"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," Cyrus R. Vance Jr., the Manhattan district attorney, said on Monday.
In the indictment, prosecutors outline how Mr. 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 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, "carefully crafted their corporate entities to obscure ownership and secure increasing profits."
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Beneath the dizzying corporate structure, prosecutors said, was a simple goal: make expensive loans even in states that outlawed them. To do that, Mr. 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. Other subsidiaries, owned by Mr. Brown, were incorporated in states like Nevada, which were chosen for their light regulatory touch and modest corporate record-keeping requirements, prosecutors said.
Each company—there were 12 in all—further distanced Mr. Brown and his associates in Chattanooga, Tenn., from the lending, prosecutors said. On Monday, the three executives. whom prosecutors accused of orchestrating a "systemic and pervasive usury scheme," were charged with violating usury rates and a count of conspiracy.
Mr. Brown's lawyer, Paul Shechtman with Zuckerman Spaeder, said his client "acted in good faith and looks forward to showing his innocence."
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On Monday, Mr. 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," adding that "we expect he will be fully vindicated."
Priya Chaudhry, a lawyer with Harris, O'Brien, St. Laurent & Chaudhry who represents Ms. Temple, said she was confident in her client. She added that "it remains to be seen whether the advice Ms. Temple gave was incorrect or in violation of any laws."
The indictment offers a detailed look at the mechanics of the multibillion-dollar payday loan industry, which offers short-term loans with interest rates that can soar beyond 500 percent. Following the threads of the operations took months, according to several lawyers briefed on the investigation. Prosecutors pored over reams of bank records and internal company documents to determine how the disparate companies were connected.
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The payday lending operation began when borrowers applied for loans on websites like MyCashNow.com. From there, borrowers' information was passed to another company, owned by Mr. Brown, that originated the loans. The information then wound up with another company, owned by Mr. Brown, that collected payments from borrowers. To construct the web, prosecutors say, Mr. Brown turned to his lawyer, Ms. Temple, who is accused of offering "false advice."