Bryan Cohen Dec. 17, 2013, 7:18pm

RALEIGH, N.C. (Legal Newsline) - North Carolina Attorney General Roy Cooper filed a lawsuit Monday against an out-of-state lender that allegedly charged North Carolinians interest rates of up to 342 percent.

Cooper's lawsuit alleges that Western Sky Financial, CashCall, related companies and John Paul Reddam, the companies' owner, violated state laws banning high interest rates on small consumer loans. Western Sky allegedly charged annual interest rates ranging from 89.68 percent to 342.86 percent, far higher than the state's legally allowed interest rate.

"Borrowers trapped in these oppressive loans can make payment after payment but never get ahead," Cooper said. "This type of loan is illegal in North Carolina for good reason, and we're cracking down on lenders that try to get around our ban."

The South Dakota-based Western Sky claims it is exempt from state laws that ban its loans in North Carolina because it is an Indian tribal entity. Cooper alleges Western Sky is really a for-profit company owned by an individual who is a member of an Indian tribe. The lawsuit alleges the company is not owned or operated by any tribe or for the benefit of any tribe.

The lawsuit further alleges that the California-based CashCall used Western Sky as a front in an effort to get around state laws.

Cooper's lawsuit seeks the cancellation of all allegedly illegal loans, refunds for consumers and banning the defendants from collecting on the loans and making future high interest loans to North Carolinians.

"We've fought hard to keep these loans out of North Carolina because they sink struggling consumers deeper in debt," Cooper said. "Don't let your need for quick cash trap you a bad loan that will leave you worse off."

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