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April 07, 2016

Villanova man indicted in $688 million payday lending scam

Charles M. Hallinan allegedly issued illegal short-term loans charging interest rates more than 700 percent

A Villanova man who allegedly generated $688 million from a payday lending scam was indicted Thursday.

Charles M. Hallinan, 75, faces charges of two counts of conspiracy to violate federal racketeering laws and nine counts of international money laundering. Wheeler K. Neff, 67, of Wilmington, Delaware, was indicted on the same charges for his role in the alleged scam.

The two are accused of generating more than $688 million in revenue from hundreds of thousands of customers between 2008 and 2013 by issuing criminally usurious loans, according to the U.S. Attorney's office in Philadelphia.

Hallinan allegedly issued payday loans – small, short-term loans that customers are expected to repay using their next paycheck – through his varied businesses. Those loans charged customers annual interest rates that exceeded 700 percent.

Such loans are illegal in Pennsylvania.

Hallinan and Neff allegedly conspired to evade state laws by paying thousands of dollars each month to a trio of Native American tribes to pretend they were the payday lenders, investigators said. By doing so, the tribes could claim that tribal sovereign immunity shielded them from state laws.

Randall Ginger, 66, of Canada, allegedly claimed to be a "hereditary chief" of one of the tribes, investigators said. Hallinan allegedly offered to pay Ginger $10,000 per month to pretend he owned a pair of companies that had no assets so the plaintiffs of a class-action lawsuit would settle for pennies on the dollar.

Ginger was charged with two counts of mail fraud, three counts of wire fraud and one conspiracy count.

Hallinan faces at least 12 years in prison if convicted of all charges. Neff and Ginger face at least eight years. They also face possible restitution.

Hallinan, Neff and Ginger allegedly further conspired to defraud nearly 1,400 people, who had sued one of Hallinan's payday loan companies, into abandoning a lawsuit valued as high as $10 million, investigators said.

Hallinan and Neff also are charged with helping Adrian Rubin, another payday lender facing charges elsewhere, evade state anti-usury laws by entering into contracts designed to give the false impression that a Native American tribe was the lender.