A little-known LCO tribal enterprise known as LCO Financial
Services has been engaging in online payday loans charging interest rates, at
times, in excess of 800%. The operation was incorporated on September 1, 2013,
and not long after, began doing business as Blue Trust Loans.
According to documents retrieved, LCO Financial Services was
established for two purposes, to engage in online lending and online gaming.
The online lending became a partnership with an overseas company, Cane Bay
Partners VI, who are using tribes to avoid state and federal regulations
running dozens of high interest payday loan websites because tribes claim
sovereign immunity.
The LCO Tribe, through LCO Casino, invested $1 million with
Cane Bay in 2013 for a 2% share of all online lending businesses conducted through
LCO Financial Services, according to multiple sources, including former tribal council
members.
An additional $1 million dollars from the casino was
invested into the Inter-Tribal Online Gaming Alliance (ITOGA) to establish an
online bingo website that never launched. The investment was made over the
summer of 2013.
The whereabouts of the million dollars is unknown as the LCO
Financial Services company created underneath it, Moccasin Gaming, doesn’t
exist and the one page website for ITOGA, sits idle with no contact us
information or listing of member tribes. The contact us form no longer works.
LCO Financial Services issued a statement in defense of
their online lending operation, but made no comment in reference to ITOGA or
online gaming.
LCO Casino Chairman, Lee Harden, pushed for the creation of
LCO Financial Services and was also named its Chairman of the Board and is
named as manager of the company.
Harden was appointed Chairman of the Board at the first
meeting under a brand new LCO Chairman, Mic Isham, on Monday, July 8, 2013.
Isham was inaugurated as chairman on Friday, July 5, 2013.
Shortly after assuming office, Chairman Isham, with four
votes from the tribal council, authorized Lee Harden to move forward with the
“Rent A Tribe” scheme and the investment of $1 million into a non-existent
online bingo company.
Summary of Details
LCO Financial Services is in partnership with Cane Bay
Partners in a “Rent A Tribe” scheme and the practices used are in direct contradiction
with LCO FS membership in Native American Financial Services Association
(NAFSA), charging interest rates sometimes over 800% on loans, according to
documentation and multiple sources interviewed. Chairman Isham is also
Vice-Chairman of this organization.
There are dozens of documented complaints at several
different reporting sites, including Ripoff Report and the Better Business
Bureau, alleging that LCO’s payday loan website Blue Trust Loans is
overcharging clients, harassing them using various 1-800-numbers that are also
tied to other payday loan sites, operating in a similar fashion by other tribes
in partnership with Cane Bay.
Cane Bay Partners are under several federal investigations
but operate off shore to avoid usury laws and to avoid state and federal
regulations. They are using multiple tribes generating millions of dollars,
according to several national news articles.
We gave Cane Bay Partners $1 million for a 2% share.
Our tribe gave the Inter-Tribal Online Gaming Alliance
(ITOGA) a $1 million investment to operate an online bingo site with a total of
6 tribes, but the site or sites never launched and the ITOGA website sits idle
today and has no contact information, even the contact us submission form no
longer works. The LCO Tribe’s own site Moccasin Gaming never got off the ground
and we gave them $1 million. Where is that money and what happened to ITOGA.
LCO Financial Services has nine different company names
underneath it and only two actually do business. Also, various LCO Financial
Services board members have named themselves as managers of these different
companies, and per their operating agreements, may pay these managers a wage.
These so-called managers are also employed and collecting paychecks in other
departments of the tribe.
LCO Financial Services and the many other company names held
their board meetings in Lee Harden’s office during casino business hours, as
documented in meeting minutes, and collected a $200 stipend each for every
meeting they attended, according to a source close to the operation who wished
to remain anonymous for fear of retaliation. This includes tribal attorney Jim
Schlender and council member Norma Ross.
LCO Financial Services is the only tribal enterprise where
all books and payroll are kept out of the hands of any tribal accounting
department using an outside firm, Roe & Meyer.
A listing of this summary was sent to 16 persons involved,
past or present, with LCO Financial Services in the day leading up to
publication, and only one made a comment while the others shared no response to
this article. Instead, a New York law firm, Rosette Law, sent a letter threatening
a lawsuit if the article was printed.
LCO Financial Services also sent a statement in their
defense, issued by a Robert Ford, but Ford didn’t indicate whether he is an
employee of LCO Financial Services or the law firm.
The listing of this summary was sent to LCO Casino
executives Lee Harden, Dulcie Rae Wolfe and Randy Cadotte, all who currently
hold positions on the board of directors. It was also sent to all seven tribal
council members and two current LCO FS board members, Di-Z Cross and William
Trepania. Also, details were sent to the LCO Tribal Judge, Jim Schlender, who
was the attorney who sat on the original board, and current attorney, Jason
Kekek Stark. LCO Financial Services Executive Director, Trina Starr, was also
sent a summary. Former board member, David Fleming, was also sent a copy but
was out of town and unreachable.
The only person to respond was LCO Council Member Joel
Valentin. Valentin said he was unaware of any of these details and only
attended a couple of meetings during his two years on council, where he only
saw that we were operating an installment loan business.
Valentin said his background includes law enforcement and he
is liaison to programs and enterprises that fit his background. He wasn’t a
part of LCO Financial Services, he said.
The sections upcoming in this article, each telling their
own story, include;
1.
Establishing LCO Financial Services
2.
Establishing the businesses
3.
The business accounting
4.
Cane Bay Partnership
5.
Cane Bay California lawsuit
6.
NAFSA and how it all began
7.
LCO investment in ITOGA
8.
Cane Bay websites
9.
Hummingbird and Blue Trust Loans
10.
The Complaints
11.
The Rosette Law Firm
12.
Operation Choke Point
13.
The current operation
14.
A Statement from LCO Financial Services
Establishing LCO Financial Services
Over the course of the first year in business, several LLC
business names were set up under the original business plan, of which only one
is actually doing business with the public, and yet, the LCO Financial Services
Board of Directors has established themselves as managers of the various
companies that exist only on paper.
After the first four businesses were set up, LCO Financial
Services, Oasis Funds, Moccasin Gaming and Red Stone Investments, several more
were created in the years to follow. Those include Oasis Funds II, Hummingbird
Funds, Ladder Credit, Minaan Funds and Adaawam Funds.
Two of these businesses have payday loan websites, Blue
Trust Loans, owned by Hummingbird Funds, and Ladder Credit, which is owned by
Minaan Funds.
According to the operating agreements of each of these
separate business entities, a salary will be paid to each manager. The original
board members included Lee Harden and two other casino executives, Glenn Hall
and John “Randy” Cadotte, who recently ran for tribal council and lost by one
vote. Glenn Hall was removed on November 1, 2013 and replaced by Dulcie Rae
Wolfe. All three have been appointed managers of the various companies. All
three sat on the board of directors for each one and exchanged the titles of
chairman, vice chairman and treasurer throughout.
Shortly after Financial Services was established, Lee Harden
created a partnership with an off-shore company called Cane Bay Partners, which
is under federal investigation for its payday loan practices in many states. The
company is also under a lawsuit which goes to trial on March 26 of 2018 for
illegal practices in the state of California.
The lawsuit stems from Cane Bay’s participation in
MoneyMutual, the website promoted by talk show host Montel Williams in the late-night
viewing hours of television several years ago. More on that later.
The two owners of Cane Bay Partners, Kirk Chewning and David
Johnson, both live in St. Croix of the Virgin Islands, and are accused of using
many American Indian Tribes across the country to set up dozens of these payday
loan companies to operate outside state laws, because of tribal immunity. The
scheme is called “Rent-A-Tribe.”
Our management contract with Cane Bay originally gave our
tribe only 2% of the loan revenues, according to a former employee at LCO. If
the LCO Tribal Governing Board was willing to invest $3 million into Cane Bay,
they would have received a higher percentage at 5%, but former tribal governing
board member Don Carley said they weren’t willing to put in that much.
In July of 2013, Mic Isham took over as chairman of LCO and
immediately thereafter, Lee Harden went forward with the business plan and
entered into talks with Cane Bay. Ultimately, LCO gave Cane Bay $1 million for
the initial start-up, which gave LCO 2%.
According to a source close to the operations of these
companies who wished to remain anonymous for fear of retaliation, a
distribution has been made to the LCO Tribe from Cane Bay on a monthly basis
ranging between $40,000 and $200,000. A similar payday loan company operated by
the Rocky Boy Reservation called Plaingreenloans, which actually charges more
reasonable interest rates around 30 to 40% and is made public to their
membership, makes in excess of $12 million a year for their tribe.
LCO Financial Services was first proposed to the tribal
council in May of 2013 by LCO Casino Manager, Lee Harden.
Establishing the businesses
On May 20, 2013, the tribal governing board passed
resolution 13-36, which approved and established the Lac Courte Oreilles
Financial Services (LCOFS). LCO Vice Chairman, Bill Morrow, signed the
resolution acting as chairman in the absence of Gordon Thayer.
“I don’t know much about it,” Thayer said in regards to LCO
Financial Services. “It really came about after I was chairman.”
A little more than a month after the resolution was passed,
on July 5, 2013, new officers were chosen by the council, which included Mic
Isham as chairman, Rusty Barber as vice chairman and Norma Ross as
secretary-treasurer.
That next Monday morning, July 8, at their regular council
meeting, the new chairman, Isham, moved forward with the new tribal enterprise.
On the agenda was the appointment of Lee Harden as chairman of the board of
directors for LCO FS. The motion to appoint him was made by Rusty Barber and
seconded by Norma Ross. It was approved 4-0-0, with Don Carley and Larry
Kagigebi voting in favor.
At the same meeting, Norma Ross and Mic Isham were appointed
to the Native American Financial Services Association (NAFSA) board and
Inter-Tribal Online Gaming Alliance (ITOGA), representing LCO. NAFSA is an
organization that represents various Indian tribes engaging in the payday loan
business, but with respectable fair practice standards. Isham is now the vice
chairman of this organization.
ITOGA is an organization that was created to do an online
gaming partnership between six tribes, each of which contributed more than a
million dollars, LCO included, but was never launched and has a website that
sits idle, but more on both these organizations later.
Speaking of the newly created enterprise when Thayer was
still chairman, he said it was presented to the council by Lee Harden. “It was
supposed to bring in all kinds of money, but I was apprehensive about it. After
Mic became chairman, they never involved me.”
Other council members at that time, Little Guy Clause, Don
Carley and Larry Kagigebi all said the same thing, that closed-door meetings
were held in the chairman’s office in regards to the new enterprise and they
never really knew much about it.
“They had their own little crew there,” Thayer said.
Don Carley said he never had anything to do with the
company. He said Mic, Norma and Lee Harden had control of it.
“When we did discuss it in council meetings, we were told it
was going to be a very lucrative business for the tribe,” Carley said. “It
should have been very profitable, but I don’t know what it made for the tribe.”
Carley said Lee brought the proposal to the tribe and said
the tribe could make a lot of money off of it, and, “At the time, we needed to
make money, so we had our attorneys look at it and they said it was on the up
and up. We had them check into these two guys from Cane Bay and our Legal
Department said they were good guys.”
Carley said Lee Harden brought over the chairman from the
Lac Vieux Desert to make a presentation about the payday loan business because
they were involved in it and had experience.
Carley said this all happened towards the end of 2013 and
into 2014, but that it took almost a year before the tribe saw any money from
it, and from what he remembered, he said it was $25,000 here and there.
Gary “Little Guy” Clause, who was on the council at that
time, said he never wanted the business on our reservation because it was
charging high interest loans. He said he had heard the government was cracking
down on the business in other states, but he didn’t realize that the Cane Bay
Partners were actually under investigation.
“They came in here and said we were going to make mad
money,” Little Guy said. “I don’t remember seeing any money coming out of it.”
Little Guy said he was never included in any closed-door
meetings, only council meetings. “Mic had his hands in there and he didn’t
trust me or open up to me about it at all. And I heard Lee was going to be
running the financial services and I said right away, ‘how is he going to run
this and be running the casino,’ but Legal came in and told us everything was
going to be okay."
The tribal attorney at the time was James Schlender Jr. He
was also the attorney who prepared the legal documents for the enterprise,
which included the operating agreement, articles of organization and the
bylaws. Schlender sat in the original board meetings of LCO Financial Services.
In the Articles of Organization, signed by Lee Harden on
November 11, 2013, James H. Schlender Jr is listed as the statutory agent at
13394 W Trepania road, Hayward. The statutory agent is listed to receive legal
notices or process.
Another former council member who sat on the council at that
time was Larry Kagigebi. “I never heard of this getting off the ground. I
remember talking about online gaming at a few meetings, but that was it,” he
said.
An operating agreement for LCO FS was presented to the
tribal council at that July 8, 2013 meeting, but it wasn’t signed until
November 1, 2013, making it effective to govern the operations of LCOFS. It was
signed by Norma Ross, as TGB member, Lee Harden, chairman of the LCOFS board,
and David Fleming, Secretary-Treasurer of the LCOFS board.
In Sec. 3.2 of the operating agreement it provides that the
company may hire a manager who runs all actions necessary for the business
affairs. In Sec. 3.2.4, it says “At the
Board of Directors’ discretion, Manager may serve pursuant to an employment
contract or simply as an at-will officer-employee of the Company.”
Section 3 also provides that the manager must abide by all
requirements of tribal law including any reporting requirements and applicable
federal and state laws. And manager shall have strict fiduciary responsibility
to the company and to the TGB and shall at all times carry out business of the
company.
Lee Harden was named manager of the company.
Similar operating agreements were set up in late 2013 and
early 2014, along with Articles of Organization and Bylaws for three other
companies, Oasis Funds, Moccasin Gaming and Red Stone Investments.
Dulcie Rae Wolfe was named manager of Oasis Funds. Randy
Cadotte was named manager of Moccasin Gaming and David Fleming was named
manager of Red Stone Investments. All four were members of the LCO FS board of
directors and each individual board for the other three companies. Included in
the board meetings were Jim Schlender, tribal attorney and Norma Ross, TGB
liaison.
Over the course of four years, all these different LLC’s
have held board meetings, and according to the source, they have held their
meetings in Lee Harden’s office at the casino during regular business hours
when they are all under pay from the casino or their other jobs. They pay
themselves a stipend of $200 per meeting.
The Business accounting
According to an employee within the tribal accounting
operations, Dulcie Rae Wolfe argued for the accounting of LCO FS and the other
LLC’s established underneath it, to remain independent of the tribal accounting
department, even though every other tribal enterprise had their accounting done
within that department.
“Dulcie said it wouldn’t work for their employees to be paid
on Friday’ like the rest of the tribal employees,” the employee said. “She
wanted them paid on Wednesdays, so the decision was made to allow them to do
their own bookkeeping and payroll.”
Another source close to the operation of LCO FS said the
accounting is done through Roe & Meyer so that tribal members are clueless
to what is actually being paid out in payroll, such as the board members naming
themselves managers of each of the various companies, and to what is actually
being generated for revenue.
“Even the credit union goes through us,” the accounting
dept. employee said. “They pay their own bills, but we do their payroll. It was
unusual for LCO Financial Services to do their own payroll.”
The employee said that in the beginning of financial
services, Glenn Hall, another casino executive, was part of the original board
of directors for LCO FS and he would send over regular monthly financial
statements and reports. Hall was removed from the board in late 2013 when he
was fired from the casino. That is when Dulcie Rae Wolfe came aboard, hired in
his place. David Fleming took over Hall’s responsibilities with LCO FS. The
employee said when Fleming took over, the reports came in sporadically. “Like
maybe once every six months.”
In regards to the revenue that came in to accounting from
LCO FS, the employee said when Norma Ross needed money to pinch, they came up
with it. “Otherwise, they had very little money.”
The source close to the operations of LCO FS said anywhere
from $40,000 to $200,000 was coming in every month, but the bank accounts for
each individual company under the LCO FS banner were done at Chippewa Valley
Bank and the books were done by Roe & Meyer, so the tribal accounting
department may not have been aware.
In the Bylaws of the organization, approved by one
signature, Lee Harden, November 1, 2013, it states in Article IV, Section 3
that the treasurer will keep accurate financial records of expenditures and is
responsible for safeguarding the assets of the LCO FS.
David Fleming was given this title in the beginning. He was
the tribe’s business manager overseeing the tribal enterprises. He now serves
as manager of the LCO Country Store.
The source said Fleming wanted the accounting to be done
through the tribal enterprise accounting department, but Dulcie Rae Wolfe said
it was too much for the tribe’s accounting.
According to the source, Fleming resigned from LCO FS in the
summer of 2015. The source remembered Fleming stating, “It was a lot to
handle.”
The source also said LCO FS banking was done through
Chippewa Valley Bank and there are at least five different statements that come
in from the bank. They include Legal Reserve, Oasis 1, Oasis 2, Hummingbird and
LCO FS.
“All money from Cane Bay comes into these accounts,” the
source said. “Money was wired back and forth through Chippewa Valley Bank.”
On January 16, 2014, Lee Harden recommended to the tribal
council to make William (Bill) Gouge Jr. the Director of Lending Authority.
Gouge was the LCO Casino vault manager. He was never paid for his services.
According to the source, Gouge got leery of what documents
they were asking him to sign and he opted out of the position.
In its recommendation to the tribal council, the LCO FS
board said, “Bill has Title 31 and Bank Secrecy Act knowledge, well versed in
compliance and would be an asset. This appointment by the LCO TGB would put the
final pieces together for the banking initiatives of Oasis, Red Stone and
Moccasin Gaming.”
Cane Bay Partnership
The LCO Financial Services board met in Lee Harden’s office
on August 1, 2013, and part of the agenda included discussing the offer made to
LCO by Cane Bay Partners VI, LLLP. Board members considered at what percentage of the gross
revenue would they be willing to walk away from the deal, because, “there is
some opinion within the Board that we are being low-balled on their offer of revenue
split.”
The Board reported in their minutes that they needed to
consider how much investment was needed to maximize their profits and limit the
potential risk in launching the small dollar tribal lending portfolio.
The percentage of revenue would increase with a higher
investment. Multiple sources confirmed that Cane Bay wanted $3 million for 5%
of gross revenues, but the LCO TGB chose to invest $1 million for 2%.
Lee Harden told the board that Kirk Chewing, one of the Cane
Bay owners, was eager to finalize the terms in the proposed partnership
agreement.
Chewning visited LCO around this time and met with various
tribal leaders to secure the deal which was approved by the LCO Tribal
Governing Board at their meeting on September 9, 2013.
At their November 1, 2013 meeting, the LCOFS board had all
their documents in place to begin their partnership with Cane Bay.
The Rosette law firm was contracted as the attorney representing LCO. They presented on July 13, an attorney engagement, flat fee, contingency fee agreement to assist LCO in their participation with ITOGA. Rosette also represented the ITOGA group itself.
The payment
structure approved by LCOFS was for a total of $250,000, to be paid by $50,000
upon the execution of the legal transaction documents which virtually guarantee
the launch of the on-line lending operation, and $10,000 per month for each
successive 20 months from the first month of the lending operation launch. More
on Rosette later.
According to the Cane Bay Partners website, Chewing is
co-CEO, along with David Johnson. Chewning is listed as having 20 years of
experience in the financial services industry. His experiences include
commercial & consumer lending and regulatory compliance. He also has
software development skills.
The website says Johnson has an educational background in
computer information systems. His specialties include offshore call center
operations, risk management, information technology, and marketing.
According to a news story from St. Croix, Virgin Islands on
September 6, 2015 printed by Virgin Islands Free Press, “Island life has been
good to David Johnson. Photos on the St. Croix resident’s Facebook (FB) page
show him fishing in tournaments, partying on his boats, and chugging Fireball
Whisky from the bottle.”
The article goes on to say Johnson won the island’s
Christmas boat parade with a 65-foot yacht named Living the Dream, according to
the event’s website. Chewning also won the tournament with a 49-footer called
Renewed Interest.
According to the article, four former employees of the
company said it’s not all what it seems. The four employees said Johnson and
Chewning, along with a third man, Richard Clay, built a network of payday loan
sites using corporations set up in Belize and U.S. Virgin Islands that obscured
their involvement and circumvented U.S. usury laws.
“The sites Cane Bay runs make millions of dollars a month in
small loans to desperate people, charging more than 600 percent interest a
year, say the ex-employees, who asked not to be identified for fear of
retaliation,” the news article reported.
Richard Clay, 51, founded Cane Bay with Johnson and Chewning
after his chain of payday-loan stores called USA Payday Cash Advance Centers
were ordered to shut down after being sued by the state for making illegal
loans. He was sued in 2002 and the case dragged on till 2008. During this time,
Clay moved into the online business with his new partners, who had worked
together at a company that makes software for payday lenders.
“The three set up a network of websites based in Delaware
and Nevada in 2005, according to a lawsuit filed by a fourth partner after he
was ousted in 2008,” Bloomberg reported. The partners founded Cane Bay in 2009.
According to a national news story from Bloomberg News,
released September 4, 2014, a private-equity fund, Vector Capital IV, LP, had
raised $1.2 billion but had failed to invest half the money. Investors were
frustrated, so three American businessmen on the islands of St. Croix, Cane Bay
Partners, had a solution. Their network of payday-lending websites.
“Vector Capital IV LP, bought into Cane Bay a year and a
half ago, according to three people who used to work at Vector and the former
Cane Bay employees. One ex-Vector employee said the private-equity firm didn’t
tell investors the company is in the payday-lending business, where borrowers
repay loans out of their next paychecks,” Bloomberg reported.
Furthermore, the article stated, “Vector’s investment in
Cane Bay shows the continuing allure of the payday-loan business, even after
most states from California to New York restricted or banned it to protect
consumers. The crackdown has driven borrowers online. Internet payday lending
in the U.S. has doubled since 2008 to $16 billion a year, with half made by
lenders based offshore or affiliated with American Indian tribes who say state
laws don’t apply to them.”
Ronn Torossian, a spokesman for Cane Bay, said in an e-mail
that the company provides services to financial firms and doesn’t make payday
loans. “Cane Bay Partners is a management-consulting and analytics company,”
wrote Torossian, head of 5W Public Relations. “In the past, the owners held
minority positions in some licensed short-term lending businesses, which are no
longer in operation.”
Bloomberg reported Cane Bay’s programmers, marketers and
data analysts run CashYes.com, CashJar.com and at least four other payday-loan
websites, the former employees said. Cane Bay registers the domains, designs
the sites, approves the loans and analyzes the returns to adjust algorithms,
according to the ex-employees.
“The loans were made by companies incorporated in Belize, a
Central American country that lets foreigners set up entities that don’t pay
local taxes or disclose ownership. When a state barred one site, Cane Bay would
direct customers to another, according to the former employees.”
The ex-employees said Cane Bay had no business other than
running the payday-loan websites and that Johnson and Chewning, both 41,
directed operations for all of them, Bloomberg reported.
Johnson and Chewning referred questions to Torossian, who
said the men wouldn’t agree to an interview. Neither the Belize companies nor
the websites returned calls seeking comment when Bloomberg reached out.
The four former employees told Bloomberg that Johnson wears
flip-flops and khaki shorts in the office, while Chewning, who handles
day-to-day operations, likes to watch Fox News in the kitchen, often
complaining about President Barack Obama.
Cane Bay California lawsuit
On March 26, 2018, Cane Bay Partners will be defending
themselves in a jury trial in Oakland, Ca, along with talk-show host Montel
Williams and Money Mutual. The companies are being sued for encouraging people
to take out loans with illegal unlicensed lenders.
Late-night television ads featuring Williams supplied
customers, four former Cane Bay employees told Bloomberg News.
“The company that runs the ads, MoneyMutual, doesn’t make
loans. Instead, when people fill out applications, their names and data are fed
into an electronic auction system called a ping tree. Lenders have seconds to
decide whether to buy their information. The best leads sell for more than
$100,” a September 4, 2014 article on Bloomberg.com reported.
Cane Bay owner David Johnson signed contracts with a
MoneyMutual affiliate on behalf of CashYes and CashJar, two of their payday
loan websites, according to Jeffrey Wilens, a Yorba Linda, California-based
lawyer who discovered the documents when he sued MoneyMutual and Williams in
2013 for conspiring to make illegal loans. He expanded the lawsuit to include
Cane Bay.
Williams’ public relations representative, Jonathan Franks,
said Williams is just a spokesman for MoneyMutual and never had any dealings
with Cane Bay. He and Money Mutual both denied the allegations in court.
David Johnson said he was only acting as a consultant when
he signed contracts with MoneyMutual.
The Bloomberg article reported Wilens said, “that does not
mean this ‘consulting’ is all that Cane Bay did and does with respect to the
payday loans. Johnson set up various companies for the purpose of arranging
illegal payday loans.”
NAFSA and how it all began
According to a report submitted to the LCO Tribal Governing
Board on March 19, 2013, following a trip to the Reservation Economic Summit in
Las Vegas, Lee Harden said the initial interest in online lending and online
gaming began when he attended a meeting in Danbury, Wis in March of 2012, and
another in January of 2013.
A presentation was made by the Rocky Boy Reservation tribal
attorney, Robert Rosette, on his research and development of regulatory models
he has proposed for the operation of legally defensible internet lending and
internet gaming enterprises on tribal lands.
Harden said he invited Rosette to meet with the tribal
governing board on February 22, 2013 at the tribal office.
Rosette invited any interested parties to attend the RES
2013 conference and observe the conduct of the Native American Financial
Services Association (NAFSA), Harden said. This is the organization working at
federal levels to protect the sovereign rights of tribes to conduct e-commerce.
“He also wanted us to meet the representatives of those
tribes already conducting their own online lending businesses using his
regulatory model and preparing to launch online gaming under his model for that
in the near future,” Harden said.
Harden explained that NAFSA is busy in Washington DC and at
the state level advocating for the legitimacy of online lending as a tribal
enterprise.
“They are working hard to communicate the positive
distinctions between predatory lending and what tribal online lending practices
are as they are distinctly different,” Harden wrote.
As research of the websites operated by the LCO Financial
Services, using the name of the Lac Courte Oreilles Tribe as the owner, it
becomes clear that the LCOFS board didn’t commit to the model used by member
NAFSA tribes.
Harden recommended to the board to examine the NAFSA
website. “There is much more information about their credibility and the active
role they are playing to protect financial enterprise through e-commerce on
tribal lands.”
The NAFSA website proclaims their member tribes give
short-term installment loans and states they are not payday loans.
“NAFSA members never engage in abusive collection practices
or in any way disrespect or disregard the rights of our customers,” the site
claims.
The site goes on to say unlike payday loans, installment
loans are amortized, have a definite loan term and require payments that go
toward not just interest, but pay down of loan principal. Unlike traditional
payday products, installment loans do not “roll over” (where fees are assessed
to maintain, but not pay down the loan), and by requiring payments be made
toward the principal of the loan with defined payments, installment loans help
deter the cycle of debt perpetuated by multiple, unchecked rollovers.
And yet, on the LCO owned website, Blue Trust Loans, it
clearly states the interest charged on their loans. “APR’s range from 471.7846%
to 841.4532% depending on the duration of the loan and the loan origination
fees,” it states.
It also says they offer loans up to $1,250. LCO Financial
Services director Trina Starr said Blue Trust Loans offers “installment” loans
up to $300, in direct contradiction of what is stated on the website.
Starr’s explanation of what LCO Financial Services does fits
with the model of member tribes of NAFSA, but directly contradicts what is
published on the LCO-owned page, Blue Trust Loans.
There are dozens of pages of complaints at various online
locations in regards to unfair practices by Blue Trust Loans, including
“rolling over” the payments, whereby all of the payments go to interest, not
the principal. More on that later.
Many tribes are operating legitimate online lending sites,
such as the Rocky Boy Reservation, whose site Plaingreenloans.com generates $12
million for their tribe.
The source close to the LCOFS operations said the initial
meetings held, there were good intentions, but after a change in leadership on
July 3, 2013, when Mic Isham and Norma Ross took over the tribal governing
board, LCO Financial Services began meeting with Cane Bay Partners and it all
changed.
At the first meeting of the new tribal council on July 8,
2013, Mic Isham was appointed to the NAFSA board. Today, he is the Vice
Chairman of the Board.
The NAFSA website also states, “E-commerce allows tribes to
alleviate the economic burden of geographic isolation. The tribal profits
derived from the TLEs go to fund essential governmental services and programs
that tribes provide for their memberships and augment ever-dwindling federal
grant program funding. These TLE revenues, which account for a significant
portion of a tribal government’s operating budget, go towards providing vital
social programs like health care services, housing assistance, home utilities
subsidies, education for children, elder care and more. The businesses also
create jobs within Indian country, reducing the unemployment rate and providing
meaningful opportunity to tribal members within their own communities.”
The source asked why it seemed like there isn’t any money
from LCO Financial Services making it to the membership. The source pointed out
how many enterprises have closed recently and to the mold homes that weren’t
fixed on the reservation. The source also referred to the Elder Christmas Bonus
program that had been cut in the past two years.
“If we’re making so much money and it’s supposed to help our
people, where is the help,” the source said.
The NAFSA site also claims it is offensive to accuse their
member tribes of falling victim to “rent a tribe” schemes because the tribes
partner with non-tribal lenders and continue their normal business operations
with the tribe’s name on their product.
After reviewing Blue Trust Loans, this is exactly what is
happening with LCO’s online lending operations.
“As tribes do not historically have access to their own
capital, they negotiate for necessary capital to enter the industry, similar to
other commercial industries and actions taken by non-tribal entities seeking to
enter into a new business venture. These investments can come in many forms,
including the acceptance of loans, issuance of bonds, securitization of debt,
and more—all of which are common, available to every other business in the
country. NAFSA member tribes retain complete control over the decision making
necessary for their TLEs,” the NAFSA site states.
The site further states NAFSA member tribes and service
providers are required to follow NAFSA’s established Best Practices and Bylaws
to ensure responsible lending and advance industry-standard consumer protection
safeguards.
“NAFSA Best Practices require members to follow all
applicable federal lending laws and the tribes’ own regulatory compliance laws.
All member tribes’ products are owned by the tribes for the benefit of their
tribal government and communities. These tribes originate the loans on their
reservations and assume the credit risk when making the decision to approve
individual loan applications.”
As multiple sources have confirmed, the loans are
originating from the Virgin Islands and through Cane Bay. The LCO operation
doesn’t have any participation in the individual loan applications, which is in
violation of the NAFSA Best Practices claim, which has the LCO Chairman, Mic
Isham, seated as Vice Chairman of their board.
The NAFSA site lists the following Lending Best Practices
that outline the requirements NAFSA members must follow when creating and
servicing consumer products. It states, “because of these Best Practices,
consumers can trust NAFSA members to honor their rights, protect their privacy,
treat them fairly and constantly strive to offer them innovative alternative
financial products.”
A tribal financial service company must operate as a
legitimate tribal business; owned and operated by, and benefiting a
federally-recognized sovereign nation and they must ensure all consumers are
afforded the same protections by following the principles detailed in federal
financial services laws to the extent that they are applicable and honor tribal
sovereignty.
Laws to be used as guidance are Truth in Lending Act: United
States federal law aimed at promoting the informed use of consumer credit,
requiring standardized terms and cost disclosure and other regulations that
emphasize and protect consumer rights.
Military Lending Act: United States federal law that limits
the way short term loans, vehicle title loans and refund anticipation loans can
be offered to military personnel and their families. The Blue Trust Loans
website has in their disclaimer that they won’t even issue loans to members of
the military.
The NAFSA website lists another dozen laws to be used as
their guidance. Those can be viewed at their website.
According to finder.com/tribal-lending-guide, many tribes
are conducting responsible lending operations.
“Tribal lenders can lend money to tribal and non-tribal
borrowers, and they can even lend money to customers in states where payday
lending is normally illegal. While many are legitimate and fair lenders, keep
in mind that because they are a sovereign instrumentality, they cannot be
sued,” Finder states. Blue Trust Loans has this posted in their disclaimer,
that they cannot be sued.
Wisconsin is one of 17 states where payday loans are
completely legal. 21 states have some regulations while 12 states completely
outlaw payday loans.
Trina Starr said LCO Financial Services operates in 38
states and that Wisconsin is not included. Several past council members made it
clear they didn’t want the tribes own company offering these high interest
loans to our own tribal members.
The Finder website describes the online lending controversy
like this, “Many American Indian tribes have the financial resources to be able
to fund their lending business, and many are even members of the Online Lenders
Alliance (OLA), which offers peace of mind to consumers. Unfortunately, many
less self-sufficient tribes are engaging in illegal and irresponsible lending
practices in order to gain revenue.
“Many tribal lenders will partner with a 3rd party,
non-tribal lender to provide short term loans to consumers. The tribe operates
as the official owner and collects a percentage of the APR. Both the tribal
lender and the 3rd party lender are protected by the tribes immunity. This
practice is often referred to as a ‘Rent-a-Tribe’.”
After the RES 2013 meeting in Las Vegas, Lee Harden made his
recommendation to the LCO Tribal Governing Board.
“From the information obtained so far I believe internet
lending is a viable source of funds and jobs for LCO and should be acted upon
immediately. NAFSA is providing the communication to legislators that will
protect the right to operate this business in an ethical manner. This provides
an opportunity to derive revenue from a marketplace that is national in scope
which can generate millions of dollars with disproportionately low operating
costs and infrastructure requirements,” Harden wrote. “This is seen as a way to
level the playing field with Tribes who have the benefit of being located close
to metro populations with their casinos.”
LCO investment in ITOGA
At their August 1, 2013, LCO FS board meeting, payments to
the Inter-Tribal Online Gaming Alliance (ITOGA) were discussed. They authorized
making the second of three payments to this organization.
Over the course of the next few months, one of the companies
under LCO FS, Moccasin Gaming, would be created, with Randy Cadotte named as
its manager. This company was to be an online bingo operation ran as a
partnership with ITOGA. Each tribe was given the option to be a part of one
main website, or operate their own.
Moccasin Gaming was to be the LCO part of this operation.
The initial talks of an online gaming site began even before the payday loan
operation. In March of 2013, a contingent of LCO personnel, including the
tribal attorney James Schlender, Lee Harden, and LCO Vice Chairman Bill Morrow
all attended the Reservation Economic Summit 2013 in Las Vegas.
As part of RES 2013, the group met with attorneys from
Rosette Law Firm and Sherry Treppa, chairperson of the Habematolel Pomo of
Upper Lake tribe. Treppa was chairperson of ITOGA. The law firm set up the
operational model for the online gaming venture.
According to the source close to the operations of LCO FS,
the original model for this operation wanted 10 tribes to participate each
investing $614,293. At the time of RES 2013, there were six tribes committed.
The model and all the details appeared to be a very
profitable enterprise for the tribe to participate in, according to the source,
so they decided to invest.
A payment plan was set up with ITOGA making an initial
payment of $28,290.31. The second payment of $255,929,62 was made following the
August 1 meeting and the final payment of $330,072.65 was invoiced November 13,
2013.
The source said all the payments were made from the LCO
Casino.
Each payment was invoiced to Glenn Hall, LCO Casino. The
final payment was invoiced for November 13, 2013, but at the LCOFS board
meeting held on November 1, 2013, the group had voted to remove Glenn Hall
because the LCO TGB had fired him from employment at the casino.
ITOGA couldn’t find other tribes to invest, so each of the
original six tribes had to invest more. Two
more payments from the LCO Casino were made to ITOGA in the amount of $200,000
each, bringing their share to over $1,020,000, according to the source.
On November 1, 2013, Moccasin Gaming was incorporated, but
it was never launched. The business still exists in name only. There is no
online presence for Moccasin Gaming. And a search of ITOGA finds a one page
website with no “About” information or contact information. The site doesn’t
mention member tribes or any other specifics. The Contact Us page says it is
not accepting submissions any more.
The one page of the ITOGA website said it is an alliance of
several Native American Tribes from around the United States that recognize
their sovereign right to economic self-determination.
What does ITOGA do? According to the site, “Through
well-established tribal laws and regulations our member tribes of ITOGA are
working diligently to further our people and provide economic opportunities
through innovation and e-commerce initiatives.”
Nothing more exists about this group that the LCO Tribe,
through the casino, invested over $1 million dollars, and no online gaming site
owned and operated by the LCO Tribe exists today.
“And Lee Harden recommended our tribe get in bed with this
group,” the source said.
Lee Harden wrote to the tribal governing board in his
recommendations, “I recommend participation in ITOGA only if the tribal council
feels ready to dedicate the appropriate people and funds. The decision to
participate at the owner level would be an extremely lucrative position if this
model is successful.”
Cane Bay websites
According to various reports and news articles, Cane Bay
Partners is operating dozens of different payday loan companies, but the two
most popular operated by the company themselves is CashYes and CashJar.
CashYes and CashJar operates with an address from Belize and
at least two other websites operate with these same addresses, PayDayYes and
CashDirectExpress.
1501 Hatcher Lane Suite B
Columbia, Tennessee 38401
Address:
Cash Yes
P.O Box 1469
Belize City, Belize C.A.
Additional Address: (Confirmed Oct. 20, 2013)
Cash Yes
P.O. Box 96503, #15050,
Washington, DC 20090
Additional Address:
Hong Kong Partners, Ltd.
Suite 508 Marina Towers
Newton Barracks Road
Belize City, Belize C.A.
CashYes operates under the ownership of Hong Kong Partners
and CashJar operates under the owernship of Down Under Ventures.
According to the Bloomberg News article from September 4,
2014, regulators investigating Cashyes discovered, “A borrower had told his
department that CashYes was calling her to collect more money after she had
already paid $3,193.75 on a $775 loan.”
The regulators at that time confirmed that they weren’t able
to trace CashYes beyond its Belizean parent company, Hong Kong Partners Ltd.,
but since those investigations, the link to all the sites has been made to Cane
Bay Partners.
The Bloomberg article reports regulators at the time
discovered more than 300 complaints to the Federal Trade Commission and at
least 250 bankruptcy filings in relation to these websites.
“The cost for a $500 loan is between $100 and $150 in
interest every two weeks, according to four contracts obtained by Bloomberg
News. One contract, for a $700 loan, would result in the borrower paying back
$3,675 over eight months unless a quicker payment plan was requested,” the
article said. “Borrowers are asked to provide bank-account information, which
enables the lenders to deduct payments directly, the contracts show. About a
third of the complaints obtained from the FTC were by borrowers in New York,
New Jersey and North Carolina, where payday loans are illegal.”
The Bloomberg article tells a story of one of these
complaints.
Gina Smith, 42, a legal secretary in Mount Vernon, New York,
a state where charging more than 25 percent is a crime, said she borrowed about
$500 three years ago from CashJar, according to the article.
She said she needed money to pay rent and other bills because
she was getting just $170 a week in disability payments while she was out of
work for medical reasons. When she fell behind, the collection calls started,
the article stated.
“They started threatening to come to my home,” Smith said.
“They said investigators were coming to serve me court papers.”
The calls stopped when she filed for bankruptcy, she said.
More information revealed that over 150 other customers said
in FTC complaints that debt collectors calling for CashJar and CashYes harassed
them. One even said in an interview that CashJar called her boss, posing as a
police officer. Another said in a complaint that the company called her sister
and said she was a slut.
“My clients call me in tears because of these payday
lenders,” said Charles Juntikka, the bankruptcy lawyer in New York who
represented Smith. “I have to tell them you don’t go to jail over debts in
America.”
The Bloomberg article goes on to compare the Cane Bay
Partners payday loan site activities to organized crime stating that in the 1960’s,
with usury laws widespread, loan sharks took over the business of payday loans,
which had been around since the 1880’s in newspaper advertisements.
“The thousands of dockworkers who then plied New York’s
piers were among the biggest customers. The loan sharks on the waterfront
charged 15 percent a week -- about the same as CashYes and CashJar. Lacking
electronic access to borrowers’ bank accounts, they would station themselves
outside banks that catered to longshoremen and collect when the workers cashed
their paychecks,” the article reported.
Online-Payday-Loans.org had many complaints reported against
CashYes.
A reader wrote: “For an address I was given Suite 508 Marina
Towers, Newton Barracks Road, Belize City, Belize. But when we were talking the
gal mentioned that she was located in Georgia and then stopped short of saying
any more.”
Another reader alleges: “I received some feedback that Cash
Yes is an illegal offshore lender. They are likely to ignore anything you say.”
On February 25, 2013, a kind reader sent us the following
allegations about Cash Yes: “Unorthodox collection practices, very high
interest rate (greater than 400% APR) and draws monies directly from bank
account before the due date.”
On August 7, 2013, we received these allegations against
Cash Yes Direct: “They call my work. I had something very bad happen
financially and they harass me. I can’t pay them back but I think I’ve already
paid the principal back. I’m not sure. Anyway I want this to stop. Cash Direct
Express is another name.”
On Oct. 20, 2013, we received these allegations against
CashYes.com: “The company will not allow me to pay off the amount borrowed. The
company keeps taking $150.00 out of my checking account monthly. When I finally
got in touch with someone, I could not understand the man. I received an email
saying that Cash Yes was going to debit my account on 10/25/13 for $800.00. I
have been receiving threatening telephone calls from what seems to be the same
person saying that I was going to be charged with federal litigation charges.
These people call my home, cell, and work.”
On Nov. 21, 2013, we received these allegations against
CashYes: “Received call from 217-402-9281. Person told me his name is Michael
Black. Told me he was having a federal warrant issued for my arrest. I told him
not to call this particular number. He continued to call and make threats. I
had to change my phone number. Now he is calling on my cell phone 4 to 5 times
a day.”
On January 18, 2014, we received more allegations against
CashYes: “They debited the fee from my account. Then the same day they debited
the entire amount of 500.00 dollars from my account causing me to overdraw.
When speaking to them they said they were not sure the exact amount they had
taken out of my account. Then when I asked if accredited by the BBB they didn’t
know what I was talking about. Very unreliable and very unprofessional.”
Here is a statement reported at Ripoff Report about the two
companies, “Cashjar.com & cashyes.com are the same company just different
names. Both ran by Ann Stanton. They use two different websites to herd off the
authorities when they are forced to close off doing loans in one state. Such as
Cashjar.com cannot do loans in CA. so they tell the customer they are going to
send them to a lender finder www.cashloansource.com which is also the same as
the companies. It’s just a way of not letting the customer know that they are
still in the same company and it throws the customer off by giving different
company name. In actuallity the people are sitting across from each other
playing games with the customers. Here is the document where they were shut
down in CA. Report them still doing business in CA just under cashyes.com but
it is the same company. Everything is exactly the same just different name of
website.”
As reported in a segment above, Cane Bay Partners are named
as defendants in a jury trial set for March 26, 2018, in Oakland, Ca. for their
activities in that state.
In a segment below, titled The Complaints, you can read more
of the complaints made against these companies through various reporting
agencies, including the Better Business Bureau.
Hummingbird and Blue Trust Loans
One of the LLC companies under ownership of LCO Financial
Services includes Hummingbird Funds, which operates the business name of Blue
Trust Loans, a payday loan website. This is the largest and most active of the
LCO-owned payday loan sites.
The site doesn’t follow the Best Practices standards set
forth in the Native American Financial Services Association (NAFSA) membership
guidelines, according to the source close to the operations.
The source said Mic Isham oversees the LCO Financial
Services through Lee Harden. “He is the vice chairman of NAFSA, so his position
on that board shows he is very active in the payday loan business.”
When you do a Google Search of Hummingbird Funds LLC, the
most prominent and top listings for this company include many complaints of
their deceptive practices, while also showing the ownership of this site by the
Lac Courte Oreilles Tribe in Hayward, Wis.
One complaint submitted on July 15, 2015, said, “I was in a
bind as I needed a new roof and other work completed on my home before I could
place it on the market. I filled out an
application for Lending Tree and this was one of the offices that contacted
me. I was at work and distracted so
shame on me, I paid dearly for it. I
opened a loan for $1000. I did not see
the disclosure page at all until I received it in email after agreeing. Big mistake on my part, but shame on
them. I have worked in a finance office
at a car dealership and we would be fired for non-disclosure. Come to find out
that $1000 would have cost me $3535.86 had I not paid it off early. The interest rate that I was not told or
shown when I asked about it was 771.87%!
Beware of what you are signing. I
made a huge mistake, but they were very deceptive as well.”
Another complaint filed by David Sama on January 26, 2016
said, “I needed an urgent loan of $600. I obtained it through Hummingbird
Funds, LLC, d/b/a Blue Trust Loans. I was charged $1,800.11 in interest for a
total of $2,400.11 over six months! The interest rate was 766.78! To attempt to
escape usury laws, the loan is funneled through a sovereign American Indian
tribe. I paid the loan timely, and in full. Lender has repeatedly refused to
return the note stamped paid.”
More complaints against Hummingbird Funds and Blue Star
Loans can be read in the segment The Complaints.
At the BlueTrustLoans.com website, Hummingbird Funds has a
disclaimer at the bottom of the page that reads as follows;
“Hummingbird Funds, LLC is a sovereign enterprise, an
economic development arm and instrumentality of, and wholly-owned and
controlled by, the Lac Courte Oreilles Band of Lake Superior Chippewa Indians
(the “Tribe”), a federally-recognized sovereign American Indian Tribe. This
means that the Hummingbird Funds’ installment loan products are provided by a
sovereign government and the proceeds of our business fund governmental
services for Tribe citizens. This also means that Hummingbird Funds is not
subject to suit or service of process. Rather, Hummingbird Funds is regulated
by the Tribe. If you do business with Hummingbird Funds, your potential forums
for dispute resolution will be limited to those available under Tribal law and
your loan agreement. As more specifically set forth in Hummingbird Funds’
contracts, these forums include informal, but affordable and efficient Tribal
dispute resolution, or individual arbitration before a neutral arbitrator.
Otherwise, Hummingbird Funds is not subject to suit or service of process.
Neither Hummingbird Funds nor the Tribe has waived its sovereign immunity in
connection with any claims relative to use of this mobile site. If you are not
comfortable doing business with a sovereign instrumentality that cannot be sued
in court, you should discontinue use of this website.”
The Blue Trust Loans website has their interest rates
published on the page. APR’s range from 471.7846% to 841.4532% depending on the
duration of the loan and the loan origination fees.
Although the Better Business Bureau has Blue Trust Loans
rated F on a scale of A+ to F, the website claims, “We are an experienced
lender with over 20 years in the personal loan industry committed to offering
the timely solutions people need when they have short-term goals to meet. At
Blue Trust Loans, we work with people in various situations and help them
obtain the funds they need and make the process as simple as possible for you.”
It also states, “We started this business to help people.”
But the Better Business Bureau has an ALERT warning against
the LCO Tribe’s payday loan company.
The BBB reports, according to the company's website, "Hummingbird
Funds, LLC d/b/a “Blue Trust Loans” is the tribal lending agency of Lac Courte
Oreilles Financial Services, LLC, an arm and entity of the Lac Courte Oreilles
Band of Lake Superior Chippewa Indians of Wisconsin, a federally-recognized sovereign
nation located within the United States of America, and is operating within the
Tribe’s Reservation." And, "The Tribe is a federally-recognized
American Indian Tribe and enjoys governmental sovereign immunity. Because we
and the Tribe are entitled to sovereign immunity, you will be limited as to
what claims, if any, you may be able to assert against the Tribe and us. To
encourage resolution of consumer complaints, any complaint may be submitted by
you or on your behalf as described in the" Terms and Conditions on its
website. "Your right to file suit against us for any claim or dispute
arising from or relating to this Agreement is limited by the WAIVER OF JURY
TRIAL AND THE TRIBAL DISPUTE RESOLUTION PROCEDURE provisions that you
acknowledged and agreed to in the Loan Agreement."
In researching Blue Trust Loans and similar Native American
owned sites, Maxlend was discovered and had a similar web page to Blue Trust
Loans with the same information and disclaimers. Maxlend is a website wholly
owned by the Three Affiliated Tribes of North Dakota. In the next segment about
The Complaints, a 1-800 caller complaint reporting agency has many different
complaints claiming that the same 1-800 numbers are calling for both Blue Trust
Loans and Maxlend.
The Maxlend site has the same disclaimer information that
Blue Trust Loans has, only the names are switched. It reads as follows;
“MaxLend, is a sovereign enterprise, an economic development
arm and instrumentality of, and wholly-owned and controlled by, the Mandan,
Hidatsa, and Arikara Nation, a federally-recognized sovereign American Indian
Tribe. (the “Tribe”). This means that MaxLend’s loan products are provided by a
sovereign government and the proceeds of our business fund governmental
services for Tribe citizens. This also means that MaxLend is not subject to
suit or service of process. Rather, MaxLend is regulated by the Tribe. If you
do business with MaxLend, your potential forums for dispute resolution will be
limited to those available under Tribal law and your loan agreement. As more
specifically set forth in MaxLend’s contracts, these forums include an informal
but affordable and efficient Tribal dispute resolution, or individual
arbitration before a neutral arbitrator. Otherwise, MaxLend is not subject to
suit or service of process. Neither MaxLend nor the Tribe has waived its
sovereign immunity in connection with any claims relative to use of this
website. If you are not comfortable doing business with sovereign
instrumentality that cannot be sued in court, you should discontinue use of
this website.”
The Complaints
800notes.com has a page for complaints against a certain
phone number, 800-465-2797, that comes back to Blue Trust Loans and other
payday loan sites on numerous occasions.
Reading through the complaints reveals how several sites are
using the same phone number to make harassing phone calls for collections, and
those sites are all connected back to tribes working as “Rent A Tribe” sites
for Cane Bay Partners.
Liz reported on June 30 of 2015, “They're blue trust loan, I
got this loan almost a year ago, I borrowed $500 to begin with and they
diligently took $150 from my account every 2 weeks for about 6 months, then my
account number changed and they start trying to hunt me down for more money, I
told them to kiss my butt, they have gotten me for over $1500 and still calling
for more? Please word of advice, please don't mess with this payday loan
company, it's ridiculoucity of the highest order if there's any such word!”
Yoda replied to Liz and said, “Just another Tribal lender,
BBB Review right here,” and then provided the link to the Better Business
Bureau pages of complaints against Blue Trust Loans.
“So they are saying that they are above the law. Maybe that means it is time to circle the
wagons,” Wolfman replied.
Another reply said, “there's another one called
northcash.com just like this. At least
on their web site they tell you they have an effective APR of 795%. Be easier to blow off a creditor for an extra
month and pay them, rather than get swindled into that kind of debt.”
And other complaints on the page include one submitted by
Les submitted on Feb. 16, 2015, “received message to call Steve Malone at
8004690182. No company name, original number came in as unknown at 8:05 am.”
And another reference to Steve Malone, “I received a call
from a Steve Malone asking me to call OnSpot Capital from this number and
referred me to another number 800-469-0182. Please be aware of this number.
Sounds like Steve was reading from his script,” submitted on March 18, 2015.
Renee said on March 14, 2015, “got a call from a girl named
Devin asking me to return her call, but gave a totally different 800 number
than the one she called from. Can anyone
say FRAUD?!?!”
Victoria said on June 24, 2015, “called and advised they
were from MaxPayday regarding a "pay day loan" that i supposedly owe
$1000 in account ending in "828" - I told them I've NEVER taken out a
payday loan. They acted like it was no big deal and asked for the last four of
my social - NOT! Did not give that to
them and told them so. They then
shuffled around and said no worries, they will remove my name. DO NOT GIVE THEM ANY INFO”
Another report said on September 1, 2015 said, “they keep
calling my work and don't leave a message. I read on other sites they are debt
collectors or fraudsters. I don't owe any money and never give out my work
number anyway. Block this number if you are able too.”
Ivy said on April 22, 2016, “called me and said they were
with Maxlend. But after reading the posts on here I find it strange that this
number belongs to more than just Maxlend. I answered and the lady didn't bother
to tell me what company she was calling from. I had to ask she tell me the
company she was calling from. What makes it more suspicious is when you answer
and all they disclose is their name. You have a right to know everything about
them when they call. If they refuse then you know they’re not legit!”
And on June 22, 2016, “I receive several calls a day, but
never a message. Then I get text messages with a different number (800)
442-1026 to call (MAXLEND) is the company.
Which they have been paid back twice and over again.”
At the Better Business Bureau there are 6 pages of
complaints against Blue Trust Loans, and after each complaint, there is form
letter reply submitted by the LCO-owned company that states, “I am writing on
behalf of Blue Trust Loans in response to a review made by you on the Better
Business Bureau website. We apologize for your dissatisfaction with your most
recent experience. Customer service is of the utmost importance to us. Please
contact us at ************** between 7 a.m. and 7 p.m. CST Monday - Thursday, 7
a.m. to 5 p.m. CST on Friday or email us at *********************** to discuss
the matter further. Sincerely, Blue Trust Loans Customer Service. Hummingbird
Funds, LLC d/b/a “Blue Trust Loans” is a tribal lending agency of and a
sovereign enterprise, wholly-owned and controlled by the Lac Courte Oreilles
Financial Services, LLC, an economic development arm and instrumentality of the
Lac Courte Oreilles Band of Lake Superior Chippewa Indians of Wisconsin, a
federally-recognized sovereign nation located within the United States of
America, and is operating within the tribe’s reservation.”
Here are just a few of the complaints which can be found at bbb.org/wisconsin/business-reviews/consumer-finance-and-loan-companies/blue-trust-loans-in-hayward-wi-1000020487/reviews-and-complaints
This review was done by Mary A. on May 8, 2017. Mary stated,
“I, like others trusted this was a good and fair company for a short-term loan.
I was wrong. The first time I borrowed from them and paid off loan early, no
problem. Second time I wanted to pay-off early they will not pro-rate the
interest as stated in the loan agreement: You may prepay in full at any time
and you will not incur an additional charge, fee, or penalty. This was their reply:
Please be advised that the balance to pay off your loan on 05/10/2017 is
$878.40 which includes the principal balance of $573.26 and interest fees of
$305.14. Kindly confirm by the end of the business day today 05/08/2017 if you
would still like to have the balance debited on 05/10/2017. Talk about greedy
people! I find it hard to believe this company is owned by an American Indian
Tribe. They should be ashamed!”
Jeff C. said on April 14, 2017, “Besides extraordinarily
high interest rates (expected from a bad credit loan company), they try to rip
you off at every turn. They will not accept partial payments at all, unless you
call 3 business days before the automatic payment, (So they can charge the
interest), and I tried to call to pay the loan off on a Friday, and they said
it would take one business day to process the payment, which would be on
Monday, and they charged me an extra $19 interest between Friday and Monday
when they took the payment. Even for a bad credit company, they are horrible!”
Nancy W. wrote on April 11 of this year, “I have had a
couple of loans with Blue Trust. While their service is fast that is the only
thing they have going for them. I was told I could pay off my loan early
however when I tried to make a lump sum payment today to bring my balance down
I was told I couldn't set up a payment unless it was for my next due date the
21st. That is very convenient for them not so much for me because that means an
additional $149 in interest. What they tell customers isn't true about paying
early because you can only set it up for your due date. I will never use this
company again and have already sent an email to the office of my State Attorney
General. I noticed that all the complaints have the same response from them
basically nothing.”
Terry T. said on March 24, “This company is a loan shark.
The contract says there is no pre-payment penalty, yet I am being charged
nearly $200 to pre-pay the loan. This company needs to be investigated both by
the IRS and the Attorney General and Justice Department, both of whom I will be
filing complaints with once the loan payoff goes through on Monday. Shameful
that American Indians would participate in this scam.”
Anna R. wrote Feb. 24, “This company charges you outrageous
amounts each day you have the loan. They also do not fully disclose information
before you receive a loan. They have terrible customer service. They charged my
account twice after I requested that it not be charged and for them not to.
Which means it was an unauthorized charge. I'm addition, they refused to let me
change my payment options to pay the balance due. So, it caused huge problems
with my bank account. This company is terrible!”
Stephanie T. said on Dec. 7, 2016, “Just like everyone else,
I needed the cash and I took out a loan with these people. NEVER AGAIN! Just be
aware that if you have any issues with paying it back they WILL NOT help you
out in any way. My checking account was compromised and me doing the right
thing called to tell them that I had to change my checking account. But would
like to see if we could work out something for me to pay this back because they
had taken all the money out of my account and I didn't have enough to pay my
other bills or feed my kids. I was told that as soon as we updated my account
information that she would transfer me to someone who could help me set up a
payment plan. Well She out right lied about that. The next person I talked to
told me they couldn't do anything until the funds came back as insufficient
then they MIGHT be able to do something. Really.....I have to pay more money
because I wanted to do the right thing and just extend it a little bit. Thanks
for taking the food out of my kids mouths. You are really a swell company. DONT
EVER BOWRROW FROM THIS COMPANY. I can't wait to get this paid off, and I will
never do this with a thieving company like this again.”
Stephanie then made another comment in response to the
automated reply done by Blue Trust Loans on all of the complaints.
“You use the same generic answer when dealing with anyone
from the BBB, I'm surprised it took you so long to reply to mine! Calling you
does absolutely no good. I did the right thing and called when I had to change
my checking account and your people were very untruthful saying they could
help. But in reality you don't. You get the information you need and then
totally screw someone trying to do the right thing. I have paid way more than
the $300 I borrowed and every week I get farther behind because you people are
crooks and just keep taking the money out.”
Ms. Smith wrote on March 31, 2016, “DO NOT USE BLUE TRUST
LOANS!!! The company is a complete rip off. Please do not use unless you are
desperate and this is your only option. *The interest is outrageous* I took out
a $500 loan. I understood that I would be making biweekly payments of $113.46.
I did not notice that I was being charged 637% interest over a 6 month period
which would equate to my paying a whooping $1361.65 to Blue Trust for the
initial loan. $500 initial loan amount - repayment to Blue Trust $1361.65 I am
in shock!!!! I am angry....is this even legal? DO NOT USE BLUE TRUST (I plan to
pay off earlier and will still be ripped off)”
Kt said on Feb. 26, 2016, “Please do not borrow from Blue
Trust Loans! They are a rip-off!!! I have borrowed $600 and I am paying back
triple! This is ridiculous! I have talked with customer service at Blue Trust
and she explains to me I am paying back $24 and some change to every $100 I
borrowed. Okay, I have made seven payments of $149.52, totaling $1,046.64.
Customer Service never explained to me the additional interest until I saw this
mess on their website, where I may add, it is hidden. I have borrowed from
other cash advance places and have never owed this much. I still owe them five
more payments! My total payment to Blue Trust will be $1794.24! There is
nothing trust worthy about this company. BBB please look into this matter.
Thanks.”
On September 2, 2016, D.H. said, “Not a happy camper with
this company. In a financial crunch, I needed $300. The $300 cost me an
additional $621 for a whopping payback total of $921 over a 6-month period of
time. It should be illegal for companies to cash in on a person's hardship this
way. I'm never using this company again. Just a word of caution!”
Many more complaints can be read at the link provided above.
Similar complaint pages across many platforms can be found
against many other sites associated with Cane Bay Partners, including their own
company CashYes.
Here is one more complaint made against them, “I obtained a
300.00 loan from this company and was led to believe there would be a $90.00
finance charge. I paid the finance charge on the first payment date, and to my
astonishment I was charged another $90.00 finance charge two weeks later, with
nothing applied to the loan principal.
“I later learned I would be charged $90.00 for the next two
payments, again with nothing going towards the principal. The next payment
would have been $140.00, with only $50.00 applied towards the principal. If I
would have continued to make payments like this every two weeks, I would have
paid over $1,500.00 for a $300.00 loan.
“This is a complete rip-off. These types of loan companies
should not be allowed to operate like this. I do not have a problem with them
making a profit for their services, but what they did to me was, I feel
borderline illegal. I ended up paying off the loan, which cost me a grand total
of $570.00.”
Here is a review of Cash Jar at the Better Business Bureau,
submitted by Jane L. on August 26, 2016, “Do not borrow from this
company--Illegal in NC. They are definitely crooks. I borrowed $600 in 2011. I
paid $1165 back and they were still trying to take money from my account. I
complained to the North Carolina Attorney General Consumer Complaint and
received a letter telling me to stop payment to their ACH at the bank and send
Cashjar a copy of the letter I received that said their business was illegal in
NC. I did, and did not hear any more from them until 2 weeks ago. A man
claiming to be with Sky collections called, demanding that I pay money or I
would be terminated from my job. 5 years!!! I went to my bank and they
suggested ignoring them. Then yesterday I got a call saying they were going to
take me to court. They also called a friend threatening her. I complained again
to the Attorney General and called the bank. I got my borrowed amount
information and payment information together and faxed it to the Sky man. I was
also told to call the police if he continued to harass me and my family and
friends. Never again will I have anything to do with a payday loan company and
I would suggest everyone stay away from this one.”
Here is one final complaint filed at the BBB about Cash Yes,
submitted by KJT on January 12, 2013, “I was short of cash do to Hospital
Charges and contacted Money Mutual whom then set me up with Cash Yes for a
loan. I borrowed $775 for a one-time fee of $232.50 I was told by the company
representative. This equals $1007.50 total for the initial loan and fee. I was
also told that the money to repay the loan would be taken out of my bank
account each payday (every 2wks.) in minimum $232.50 debits, unless I wanted to
pay the loan back more quickly in which case I was allowed to pay more money
back on a payday as long as it was more than $232.50., and I called the company
up to let them know how much to debit my account at least 3 days prior to my
payday. So far they have taken over $1212 from my account and claim that I
still owe them over $985. They said that the first (4) debits of $232.50 from
my account was interest/fees and the 5th debit of $282.50 was $50 toward the
principal and the rest for fees. This company practices fraud and deception and
should be sued in a class action lawsuit immediately!!”
The Rosette Law Firm
The Rosette law firm was contracted as the attorney
representing LCO. They presented on July 13, 2013 an attorney engagement, flat
fee, contingency fee agreement to assist LCO in their partnership with ITOGA.
Rosette also represented the group itself.
The payment structure approved by LCOFS was for a total of
$250,000, to be paid by $50,000 upon the execution of the legal transaction
documents which virtually guarantee the launch of the on-line lending
operation, and $10,000 per month for each successive 20 months from the first
month of the lending operation launch. More on Rosette later.
Another document was retrieved, a contractual agreement from
Rosette, dated for October 9, 2013 that shows another payment structure of $250,000
broken down as follows, $40,000 upon execution of the legal documents and
launch of online lending site, with $10 per month to follow for 21 months. It
was unclear on the documents whether this was the same agreement, simply
rewritten, or if this involved separate LLC’s operating under the LCO Financial
Services name.
The Rosette Law Firm attorney Rob Roseette, from New York, sent
a letter threatening a lawsuit on behalf of LCO Financial Services if this
article was published, dated, June 5, 2017.
The Rosette letter states Wisconsin Statutes about printing
false and untruthful information to defame the legal business entity that the
tribe operates, but LCO Today stands by all information provided in this
article, which has been verified by documentation and multiple sources.
The Rosette letter claims that the tribe never paid Cane Bay
Partners and that LCO Financial Services owns 100% of the websites, but this
has been substantiated by multiple sources, including two members of the tribal
council, a former director of LCO Financial Services and another source close
to the operation.
The letter also claims there is no partnership with Cane Bay
as a third party, and yet, just two weeks ago a press release appeared on the
LCO Tribal Website with an announcement of a $2,500 scholarship donation to the
LCO Golf Tournament held on June 3, 2017, by the “partners of LCO Financial
Services.”
Rosette claimed in their letter that LCO Financial Services
does not overcharge customers, but it clearly states on the Blue Trust Loans
website, owned by the LCO Tribe, the interest rates applied, in excess of 800%.
The letter also states that Blue Trust Loans doesn’t offer
payday loans, but rather installment loans and lines of credit. Yet, in order
to receive one of these loans, one must provide and give access to their bank
accounts for payments to be subtracted on paydays, as described by the multiple
complaints and on their website.
Operation Choke Point
In 2013, the U.S. Justice Department started a new
initiative called Operation Choke Point, aimed at pressuring banks to stop
processing payments for lenders. The agency began looking at banks of any size
on how they are enabling these businesses to illegally take billions of dollars
from consumers’ checking accounts and whether they are collecting large fees
for doing so.
A NY Times article from January of 2014 states, “The
critical role played by banks largely plays out in the shadows because they
typically do not deal directly with the Internet merchants. What they do is
provide banking services to third-party payment processors, financial middlemen
that, in turn, handle payments for their merchant customers.”
According to the Bloomberg News article cited earlier,
“Regulators intensified their scrutiny of Internet lenders soon after Vector
invested in Cane Bay. Prosecutors in New York filed criminal usury charges
against a man in Tennessee they accused of running a network of payday sites
based in the West Indies.”
But, according to the former Cane Bay employees who spoke
with Bloomberg News, they weren’t involved in the New York case and had already
arranged backup payment processors when Operation Choke Point started.
“Johnson and Chewning also were working on a deal with an
American Indian tribe as a longer-term solution, the former employees said.
They set up a new website, MaxLend.com, and a few months ago started
redirecting borrowers there, two of the ex-employees said. Other than that,
little changed, they said.”
MaxLend lists the Mandan, Hidatsa & Arikara Nation of
North Dakota as its owner.
Bloomberg said Richard Mayer, who runs the tribes’ lending
company, declined to comment.
“In the first action under Operation Choke Point, Justice
Department officials brought a lawsuit in January of 2014 against Four Oaks
Bank of Four Oaks, N.C., accusing the bank of being "deliberately
ignorant" that it was processing payments on behalf of unscrupulous
merchants — including payday lenders and a Ponzi scheme. As a result,
prosecutors say, the bank enabled the companies to illegally withdraw more than
$2.4 billion from the checking accounts of customers across the country,” the
NY Times article reported.
The article went on to say, “The lawsuit, which includes
reams of internal bank documents, offers the most vivid look yet at how some
senior bank executives brushed off warning signs of fraud while collecting
hundreds of thousands of dollars in fees. While the bank has reached a
tentative $1.2 million settlement with federal prosecutors, the impact of the
lawsuit extends far beyond Four Oaks, and federal prosecutors say this points
to a problem rippling fast across the banking industry.”
A former Kansas attorney general, Stephen Six, said that
without the banks help, it would be nearly impossible for these lenders to
operate outside the U.S. regulatory system.
The current operation
The current LCO Financial Services company has Trina Starr
listed as the Executive Director, but a source close to the operations said
Dulcie Rae Wolfe is the actual hands on operator of the day to day business,
handling contracts and negotiations. The source said Trina only runs the call
center.
LCO Financial Services employs 12 people on the reservation
at its offices next to LCO Conservation. Those 12 employees are call center
qualifiers and agents. Their main job is to act as collections agents for outstanding
payday loans.
Trina Starr said the qualifiers read from a script when they
call clients who have outstanding loans. Once they get the clients to agree to
a payment plan, the agents then take the call and try to get them back on
schedule and make payments.
The call center for LCO Financial Services employs 10
callers, Trina and a compliance officer, McKenzie Cadotte, who happens to be
the wife of LCO Financial Services board member and casino executive, Randy
Cadotte.
Starr said Cane Bay Partners are the servicing partners in
the operation. “They are like our vendors. They provide services such as
analytics and marketing.”
The source close to operations said Cane Bay actually
approves the loans and they also build the websites.
Curtis Decora, former LCO FS Executive Director, confirmed
that everything is done at Cane Bay Partners. He said the call center would
only call on delinquent accounts.
Starr confirmed that the tribe is operating only two of
their payday loan websites, Blue Trust Loans and Ladder Credit. Blue Trust
Loans is owned by Hummingbird Funds and Ladder Credit is owned by Minaan Funds.
Starr said they operate in 38 states, but do not service
loans in Wisconsin despite that payday loans aren’t regulated in Wisconsin. The
source close to operations said it is because they don’t want to do loans to
people in the area because of the backlash of charging such high interest rates
and possibly dealing with local complaints.
The other five businesses listed on the door to Starr’s
office are currently inactive, she said. Those include Moccasin Gaming, Oasis
Funds 1 and Oasis Funds 2, Adaawam Funds and Red Stone Investments.
The current board of directors for LCO Financial Services
includes Chairman Lee Harden, Dulcie Rae Wolfe, Randy Cadotte, Di-Z Cross and
Bill Trepania, who is the LCO Tribal Court Commissioner, working directly
underneath the former tribal attorney who was an original part of the board,
Jim Schlender Jr.
Schlender currently serves as the LCO Tribal Judge. The
tribal attorney, Jason “Kekek” Stark, sits on the board as a non-voting member.
Norma Ross also remains on the board as the TGB liaison.
It is unclear at this time how the make-up of each
individual board looks, but according to the operating agreements, each of the
nine different LLC’s set up underneath the LCO Financial Services banner have a
board of directors and their own manager, all appointed from within their group.
Starr said the LCO FS enterprise generates revenue for the
LCO Tribe.
“We have expanded and currently, we need more space,” Starr
said. “It’s profitable.”
Decora confirmed, “Yes, it has to make money.”
Decora said when he was director before Trina Starr, he was
asked to come to board meetings, make his report and then told to leave. He
said he was left out of what the organization was doing, as far as revenues and
decision-making.
“They just had me checking mail,” Decora said. “When I
started making suggestions to expand and improve the business, it wasn’t long
and I was out. I said right away, “we don’t need Cane Bay when we could be
doing this ourselves.”
Decora was director of the call center for six months,
leaving the position in June of 2015.
A Statement from LCO Financial
Services
The following statement was issued on behalf of LCO
Financial Services after all persons contacted, listed in the summary above,
refused to comment on this article. The statement was issued by a person named
Rob Ford, who simply said he represents LCO Financial Services, but no known
employee works there. He didn’t identify whether he worked for the Rosette Law
Firm.
The statement:
“Harming LCO Financial Services harms the Lac Courte
Oreilles Tribe. LCO Financial Services (LCOFS) is critical to the financial
independence and health of our tribe.
“Attacking our
success for partisan political interests is shameful. We are a small tribe and
have actively and professionally pursued every meaningful economic opportunity
for our community including the founding of LCO Financial Services.
“LCOFS’s legally
licensed and regulated lending entities are responsible contributors to this
goal. In the last three and one half years, LCOFS has created income, jobs and
scholarships for the tribe and will continue to do so under the direction and
oversight of the LCOFS Board. It is shameful that partisan players are playing
politics with a critical part of the community because of the upcoming election
for the Lac Courte Oreilles Tribal Governing board.
“LCOFS owns 100% of
its portfolios, and any allegations that suggest otherwise are baseless. The derisive and offensive use of the ‘rent a
tribe’ term is an affront to the extensive and properly structured nature of our
lending operations. LCOFS or any related tribal entities have never done any
loan participations or equity sharing. LCOFS or its lending entities do not
offer any payday loans, we offer installment loans or lines of credit.
Spreading these falsehoods about LCO Financial Services is deeply harmful to
the Lac Courte Oreilles Tribe.
“LCOFS employs a
variety of vendors and third parties who have expertise in ecommerce, internet
networking, hardware management, software and related technology and risk
analytics. Under the auspices of the LCOFS Board, each of these vendors has
complied with our regulatory criteria and bring complete, professional and
objective management to our business.
These and other vendors help
LCOFS to be the most successful
financial program for the tribe including nearly $50,000 in direct scholarships
to tribal members, twelve (12) full time, on-reservation jobs with health
benefits, and more.
“The LCOFS Board meets outside of company time and Board
members receive a small stipend for each 4-hour board meeting, a reasonable and
prudent compensation for the work required to serve both at meetings and the
work necessary in between meetings. No
LCOFS board members are paid a salary from LCOFS or for this function other
than the stipend. LCOFS staff and board
members spend a considerable amount of time learning and being trained by
vendors, industry associations, legal firms and other third parties to ensure
success and compliance of LCOFS. These
expenses have been paid per the LCOFS and Lac Courte Oreilles expense policies.
“LCOFS actively
participates in and is fully compliant with all NAFSA (Native American
Financial Services Association) best practices.
The complaint rate for LCOFS is one of the lowest in the industry with
less than 0.1% (.001) of transactions receiving customer complaints. In fact, general customer satisfaction
surveys have satisfaction for its product and companies at over 90%.
“Simply, Harming LCO
Financial Services harms the Lac Courte Oreilles Tribe. LCO Financial Services
(LCOFS) is critical to the financial independence and health of our tribe.”
LCO Today response:
Mr. Ford claims the board meets for four hours at a time and
outside the work hours, and yet, meeting minutes obtained show most meetings
averaged just over an hour and one meeting lasted two hours. All the meeting
minutes obtained were held in Lee Harden’s office during casino business hours
between 8 am and 4 pm.
The stipend he claims was small, is $200 per meeting. They
held board meetings for not only LCO Financial Services, but for the other LLC’s
named under the company, Oasis Funds, Red Stone Investments, Moccasin Gaming
and the others.
Mr. Ford said the tribe’s company operates within NAFSA, and
yet, statements on the NAFSA website are in direct contrast with statements on
the Blue Trust Loans website.
LCO Today stands by all information provided in this article
as true and accurate, based on obtaining over 70 documents of meeting minutes,
contracts, invoices and personal notes, and also after interviewing 12 persons
involved.
