Tribal Lenders Face RICO Class Action Lawsuit in Virginia

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Plain Green LLC and Great Plains Lending LLC have been hit with a class action lawsuit accusing the online lenders of skirting Virginia usury laws by using tribal names in exchange for a share of profits from the loans.

According to the tribal lenders class action lawsuit, the real purpose of the defendants’ contract with tribes was to use the tribes’ sovereign immunity to avoid liability for their unlawfully high interest rates.

“This case involves a criminal enterprise that was established with the intent of evading state usury laws,” plaintiffs Renee Galloway and Isabel Deleon allege in the class action lawsuit.

They claim that certain individuals, including Kenneth Rees, established a so-called “rent-a-tribe” business model in which a payday lender associates with a Native American tribe “in an attempt to cloak itself in the privileges and immunities enjoyed by the tribe–or to at least create the illusion that it enjoys tribal immunity.”

Rees allegedly approached members of the Chippewa Cree Tribe and Otoe Missouria Tribe, and reached a deal that would provide the Tribes with 4.5 percent of the revenue from the loans in exchange for the use of their names. The tribes reportedly had no control over the income, expenses or day-to-day operations of the payday lending companies.

The payday loan class action lawsuit also claims that the funds were actually diverted to tribal leaders who have been sent to prison for accepting bribes in exchange for tribal contracts.

“In this instance, Plain Green and Great Plains are not entitled to sovereign immunity because 95.5%, if not more, of the profits from the scheme went to non-tribal participants and the companies were established for the sole purpose of evading state usury laws,” the payday lending class action lawsuit says.

“Extending the protections of tribal immunity to Defendants’ scheme would not serve the policies underlying tribal sovereign immunity.”

The payday lending class action lawsuit asserts claims for violations of the Racketeer Influenced and Corrupt Organizations Act and violations of Virginia’s usury laws. The plaintiffs also assert claims for unjust enrichment.

“Because the loans exceed 12% annual percentage rate (‘APR’), such loans are null and void and neither the lender nor any third party may collect, obtain, or receive any principal, interest, or charges on the loans,” the payday loan class action lawsuit says.

The plaintiffs are asking for declaratory relief, injunctive relief, damages, attorneys’ fees and costs, and other relief the court deems proper.

Galloway and Deleon filed the payday loan class action lawsuit on behalf of themselves and a proposed Class of Virginia residents who executed a loan with Plain Green or Great Plains.

The plaintiffs are represented by Kristi C. Kelly and Andrew J. Guzzo of Kelly & Crandall PLC and by Leonard A. Bennett, Craig Marchiando and Elizabeth Hanes of Consumer Litigation Associates PC.

The Virginia Tribal Lenders Class Action Lawsuit is Galloway, et al. v. Plain Green LLC, et al., Case No. 3:18-cv-00540, in the U.S. District Court for the Eastern District of Virginia.