A trail of money that began with triple-digit loans to troubled New Yorkers and wound through companies owned by a former used-car salesman in Tennessee led New York prosecutors on a yearlong hunt through the shadowy world of payday lending, says the New York Times. On Monday, that investigation culminated with state prosecutors in Manhattan bringing criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of enabling payday loans that flouted the state's 25 percent limit on interest rates in loans to New Yorkers.
The case is a harbinger of others that may be brought to rein in payday lenders that offer quick cash, backed by borrowers' paychecks, to people desperate for money. In the indictment, prosecutors outline how Brown assembled “a payday syndicate” that controlled every facet of the loan process — from extending the loans to processing payments to collecting from borrowers behind on their bills. Brown is accused of creating a dizzying corporate structure to obscure his ownership of 12 interconnected companies, including the online lender MyCashNow.com. Brown is said to have circumvented laws by making loans at interest rates of up to 650 percent even in states that outlawed those rates.