A Wilmington lawyer and former financial services executive and a Villanova, PA man were convicted of charges related to a payday loan business.
Charles M. Hallinan, 76 and Wheeler K. Neff, 69 , of Wilmington were found guilty Monday by a federal jury of two counts of conspiracy to violate the Racketeering Influenced and Corrupt Organizations Act (“RICO”) relating to “payday lending” businesses, one count of conspiracy to commit mail fraud, wire fraud, and money laundering, as well as two counts of mail fraud and three counts of wire fraud.
The verdict was announced United States Attorney Louis D. Lappen.
Hallinan was also convicted of nine counts of international money laundering.
Wilmington lawyer one of three indicted in connection with payday loan scheme
According to Philly.com Neff had claimed during the trial that relationships with Native American tribes made the high-interest loan activities legal. The two men are expected to appeal the decision.
Payday loans are legal in Delaware, but are outlawed in Pennsylvania and other states. Delaware has placed restrictions on the loans that carry interest rates that can run into the hundreds of percentage points.
Prosecutors stated that Hallinan and Neff participated in a conspiracy that violated the usury laws of Pennsylvania and other states and generated more than $688 million in revenue, between 2008 and 2013, from hundreds of thousands of customers, including residents of Pennsylvania which prohibits such loans. Also, Hallinan and Neff conspired to defraud nearly 1,400 people, who had sued one of Hallinan’s payday loan companies, into abandoning a lawsuit with damages valued as highly as $10 million.
Hallinan owned, operated, financed, and/or worked for more than a dozen businesses between 1997 and 2013 that issued and collected debt from small, short-term loans that were commonly known as “payday loans” because the customers were supposed to pay them back with their next paychecks.
Prosecutors said Hallinan and Neff conspired to evade such laws by, among other things, paying thousands of dollars each month to three Indian tribes to pretend that they were the actual payday lenders and claim that “tribal sovereign immunity” shielded their conduct from state laws and regulations.
Hallinan and Neff are also helped another payday lender, Adrian Rubin, charged elsewhere, evade state anti-usury laws by entering into sham contracts with a Native American tribe that were designed to give a false impression that the tribe was the true lender.
