Chattanooga businessman and philanthropist Carey Vaughn Brown was indicted today in New York City by a Manhattan prosecutor for assembling an illegal "payday syndicate" in violation of state lending laws, The New York Times reports.
Brown and two of his top associates, former chief operating officer Ron Beaver and legal advisor Joanna Temple "carefully crafted their corporate entities to obscure ownership and secure increasing profits," The Times said in a blog posted tonight.
The New York Times said criminal charges were made against a dozen companies and Brown, accusing Brown and his companies of enabling payday loans that flouted the state’s usury limits on interest rates on New York loans.
In the indictment, prosecutors outline how Brown assembled “a payday syndicate” that controlled every facet of the loan process — from extending the loans to processing payments to collecting from borrowers behind on their bills.
“The exploitative practices — including exorbitant interest rates and automatic payments from borrowers’ bank accounts, as charged in the indictment — are sadly typical of this industry as a whole,” said Cyrus R. Vance Jr., the Manhattan district attorney.
The authorities argue that Mr. Brown, along with Ronald Beaver, who was the chief operating officer for several companies within the syndicate, and Joanna Temple, who provided legal advice,
Brown incorporated the online payday lending arm, MyCashNow.com, in the West Indies, a tactic that prosecutors say was intended to try to put the company beyond the reach of American authorities.
The indictment against Brown, Beaver and Temple said the trio orchestrated a “systemic and pervasive usury scheme."
Brown’s lawyer, Paul Shechtman with Zuckerman Spaeder, told the New York Times Brown “acted in good faith and looks forward to showing his innocence.”
On Monday, Beaver, who was arraigned in state court, entered a plea of not guilty. Denis Patrick Kelleher of the law firm Clayman & Rosenberg said his client “voluntarily appeared in court this morning to defend himself against these charges."
The Times said such charges are rare.
"The case is a harbinger of others that may be brought to rein in payday lenders that offer quick cash, backed by borrowers’ paychecks, to people desperate for money," New York Times reporter Jessica Silver-Greenberg said in a web update.
Brown, a former used car salesman, headed one of the largest Internet-based payday lending enterprises until he shut down most of his businesses in August 2013.
Brown started the Covenant Values Foundation in Chattanooga and pledged to give away $1 billion before his business empire shrunk with the shut down of most of his payday lending empire.
Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...