Chattanooga payday lender Carey V. Brown and two of the companies he once ran have pleaded guilty to criminal usury laws in New York and will pay victims $ 6 million in forfeiture costs, plea deal says announced today by Manhattan District Attorney Cyrus R. Vance, Jr.
Brown, the 57-year-old Ooltewah businessman who built one of the largest online payday lending empires in the United States before shutting it down two years ago under regulatory pressure, will not incur any prison sentence. But he will have to perform 250 hours of community service, lose $ 3 million and pay $ 6 million for a compensation fund to be set up by the New York attorney general.
Two Chattanooga-based companies that previously provided online payday loans across the country —Credit Payment Services, Inc. (“CPS”) and MYCASHNOW.com, Inc., are also involved in the plea deal for the charges. violation of New York State interest rate limits on its loans.
“Payday loans victimize those least able to afford the exorbitant and totally unrealistic terms of these loans, and often lead to lifelong debt and credit problems for unhappy borrowers,” Vance said in a statement. announcing the plea deal today. “Recognizing how damaging payday loans can be, Google said this week that it will no longer allow such ads on its website. and the creation of a compensation fund, we have taken a step towards redressing the wrongs caused by some members of this mining industry. “
Payday loans are generally defined as loans of $ 1,000 or less that are generally meant to be repaid from a borrower’s next paycheck. These loans often carry interest rates exceeding 300% of the principal when calculated on an annual basis for the initial term of the loan. Borrowers are often unable to repay the loan after the first two week period. In such cases, payday lenders regularly grant loans, charging new fees for extensions.
Many borrowers end up paying double the principal loan amount, or even more. In New York State, it is a crime for an unlicensed lender to charge more than 25% interest per year on any loan under $ 2.5 million.
As part of his guilty plea, Brown admitted that between 2001 and 2013, he owned, controlled, or was the final decision-maker of MYCASHNOW, an online payday lender that, under BROWN’s direction, provided loans to individuals. customers with an annual percentage rate. by well over 25 percent. These loans have been made across the country, including to customers in New York. BROWN also admitted that between 2001 and 2013, he owned, controlled or was the final decision-maker of several companies, including CPS, ACH FEDERAL, LLC; CLOUDSWELL, INC., A / k / a BASENINE, a / k / a TERENINE; ZONE 203 MARKETING, LLC; SUPPORT SEVEN, LLC; MILLENNIUM FINANCIAL CONCEPTS, INC .; and, later, OWL’S NEST, LLC, which under BROWN’s leadership actively supported MYCASHNOW by providing payday loans to New York residents.
Co-defendants Ronald Beaver, 57, and Joanna Temple, 60, had previously pleaded guilty to attempted second-degree criminal attrition last December.
Read more in tomorrow’s Times Free Press
