Arkansas Board Demands Lender Pay Fines, Cease Issuing Loans, Refund Consumers, Shut Down
By Paul RizzoPayday Loan Writer
The owner of a string of allegedly criminal payday loan companies, who was recently fined a whopping $1.3 million by Arkansas financial regulators, was accused Tuesday by the state of having siphoned cash from his businesses after being hit with the fine and ordered to shut the businesses down.
A Pulaski County court filing by the Arkansas State Board of Collection Agencies claims that Dennis Bailey transferred large sums of cash from payday loan stores and cleaned out the bank accounts of his businesses in an effort to avoid paying more the record fines.
Bailey was ordered by the board June 28 to close his stores in Arkansas after regulators found him in violation of state lending laws. He asked a circuit Judge to review the board decision, and Little Rock lawyer Thomas Thrash submitted the board's response Tuesday.
The attorney asked for a full accounting of the finances of the payday advance businesses and for a judgment against Bailey enforcing the $1.3 million in fines, plus 6 percent interest. The filing also urged to the judge that Bailey must return money transferred out of his business accounts subsequent to the board decision.
The board ordered Bailey to stop collecting any payments, effective immediately, and to cease making any new payday loans or cashing checks for a fee. He also was ordered to reimburse fees to all his customers, and his payday loans were declared null and void.
Board Executive Director Peggy Matson said a court order would be needed to close the stores because the businesses perform other services than payday cash loan lending, such as check cashing and selling money orders - operations not regulated by the board.
Bailey's attorney, Paul Johnson, said he hadn't seen the board's filing but had been told it was coming. Johnson had asked Circuit Court Judge Marion Humphrey for a stay and said he expected the board would ask for a quick judgment.
The 14 stores include 10 that go by the name of Fast Cash in Beebe, Bryant, Corning, Fordyce, Harrison, Little Rock, Mountain Home, Searcy, Sheridan and Walnut Ridge. The others are Fast Cash Check Cashers in Camden, Cash Advance in Hot Springs, Cash Advance in Cabot and Central Arkansas Check Cashing in Newport.
With a pay day loan in Arkansas, a customer writing a check for $400, for example, typically would receive $350. The lender would keep the check for about two weeks without cashing it and, thereby, allowing the customer time to buy back the check. The $50 charge on the $350 personal loan for 14 days equates to 371 percent interest, well above Arkansas' limit of 17 percent.
