Home » NEWS » Banking & Finance » Federal judge: Let payday lender All American air case

Federal judge: Let payday lender All American air case

By TED CARTER

A federal judge Friday put a speed bump in front of Mississippi banking regulators seeking to shut down payday lender All American Checking Cashing over allegedly collecting illegal fees from borrowers.

The Department of Banking and Finance can’t revoke the licenses for All American’s 43 stores and force payment of a $3 million penalty without giving the payday lender a hearing before Banking Commissioner Charlotte Corley, said Senior Judge Tom S. Lee of the U.S. District Court for the Southern District of Mississippi.

Lee’s order followed two hours of arguments from state lawyers and lawyers for owner Michael Gray on Gray’s bid for an injunction to halt the regulatory penalties. Lee said he would rule later this week.

Gray is fighting regulatory claims his stores made thousands of illegal loan rollovers and committed other offenses as a corporate strategy. The main offense, regulators say, involved letting borrowers repeatedly pay the loan fees of $20 per $100 on two-week loans instead of the principal loan amount, thus creating a new loan (or rollover) and trapping borrowers in a cycle of debt.

Instances of the rollovers “are so widespread that they are innumerable,” Taft Webb, director of the banking department’s Consumer Finance Division, said in his Jan. 29 penalty notice to Gray.

Representing the banking department, Justin Matheny of the Mississippi Attorney General’s civil division said Banking Commissioner Corley likely would conduct a hearing regardless of whether it is required. “There’s a lot of documents and evidence that must be considered,” Matheny said.

But putting a halt to the administrative actions, including the license revocations, is unmerited, Matheny said. He cited case law he said required that the potential harm to a license holder must be “the greatest of the greatest irreparable harm.

“Irreparable harm means no remedy in law,” he said.

The soon-to-be-held hearing and a judicial appeal to Chancery Court are available remedies, Matheny added.

Gray’s lawyers from the Memphis firm of Dinkelspiel Rasmussen & Mink said state regulators have failed to substantiate any of the illegal loan rollover claims and have served as “government thugs” in imposing “a summary death sentence” on All American Check Cashing.

 

 

BEFORE YOU GO…

… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Ted Carter

3 comments

  1. Just pass an anti-usury law and get rid of all of them. Oh no, instead the legislature is busy indemnifying any officer of any electric co-op for ANYTHING. They can steal the Treasury, rape their secretary (m or f) and still get a gold star. Why doesn’t the legislature do something worthwhile, like getting rid of payday lenders? They are a blight on the population. What would Jesus say? He’d throw payday lenders out of the temple.

  2. Former Manager at a location that was doing illegal roll overs and keeping customers in debt.

    The employees know the truth. We were taking fees until June 2014. We had a lavish meeting at the casino telling us to stop and not do anything that would seem as if we were taking a fee. Then we get to the stores and the supervisor tells us a customer can come pay one check off and then go outside to get their money for the other check. Customers should have the full amount when they come in. They violated a lot of practices.

Leave a Reply

Your email address will not be published. Required fields are marked *

*