A payday lending executive who New York prosecutors say violated the state's usury laws is set to be arraigned Tuesday in a Manhattan court.
Manhattan District Attorney Cyrus Vance has charged a dozen online companies and their owner with participating in a "systemic and pervasive usury scheme," according to a copy of the indictment provided by Vance's office.
The indictment outlines a "carefully crafted" corporate structure that owner Carey Vaughn Brown constructed to evade legal scrutiny.
Brown operated several of the companies named in the charges from Chattanooga, Tenn. His online payday lending company, MyCashNow.com, was incorporated offshore, in the West Indies. Additionally, several other subsidiaries were incorporated in states known for their more lenient regulations of payday lending, including Nevada and Wyoming.
Together, the companies, prosecutors charge, "marketed, underwrote, serviced, transacted and collected" short-term loans to consumers that often carried interest rates exceeding 300%. New York state law bars unlicensed lenders from charging more than 25% per year on loans of less than $2.5 million, the indictment says.
The case comes as banks have received increasing pressure from regulators to cut ties with certain payday lenders. It also comes nearly a year after New York banking regulators targeted 35 online lenders that it said were not licensed to operate in the state.
A lawyer representing Mr. Brown did not immediately respond to a request for comment.
The charges were first reported by the New York Times.