A company tied to a payday scheme that led to the conviction of a Wilmington lawyer was placed on probation and ordered to pay nearly $6.5 million.
U.S. Attorney for Philadelphia William M. McSwain announced that Intercept Corporation,was placed on two years’ probation and ordered to forfeit $5,928,893 in criminal proceeds after pleading guilty to one count of operating an illegal money transmitting business. Intercept was also fined an additional $500,000 to be paid to the court.
The conviction stems from Intercept’s processing of high-interest consumer loans commonly known as “payday loans.” The loans are outlawed in many states, but are legal in Delaware.
Intercept is a North Dakota-based company that processes electronic funds transfers for its clients through the Automated Clearing House (“ACH”) system.
Intercept’s president, Bryan Smith, admitted that from May 2008 through August 2013, Intercept knowingly helped certain clients collect payday loans. Smith later testified at the racketeering and fraud trials of former client Charles M. Hallinan and Hallinan’s attorney, Wheeler K. Neff. Neff lives near Wilmington.
Smith told the jury that Intercept helped Hallinan’s payday lending companies collect more than $490 million from borrowers living across the United States. The jury eventually convicted Hallinan and Neff of all charges.
United States District Judge Eduardo C. Robreno sentenced Hallinan to 14 years’ imprisonment and Neff to eight years in prison Another former Intercept client, Scott Tucker, was convicted of similar crimes in New York and sentenced to 200 months.
Without Intercept’s use of the ACH system, the payday lenders would not have been able to collect nearly as much money from their loans. Most of the loans involved in the scheme had annual interest rates exceeding 780 percent, a release stated.
“Charles Hallinan, the so-called ‘Godfather of Payday Lending,’ made millions by preying on vulnerable victims, and Hallinan’s financial success was due, in large part, to Intercept’s willing participation in the scheme,” stated U.S. Attorney McSwain. “The substantial forfeiture order the Court entered today sends a powerful message to companies who profit from doing business with criminals like Hallinan and Neff: my Office will use every law enforcement tool we have to hold you accountable under federal law.”
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, and the U.S. Postal Inspection Service. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.