(C) Daily Montanan This story was originally published by Daily Montanan and is unaltered. . . . . . . . . . . Minnesota AG sues Fort Belknap company's officers over 'illegal' lending operations – Daily Montanan [1] ['Blair Miller', 'More From Author', '- November'] Date: 2023-11-02 Fort Belknap’s short-term lending operations might not be able to do business with anyone in Minnesota for much longer after the state’s attorney general sued their CEO and board chairman this week, alleging the companies have been violating state and federal law by handing out, and collecting on, loans with exorbitant interest rates. Those companies are owned and operated by the Fort Belknap Indian Community tribes through their economic development company, Island Mountain Development Group, and bring in about 90% of its revenue, which was about $130 million annually as of three years ago. IMDG generates the bulk of economic activity and jobs on the remote reservation in northern Montana – largely by handing out small loans with interest rates from 400% to 800%. The lawsuit filed in federal court on Monday and announced Wednesday by Attorney General Keith Ellison marks the highest-profile legal challenge to IMDG’s lending companies, which are now ongoing in at least three other states, as the company alleges its former attorney engaged in financial malpractice over the past several years before a leadership shakeup earlier this year. “These businesses have been engaging in the worst kind of predatory lending, and I’m glad to bring this lawsuit to stop the harm they are causing and help people afford their lives,” Ellison said in a statement. “Let this serve as a warning to any other businesses charging these illegal and outrageous interest rates: If you break the law and cheat the people of Minnesota, we will put a stop to it and hold you accountable.” The latest lawsuit was filed against IMDG’s current CEO, Evan Azure, and current IMDG board chairman Geno LeValdo in their official capacities. But it differs from some of the other lawsuits filed over the past few years in that it names only the two as plaintiffs and not IMDG or the Fort Belknap Indian Community because of their sovereign status that shields them from suit. “The sovereign status of the lenders’ owner, however, prevents a direct lawsuit against the tribal entity itself,” the Minnesota Attorney General’s Office said in a news release. “It also limits relief available to an injunction that stops further illegality by the company’s controlling officers; monetary relief and penalties are not available.” Azure and LeValdo did not respond to messages seeking comment on the new lawsuit Thursday. The lawsuit implicates two of the lending companies under IMDG’s umbrella – Bright Lending and Target Cash Now – whose operations and legal matters the Daily Montanan has previously reported on. It also identifies a third company, Green Trust Cash, operated under the IMDG umbrella, which the suit says has ceased operations following complaints to the Better Business Bureau. IMDG currently also operates a lending business called Cash Advance Now that is not named in the lawsuit. Minnesota’s filing says while the state believes there are potentially thousands of Minnesotans who received loans that are illegal under Minnesota law from IMDG’s companies, it has so far only received information about 634 loans that defaulted and were referred to collections companies between 2018 and 2022 for a full balance of $608,000. The lawsuit says that while former IMDG CEO Terry Brockie and former IMDG board chairman Tracy King had always maintained to the Attorney General’s Office that the loans it was providing were not subject to state law, that is not the case, and Azure and LeValdo have not changed their stance since taking over. “However, the lenders’ scheme is illegal and their statements to consumers were false. A business that sells in Minnesota must comply with Minnesota’s consumer-lending laws, regardless of whether it offers and makes the loan over the internet or a brick-and-mortar store,” the Attorney General’s Office said in a release. “The law also applies to businesses even if they are owned by a sovereign entity, whether it be a state or tribal entity. Brockie stepped down after the tribal council in January ousted the former board, including King, over questions over IMDG’s finances several council members said were not being answered. The new board, composed of tribal councilmen, started an investigation into the company’s finances that led to King’s impeachment from the council this summer and the lawsuit against the company’s former lawyer for alleged financial mismanagement. The Minnesota lawsuit asks a federal judge to declare Azure and LeValdo’s ongoing efforts to offer and collect on the loans through IMDG to be in violation of state and federal law; enjoin both from continuing to offer those products or collecting on usurious loans in Minnesota; and allow Minnesota victims, if the suit is successful, to receive compensation from a victims relief fund since they could not collect monetary damages because of the tribal-arm company’s sovereign immunity. Ellison’s office pointed to numerous state and federal usury, consumer protection, and racketeering statutes it said IMDG’s companies are violating by continuing to make the loans and collect on any debts owed by Minnesotans. “Simply put, those that do business in Minnesota cannot evade Minnesota laws by operating online or including contract provisions purporting to waive operation of Minnesota statutes,” the lawsuit says. “Defendants’ loans are illegal and their representations about consumers’ obligations and rights are misleading, abusive, and unfair.” The lawsuit lists pages of summaries of complaints made by 45 Minnesotans to the AG’s Office and BBB regarding IMDG’s lending companies, many of which detail loans of between $300 and $1,200 that carried interest rates well above 400%. Several of the people who took the loans said they were already in dire financial straits, did not understand the massive interest rates the loans carried, and that the loans and interest had only made their financial situations worse than before. Under federal law, the Consumer Financial Protection Act prohibits misleading, abusive and unfair practices, while the Racketeer Influenced and Corrupt Organizations Act (RICO) prohibits companies from lending at unreasonably high interest rates. The suit alleges the lending companies are violating both acts. Minnesota has had usury laws in place since it was a territory, but the state legislature this year and in recent years past strengthened several usury laws surrounding interest rate caps and both small and short-term loans. Lawmakers have also budgeted more than $100,000 annually so the state government can refinance the loans of Minnesotans taken out with interest rates above 36%. The suit says Minnesota has a general interest rate cap of 8% for most general loans, prohibits terms of loan contracts that say state lending and usury laws do not apply, and requires short-term lenders to be licensed and file reports with the Department of Commerce. This year, the legislature capped short-term lending interest rates at 50% if the consumer can make the payments, and at 36% if they cannot. The lawsuit further says the Minnesota Supreme Court has held that any lender charging interest rates above 500% to people who have to borrow money due to “necessitous circumstances” are a constituted as a “public nuisance.” The suit says the lending companies are violating all of those laws, as well as laws protecting against unfair trade practices and false advertising, by offering the high interest rate loans and making customers sign agreements saying they have no right to sue for violations of the law despite Minnesota law declaring the interest balances illegal. “Defendants’ conduct and operations of the IMDG and its LLCs … undermine Minnesota’s sovereign interests in upholding its laws, preventing wrongful and harmful business conduct, protecting the economic health of state residents, ensuring a sound and fair marketplace for financially distressed consumers with diminished bargaining power, and preventing unfair competition against businesses that comply with Minnesota law,” the lawsuit says. In Minnesota, some of the newly updated consumer and lending protection laws have come from efforts spearheaded by Minnesotans for Fair Lending, a coalition led by Exodus Lending, a nonprofit that refinances predatory loans at no interest to try to help people out of unnecessary debt caused by loans similar to what IMDG’s companies offer. “Since we began our program in 2015, we have refinanced 32 loans carrying average interest rates of 519% across three lenders operating under Fort Belknap Community,” said the nonprofit’s executive director, Anne Leland Clark. “While these loans may have been helpful in solving an immediate financial need or shortfall, they caused financial harm in the long run.” The Attorney General’s Office is also asking other Minnesotans who have taken loans from Bright Lending, Target Cash Now and Green Trust Cash to call the office and file a complaint at 800-657-3787 statewide or 651-296-3353 in the Minneapolis-St. Paul area. 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