NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a settlement on Friday with three lenders and their principals for allegedly violating the state's usury and licensed lender laws.
Western Sky Financial LLC, CashCall Inc., WS Funding LLC and their owners, J. Paul Reddam and Martin Webb, allegedly charged New Yorkers annual interest rates of between 89 percent and more than 355 percent. The maximum rate allowed under New York law is limited to 16 percent for most lenders not licensed by the state. None of the companies involved in the agreement were licensed in New York.
The three companies, which are located in South Dakota and California, allegedly targeted vulnerable New Yorkers through internet and television advertising that promised fast cash to consumers who needed money. The companies allegedly charged extremely high interest rates in more than 18,000 loans to New York consumers.
"With this agreement, thousands of New Yorkers exploited by Western Sky and CashCall will get the relief they are owed," Schneiderman said. "As individuals in New York and across the country continue to face tough economic times, we must keep up the fight against those who exploit and scam them. Illegal collectors and lenders, in particular, must pay a price for their behavior and pay back the New Yorkers they harmed."
Under the terms of the agreement, Western Sky, CashCall and related companies will modify all outstanding loans that were made to New Yorkers, cease all collections from New Yorkers who paid more than the principal of the loan and cease all collection of interest from all other New Yorkers. The companies will provide refunds to New York borrowers who paid back more than the principal of their loan plus the legal interest rate of 16 percent and pay $1.5 million in penalties.
The settlement could provide more than $35 million in debt relief to New York consumers. A proposed order and judgment was submitted to the court for its approval.