuit. In turn, Think Finance earns significant revenues from various services it charges to the tribes.
Before establishing the tribal partnerships, the company allegedly used the cover of a rogue bank based in Center City Philadelphia, in what is commonly referred to as a "rent-a-bank" scheme, until the federal government shut down the bank, according to the lawsuit.
Internet marketer, Selling Source LLC, which used its "MoneyMutual" website and television commercials to generate online leads for high-rate lenders, including at least one tribal lender, also is named in the suit. Selling Source allegedly made referrals of Pennsylvania residents to the scheme for a charge, even after it was ordered to stop doing so in a 2011 agreement with the Pennsylvania Department of Banking.
Think Finance, according to a 2013 news release, had more than $500 million in revenues up from $100 million in 2010. At that time, the company reported it had provided more than $3.5 billion in loans to 1.5 million consumers in the U.S. and internationally.
In a statement announcing the lawsuit, Attorney General Kane said: "Any Pennsylvania residents with problems or complaints involving payday loans or related debt collection should get in touch with us immediately."
Kane's office filed the civil lawsuit in the Court of Common Pleas of Philadelphia County, Pa. The defendants are accused of violating several Pennsylvania laws including the Unfair Trade Practices and Consumer Protection Law, the Corrupt Organizations Act and the Fair Credit Extension Uniformity Act.