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Payday lender, fired executive exchanging blame for lender’s regulatory woes

Lawyers for payday lender All American Check Cashing and a fired executive of the Madison company are trading accusations of criminal activity.

All-American blames the former executive for the hot water it is in with state regulators; the out-of-work executive alleges the company fired him for not participating in illegal activities that included under-the-table payments to state legislators.

Hattiesburg lawyer Daniel Waide alleged in a July letter to All American Check Cashing’s attorney Dale Danks Jr. that the statewide payday lender tried to force former chief administrative officer/compliance officer Alan Crancer to take part in making illegal cash payments to Mississippi legislators in return for “favorable legislation.” Waide further claims All American asked Crancer to participate in making cash payments to owner Michael Gray to help Gray avoid paying taxes.

Crancer-vs-AllAmerican_rgbWaide has offered to drop further legal action in exchange for Crancer receiving two years of salary and medical insurance as severance.
Danks countered that Waide and Crancer “have conspired to actively engage in the criminal act of attempting to extort benefits, both monetary and otherwise, from my clients.”

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Danks said in 51 years as a Jackson lawyer he has never encountered “such a shallow attempt by a fellow member of the bar.”
In a July 20 email to Danks asking to settle Crancer’s complaint, Waide claims All American fired Crancer for refusing to take part in illegal payday loan rollovers, an illegal practice in Mississippi by which fees on an old loan are paid and a new loan is issued with new fees.

The alleged rollovers are part of an investigation by the state Department of Banking and Consumer Finance and central to a cease-and-desist order placed on All American Check Cashing and its 41 stores in Mississippi.

All American alleges that Crancer hatched the rollover scheme and posted a training document on the company’s intranet detailing how to work the rollovers. State regulators say the training document is a key element of its ongoing investigation of All American’s lending practices.

Crancer’s firing occurred in late June around the same time investigators from the state Department of Banking and Finance raided more than a dozen of All American’s stores around the state.

For his part, Crancer has repeatedly denied having any role in setting lending policies and practices during his four years as CAO and later compliance officer at All American. He said other company managers pushed employees to maximize borrower fees no matter what it took to do so.

The October 2012 document cited by regulators has the name of an All American manager other than Crancer. Labeled “The Monthly Lending Program,” it details how to keep the amount of each loan at the state’s allowable first tier level of below $250 and setting a 14-day repayment on a borrower whose source of income arrives monthly.

The state cease-and-desist order claims All American designed the program especially for borrowers who get monthly paychecks or government benefit checks.

On first-tier loans, the state allows fees of up to $20 per $100 loans and a 14-day repayment period. In what even state legislators concede is a glitch in the check cashing law renewed in 2012, the law lets lenders issue a combination of the first-tier loans up to $500, a limit that includes both the loan amount and fees. Second-tier loans are those $250 and above and mandate a 28-to-30 day repayment period.

Lenders who make a combination of first-tier loans up to $400 can collect up to $87.80 in fees ($21.95 on each $100). The loans are due in 14 days, unlike a true second-tier loan that carries twice the repayment period.

The practice detailed in the training document shows workers how to gain nearly the same in fees, $80 in this instance, while keeping the loans at the tier-one level. It further advises limiting the loan duration to 14 days but spreading the fee repayment over 30 days.
Danks insisted that no company executives other than Crancer knew the training document was on the intranet.

“Mr. Crancer was terminated from All American because he created and disseminated an illegal document on the intranet,” Danks said in an interview Tuesday.

Crancer, through attorney Waide, makes a series of serious allegations against All American and Gray, who founded the company 15 years ago.

Waide alleges:
» Crancer “refused to participate and complained of All American’s practice of making cash ‘payments’ to state legislators in exchange for favorable legislation.”
» Crancer “refused to participate and complained of All American’s practice of paying (owner) Michael Gray in cash to avoid tax consequences”;
» Crancer “refused to participate and complained of All American’s practice of ‘erasing’ refunds to customers who had overpaid”;
» Crancer “refused to participate and complained of All American’s practice of using Hailey Holdings [a limited liability company for which Gray is the registered agent] to avoid tax liability”;
» Crancer “refused to participate and complained of All American’s practice of discriminating against minorities. More specifically, but not limited to, Michael Gray’s reference to the collection department as ‘Willy Wonka and the Chocolate Factory’ because of the number of black employees there”;
» Crancer “refused to participate and complained of All American’s practice of rolling fees and entangling customers in debt, in violation of the banking laws in Mississippi.”

Waide further alleged: “According to my client, Michael Gray eventually became frustrated that Mr. Crancer was not cooperative and wouldn’t play ball in regards to the many discriminatory and criminal acts which were practiced at All American.”

Waide said he has not decided “what we’re doing next.” Any suit he files for Crancer on the wrongful dismissal claim will be in state court.

He declined to elaborate on the allegations. “At this point, I can’t comment on those because there is no litigation,” he said.

Danks called the allegations “ridiculous” and said they “are the result of a disgruntled employee who was fired with cause and is attempting to strike back.”

Michael Gray, in an interview Tuesday, said each of the allegations from Waide and Crancer is false. “Absolutely not,” Gray said of the claim he bought favors from state legislators.

On the tax avoidance claim, he said any money he received from his company came in a check. “I’d like that one explained to me,” he said.

On the claim of “erasing” refunds, he said that is not possible because every transaction is warehoused in a point-of-sale software data storage center.

To the racial slur claim, Gray said, “I never used those terms. I am very proud of the diversity in this company” of 200 employees, he added.

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