B.C. man charged in U.S. payday loan racketeering case

A B.C. man has been charged with fraud and international money laundering as part of a U.S. indictment involving a multi-million dollar payday loan business.

American prosecutors allege that Randall Ginger claimed he was hereditary chief of a Vancouver Island First Nation to help the masterminds behind a massive payday loan company hide their activities from authorities.

'Rent-a-tribe'

According to an indictment filed in federal court in Philadelphia, the 66-year-old was paid thousands of dollars a month from 2009 to 2013 "to pretend that his Canada-based tribe issued payday loans". 

"This model was widely characterized throughout the payday lending industry as 'rent-a-tribe,'" the indictment reads.

Ginger is charged along with Charles M. Hallinan, a Pennsylvanian who allegedly owned, operated, controlled and financed numerous payday loan businesses.

A Delaware attorney, Wheeler K. Neff, is also charged.

All three face a count of conspiracy to commit mail fraud, wire fraud and money laundering, as well as two counts of mail fraud and three counts of wire fraud.

The conspiracy allegedly generated revenues of $688 million from hundreds of thousands of customers.

Ginger, Hallinan and Neff are also accused of conspiring to convince people who sued one of the payday loan companies to abandon a class action lawsuit that could have netted as much as $10 million.

Payday loan companies offer short-term credit to lenders at inflated rates.

According to the indictment, Hallinan's companies allegedly charged customers $30 for every $100 they borrowed, which meant the annual interest rates on the loans often exceeded 700 per cent.

'Tribal sovereign immunity'

Pennsylvania and more than a dozen U.S. states have outlawed loans at those kinds of rates. But prosecutors claim Hallinan moved his business to the internet, hiding his activities through sham business arrangements.

Ginger allegedly claimed to be hereditary chief of the Mowachaht/Muchalaht First Nation.

According to the indictment, Hallinan pretended to sell one of his companies to Ginger, who was then paid as much as $10,000 a month to claim he had "tribal sovereign immunity" if law enforcement tried to shut down the operation.

In 2010, a class action lawsuit was filed in Indiana state court against Apex 1 Processing, the company Ginger allegedly was pretending to run. Nearly 1,400 people had joined the class by 2013.

The indictment claims that in 2013, Ginger's lawyer told the plaintiffs the company was no longer in operation and had no assets.

In fact, prosecutors claim the payday loan companies were footing Ginger's legal bills and Hallinan was transferring $15,000 a month to a bank account controlled by Ginger and his wife.

The class action plaintiffs settled for $260,000 instead of the $10 million their lawyers estimated the damage was worth.

Ginger could not be reached. Prosecutors say he could face up to eight years in prison.

A spokeswoman for the Mowachaht/Muchalaht First Nation said Ginger is not a hereditary chief.

None of the charges have been proven in court.