Status Quo for Payday Advance Firm
By Paul RizzoPayday Loan Writer
More than two years after a father and his two sons went to court in a bitter battle to control a Mason payday loan company, a Hamilton County judge has issued an order that puts tight controls on the firm’s finances and prohibits the alteration or destruction of company records.
The preliminary injunction issued by Common Pleas Court Judge Norbert A. Nadel is intended to maintain the status quo so that the company’s financial condition does not change substantially in the interim between when the order was issued and when the case is finally decided.
The order specifically prohibits CNG Financial from paying any dividens or making any other kind of payments to shareholders. The order also bars the company from borrowing any money other than funds that are routinely acquired to keep the fast payday advance business operating.
Nadel said Wednesday no trial date has been set and both sides are due back in court October 26 to determine when a hearing will be held on motions filed recently.
Allen L. Davis sued the company he created, CNG Financial, in 2004, claiming he did not receive all the shares he paid for when he exercised an option to buy a bigger stake in the company. He also accused his two sons, Jared and David, of mismanaging the company and using corporate funds to cover personal expenses.
At the time the suit was filed, CNG Financial operated about 800 Check ‘n Go stores across the U.S.
The payday cash advance lending firms, typically patronized by low-income people, have been frequently criticized for charging exorbitant interest rates to those who can least afford to pay them.
In Kentucky, for example, the fees charged for some of the company’s smallest personal loans amount to 460 percent per year.
Allen Davis, a former president of Provident Bank, later acquired by National City Bank, started the company with a single store at Fourth and Scott streets in Covington.
Today, it operates about 1,400 stores in 35 states and has about 3,000 employees. The privately held company had estimated revenues of about $360 million last year.
The three Davis family members and Cincinnati attorney David Rosenberg own all the company shares. The sons control it with a 60 percent stake given to them by their father.