A judge on Friday blocked an order by state regulators shutting down one of Mississippi’s largest payday lenders and fining the company more than $1.5 million.
The Thursday order by state Banking Commissioner Charlotte Corley followed a monthslong proceeding examining whether All American Check Cashing broke state law in its payday and title pawn lending operations.
All American’s stores remain open, though, after the lender’s lawyers persuaded Hinds County Chancery Judge Dewayne Thomas to sign a temporary restraining order. Thomas has yet to schedule a hearing in the case.
Federal and state regulators in 2014 had accused Madison-based All American of a systematic scheme orchestrated by corporate leadership to evade Mississippi’s prohibition against rolling over payday loans by pushing customers to pay only interest and continue the loan. Consumer advocates have long fought that practice, because rolling over payday loans means borrowers continue paying sky-high interest rates.
The Mississippi Department of Banking and Consumer Finance revoked lending licenses held by All American’s 42 stores and ordered an immediate stop to new loans. Corley also ordered the company to pay civil fines of $1.58 million and pay refunds to at least 700 customers. All American says the largest penalty ever previously imposed by the department was about $50,000.
“I had no option but to permanently revoke all licenses held by All American or its owner, Mr. Michael Gray,” Corley said in a statement . “Fault lies with Michael Gray and those individuals that he placed in positions of authority within his company.”
The department cited numerous other violations of state law and regulations, and said the company tried to shut down stores in 2014 so state examiners couldn’t observe transactions, delayed providing documents, interrupted attempts by state examiners to interview customers and even followed examiners’ vehicles after they left stores.
The U.S. Consumer Financial Protection Bureau is suing All American in federal court in Jackson, seeking to force repayment to more customers. A federal magistrate judge this week denied All American’s attempts to freeze that case on claims that the bureau is unconstitutional and ordered the company to submit documents the agency demanded.
All American strenuously disputes the enforcement actions, saying regulators are biased, examiners in the 2014 raid entered areas without authority and forced employees to answer questions using threats of jail time, and concocted bogus customer complaints. All American renewed those claims Friday before Thomas, saying Corley’s order “is not supported by clear and convincing evidence, is arbitrary and capricious, is beyond the power of the department, and is the result of multiple violations of All American’s statutory and constitutional rights.”
In a news release, the company accused the Banking Department of trying to put more than 180 employees out a job and leave thousands of customers unserved.
“I look forward to finally having this case examined by a fair and impartial judge,” Gray said in the statement.
Earlier appeals to outside authority have gone nowhere, though. A federal lawsuit by All American against the Banking Department was dismissed, as was a state ethics complaint saying the department didn’t respond to the company’s public records request. The company last year also sent reporters a document addressed to the state’s Joint Legislative Committee on Performance Evaluation and Expenditure Review, suggesting a lawmaker has asked the watchdog body to scrutinize the Banking Department’s actions.
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