Kansas Payday Loan Service Provider Got PPP Loan

An Overland Park company that does administrative work for four tribal lenders accused by a federal watchdog of tricking people into paying debts they didn’t owe has received at least $ 1 million from the program paycheck protection.

Upper Lake Processing Services in Overland Park received between $ 1 million and $ 2 million from the US Small Business Administration as part of a loan program to keep workers on the payroll during the coronavirus pandemic. Records released this week by the SBA show that Upper Lake was able to keep 200 jobs under the loan program. Kansas City’s main bank was behind the Upper Lake Processing Services PPP loan, according to records.

The Overland Park Company is owned by Habematolel Pomo of Upper Lake, a federally recognized tribe of northern California. The tribe also has four payday or installment loan operations: Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial, and Majestic Lake Financial.

According to an affidavit filed in a 2017 court case by Sherry Treppa, the chairman of the executive board of Habematolel Pomo, the tribe formed Upper Lake Processing Services.

Upper Lake Processing Services then purchased an administrative support company in Overland Park in 2013 that it previously used as a subcontractor for tribal lending operations. He rehired most of those employees and kept the company in Overland Park, where employees perform duties such as loan underwriting implementation, legal compliance and collections, according to Treppa’s statement.

Treppa did not respond to a phone message or e-mail. The tribe also did not respond to a request for comment.

The Consumer Financial Protection Bureau, a government watchdog agency established in 2011 after the Great Recession to defend consumers from financial scams, sued the four online lending companies of the Habematolel Pomo tribe. The lawsuit accused the tribe’s loan companies of violating usury laws by charging interest rates higher than those allowed by some states, as well as withdrawing money from bank accounts to collect. debts that consumers were not legally owed.

The tribe at the time denied wrongdoing.

The CFPB dropped the trial in 2018 without explanation, a move consumer advocates feared was a sign of the agency’s withdrawal from its tenure under the Trump administration. The director of the CFPB at the time was Mick Mulvaney, who prior to his work in the Trump administration was a South Carolina congressman who took thousands of dollars in contributions from the payday loan industry and turned mocking the agency’s mission.

Mulvaney became President Donald Trump’s acting chief of staff while overseeing the CFPB before becoming special envoy to Northern Ireland earlier this year.

The receipt of PPP funds by Upper Lake Processing Services poses a unique legal question. The SBA does not allow companies engaged in the loan to receive loans under the PPP program.

But businesses that provide services to loan companies can usually receive PPP loans.

Gerald Weidner, partner in the Kansas City office of the law firm Stinson, said for example that companies that issue or are service providers of mortgages but do not own the mortgages themselves might be eligible for loans. PPP. But a mortgage lender himself could not receive the government loan.

“A payday loan company itself would not be eligible because it primarily engages in lending,” Weidner said. “If there is a business that provides services but is not itself engaged in lending operations, that business may well qualify. As with many things in the PPP loan program, things are not always clear.

It’s also not clear with Upper Lake Processing Services. The Habematolel Pomo tribe have said in court records that they were the originators of loans on tribal lands.

The CFPB lawsuit said the tribe’s lending activities were organized in California, but most of its day-to-day operations took place in Overland Park. The CFPB lawsuit said no more than 15 jobs on tribal lands have been created by lending companies, while PPP data shows 200 workers are employed in Overland Park’s Upper Lake processing departments.

One of the tribe’s lending operations, Silver Cloud, received funding in 2013 from a Kansas company called RM Partners LLC in a deal that allowed RM Partners to buy up to 30% interest on Silver Cloud loans. The managing member of RM Partners was Rick Moseley Sr., a Kansas City payday loan mogul who is serving a 10-year prison sentence following a 2017 conviction on federal racketeering charges related to his business of illegal loan.

Use this database to see which companies have received PPP loans of $ 150,000 or more in Kansas:

This database shows which companies have received PPP loans of $ 150,000 or more in Missouri:

Bryan Lowry of McClatchy DC and Amy Renee Leiker of Wichita Eagle contributed reporting for this story.