Bryan Cohen Oct. 2, 2013, 4:25pm

LITTLE ROCK, Ark. (Legal Newsline) - Arkansas Attorney General Dustin McDaniel filed a consumer-protection lawsuit Tuesday against multiple entities that allegedly colluded to offer illegal payday loans in Arkansas while claiming to be affiliated with a Native American tribe.

Western Sky Financial, CashCall Inc., WS Funding, Western Sky owner Martin Webb, and J. Paul Reddam, CashCall and WS Funding's owner, allegedly offered online payday loans with interest rates as high as 342 percent to Arkansans, in violation of state law.

The South Dakota-based Western Sky allegedly identifies itself as a tribal entity protected by tribal sovereign immunity. McDaniel alleges that Western Sky is not owned or operated by a tribe, therefore it is not protected by tribal immunity. Arkansas consumers who are not on tribal lands use the internet to apply for loans and sign loan documents though Western Sky.

"Though we have successfully eliminated storefront payday lending in Arkansas, some online lenders continue to offer the kinds of loans that often push consumers further into debt," McDaniel said. "The defendants claim to be protected by tribal immunity, but we intend to prove they are not and we will ask the court to prevent them from making these harmful loans in our state."

WS Funding and Western Sky allegedly work together to originate and collect on the illegal payday loans, while CashCall and its subsidiaries allegedly run almost every aspect of Western Sky's operations.

The lawsuit requests that the court prohibit the defendants from offering illegal loans in Arkansas and order the payment of civil penalties, restitution, attorney fees and costs.

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