The Connecticut Department of Banking claims a Native American tribe in Oklahoma is running two illegal high-interest loan operations but the tribe has won a delay in its battle against the imposition of $800,000 in penalties.
If the Connecticut Department of Banking wants to pursue the case against the Otoe Missouria Tribe, Banking Commissioner Jorge Perez will have to further investigate any links between the tribes and two companies - Great Plains Lending LLC and Clear Creek Lending, according to a judge who recently remanded the case back to the banking department.
The companies offer payday loans from between $100 and $2,000 at interest rates of more than 400%. State law limits interest rates to 12% for loans under $15,000.
The 3,000-member tribe contends their federal sovereign immunity protects them from the state, but the Connecticut banking department claims the entities reach beyond the tribal protections.
"Otoe-Missouria tribal businesses are owned and operated by the tribe, governed by tribal law and regulated by tribal regulatory authorities,” said Tribal Chairman John Shotton, in reaction to the court decision. “We are a sovereign nation and our leaders are duly elected by the Otoe-Missouria people. As was recognized by the court in its decision, Indian nations have sovereignty as set forth by treaty and affirmed by legal precedent. We are pleased that the court has validated the rights of not only the Otoe-Missouria Tribe, but all tribes throughout Indian Country and feel confident that our sovereignty will be upheld.”
Shotton and Great Plains Lending previously were ordered to pay $700,000 and Clear Creek was ordered to pay $100,000.
Connecticut Superior Court Judge Carl J. Schuman ruled last month that the tribe failed in requesting a hearing on former Banking Commission Howard F. Pitkin’s fine issued in October 2014. Pitkin had said the entities were not licensed in Connecticut and were not exempt from licensure requirements. He further found that Shotton participated in the loan operation, which took place, at least in part, away from tribal jurisdiction. Schuman noted that federal courts have for generations affirmed sovereign immunity but the question is how close the loan entities are to tribal operations, or the “arm of the tribe.”"The commissioner had a valid reason for not reaching the arm-of-the-tribe issue because at the time, he reasonably, though erroneously, believed that it was unnecessary to do so in order to resolve the case," Schuman wrote.