A Lynchburg woman who embezzled $8,000 from a payday loan company will serve 10 days in the Amherst County Jail.

Lashaun Patrice Smith, 33, pleaded guilty in Amherst Circuit Court on Tuesday and was sentenced to 13 years in prison. All but 10 days were suspended.

Assistant Commonwealth’s Attorney Anthony Martin said Smith began taking out false no fax payday loans in late 2005, using the names and information of people who received legitimate loans from Cash Advance in Madison Heights.

Smith will be put on two years probation after her release and was ordered to pay back the money she stole from the cash advance payday loan lender.

A grand jury indicted Smith in October on 13 counts of embezzlement. She originally faced two dozen other related charges, including forgery, but those were dropped, Martin said.

Smith could end up serving the suspended portion of her sentence if she violates the conditions of her probation after her release from jail.

Americans pulled out their credit cards again in November after having locked them away for safe keeping in the prior month, the Federal Reserve announced today.

The Fed said consumer borrowing rose at an annual rate of 6.2 percent in November, the sharpest pace since August, as credit card applications and requests for payday advances took off.

Borrowing rose by $12.3 billion usd in November, bringing the total consumer credit up to $2.39 trillion across the nation, also the largest increase since August.

Economists had expected total consumer borrowing to rise by $6 billion in November. But the increased amount is at least partially due to the popularity of regular and faxless payday loans.

The rise in total consumer debt was widespread, as consumers increased both their credit card debt and took out loans secured by automobiles and other big-ticket items, excluding real estate.

Consumer borrowing for auto loans and other types of so-called non-revolving credit rose at an annual rate of 3 percent in November, an increase of $3.8 billion.

Credit card borrowing, known as revolving credit, rose at an annualised 11.9 percent rate in October. That’s the largest percentage increase since June and the largest dollar increase since May.

The Fed’s measurement of consumer credit does not include mortgages and other loans secured by real estate. But it does take cash loans into account.

On a busy Hampton street, a small, yet vocal group wants drivers to stop and pay attention.

“Shut ‘em down!” they yelled.

“We’re out here, trying to bring public attention to this atrocity which is called [no faxing payday loan] lending,” said Rev. Marcellus Harris, president of the Coalition for Justice for Civil Rights.

Members say their message is one everyone needs to hear.

“It is something we want to address because poor people are being victimized by the lending process that extends beyond the 36 percent interest rate,” Harris said.

Virginia legislators last year considered a plan that would cap the amount of interest short term loan companies could charge to 36 percent. Some faxless cash advance lenders right now charge as much as five hundred percent interest.

That plan was killed.

But, had it passed, it would have put providers of bad credit payday loans out of business. So says Jamie Fulmer, with Advance America Cash Advance Centers.

“We certainly believe consumers should have access to this product because it’s a product millions of Americans and thousands of Virginians have come to value,” Fulmer said.

These payday lenders are sending a message of their own, on television, on the radio, in newspapers.

“Our customer base is essentially hardworking middle income Americans who from time to time get caught with unexpected or unbudgeted expenses,” Fulmer said.

The General Assembly is also looking at another battle brewing, over the future of car title lending. That’s where a borrower hands over the title to a car in exchange for high-interest payday advance loans.

Sen. Chuck Gray, (R-Mesa, pictured) introduced a bill Tuesday that would limit instant payday loan store interest rates to 36 percent annually, including fees and fines. Gray said testimony indicates rates on the short-term loans “can be in excess of 500 percent, and we’ve heard from 700 to 1,000 percent.”

West Mesa has the highest concentration of payday cash advance stores in the state.

“It’s basically check-kiting,” Gray said, adding that the centers target “the segment of society that can least afford to go into debt.

“These kinds of facilities are not something that government should condone. I don’t think they’ve brought anything to society that is of any worth, so I’m hoping they will pack up and leave the state. Either that or live with 36 percent interest.”

The bill, SB1051, now goes to committee.

Members of ACORN, a community activist group, have picketed one payday loan company after another in recent months, claiming they take advantage of the poor.

Nancy Saxton wants to crack down on faxless payday loan companies that provide short-term loans and charge annual interest rates of up to 550 percent.

The Salt Lake City councilwoman has asked for - and received - support from the City Council to pursue an ordinance to limit the number of the check-cashing businesses.

Saxton, who is running for mayor, said she has wanted to limit the cash advance loans‘ businesses as she has noticed their proliferation in her central city district - there are eight within two blocks of her - and because she believes they prey on the poor.

“It gags me to think about the kind of interest” rate they charge, she said.

In addition, she doesn’t believe they contribute to the city’s goal of more pedestrian-friendly neighborhoods. The stores don’t generate much foot traffic, she said.

There are at least 24 providers of payday advances in the city.

The new ordinance wouldn’t eliminate existing shops, though. But it could limit the total number in the city and their location. West Valley City forbids check-cashing shops within 600 feet of each other and limits them to one per 10,000 residents. In Salt Lake City, there is at least one such business per 7,572 residents.

Councilman Dave Buhler, who is also running for mayor, said he wouldn’t be comfortable limiting the number of quick payday advance operations based on population.

The federal government has capped interest rates at 36 percent on payday loans for military personnel for security reasons.

Cynthia Smith is a fan of payday cash loan outfits, despite interest rates 10 times what other lending institutions can charge.

“I think it’s wonderful for peo ple that need the money,” Smith told The Richmond Times-Dispatch as she left a payday loan branch on West Broad Street in Richmond. “A lot of people live day to day.”

Smith, a chef, was unmoved by arguments that borrowers paying an annual percentage rate of 380 percent often end up trapped in a cycle of borrowing and debt.

“The banks make it hard,” she said, “because you have to go to [payday advance lenders] to get what the bank won’t give you.”

However, the Virginia Partnership to Encourage Responsible Lending would challenge Smith’s view with stories from people who say payday lending has landed them in a financial hole that is hard to climb out of.

The partnership includes a diverse coalition from the communities of commerce, faith, civil rights and social activism. As the General Assembly convenes today for its 2007 session, the partnership again is supporting the efforts of Del. John M. O’Bannon III, R-Henrico, to repeal the Payday Loan Act of 2002, which legalized the short-term, high-interest same day payday loans.

Despite the opposition, repealing the law will be a tough job.

“The General Assembly is business oriented,” said Del. Dwight Clinton Jones, D-Richmond. “The General Assembly is not about to, in most instances, do anything to move against anybody making a profit. It’s very difficult once a business is established, no matter what the business, to dismantle it.

“The [cash loan online] lending business should not have been codified. But once it’s been codified, it’s been institutionalized.”

Jones said he has been working for three or four years without success to repeal the law, “and my prediction is it won’t be won this session as well. But I think the sentiment is strong that even if we don’t repeal it, we can do some things to limit it.”

According to the partnership, there are around 800 cash advance payday loan stores statewide - two for every McDonald’s and three for every Starbucks.

Payday lenders use a check as collateral for a two-week loan.

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Rev. Marcellus Harris, president of the Coalition for Justice, says the group will be in Richmond later today to protest instant payday loan and car title lending.

Harris and five others held a midday protest in front of the Cash-N-A-Flash lender on West Mercury Boulevard yesterday afternoon.

“It’s a quick fix at first,” Harris said. “And then the issue changes and the quick fix become a big problem when people try to pay back these high interest rate loans.”

Lawmakers are expected to debate the future of car title lending, a controversial business that critics say hurts the poor, in the upcoming General Assembly session. The rates involved make it similar to the cash loan online industry.

In exchange for a borrower’s car title, lenders will offer high-fee, high-interest loans. If a borrower fails to pay the money back the lender can take the car and sell it to pay off the debt.

Car title lenders are currently not regulated in Virginia, but state delegates have filed at least two separate bills that could change that. One bill would require lenders to get a state license to operate. A second would cap the annual interest rate at 36 percent - just like that on military payday loans.

Lawmakers originally regulated payday advance loan lenders in 2002, but they are expected to debate tighter restrictions on the industry in the coming session.

Two men are facing the Georgia Supreme Court Monday for charges of breaking the no fax payday loan law created in 2004. One critic says these types of quick cash advances are bad business. One pawn shop manager disagrees.

In 2004, Georgia legislators made quick cash loans illegal in the state. Monday, two financiers charged with breaking the law, asked the Georgia Supreme Court to strike the law down.

WMAZ visited Tony’s Pawn Shop in Warner Robins where people often go for cash advance loans. The manager says they do not take advantage of people with their 25% percent interest rate; instead Bobby Potter says they help customers who want cash but don’t want to deal with a bank.

BARRY JONES, PAWN SHOP CUSTOMER:
“At times I come up short because I’m in between jobs or whatever and we need money to pay bills, so I have to bring things we’ve got, her silverware that’s been in the family 3 generations, I bring it in a lot, pawn it, get some money from it and pay the bills.”

Financial expert Sherri Goss says what may seem like easy money, may be an easy way to get yourself into trouble. She is against the use of no fax cash advance loans.
SHERRI GOSS, ROSENBERG FINANCIAL GROUP:
“You have payday loans, loans in anticipation of a refund and title pawn, all three of those types of loans are extremely expensive and are very bad news for consumers.”

Goss says in Georgia financiers can charge you up to 25% percent interest a month for the first three months and charge you 12.5% monthly thereafter. This means if you acquire a pay day loan and paid it back in one year, you would pay more than 187% interest.

The government must reform lending practices - such as those involving payday cash advances - that prevent the poor from saving money and owning a home, said Senator Chris Dodd, (D-Conn., pictured) the incoming chairman of the Senate committee on banking, housing, and urban affairs.

It may take a new law to do so, if pressuring financial services companies and other bad credit payday loan lenders to alter their lending practices doesn’t yield results, he said.

“I’m not overly anxious to pass legislation,” Dodd said to reporters after a speech on Tuesday. But if the problems aren’t fixed, he added, “the law will be changed.”

The White House hopeful - who repeated Tuesday that he will make a final decision on whether to run in the 2008 presidential election “probably in the coming days” - spoke at the 10th annual Wall Street Project economic summit held in Midtown Manhattan.

Wall Street Project is a group run by the Rev. Jesse Jackson and his Rainbow/PUSH civil rights organization that aims to ensure equal opportunity for minority employees, consumers and entrepreneurs.

Jackson, as well as the Rev. Al Sharpton, attended Tuesday.

Dodd said his goals as chairman included getting Wall Street firms to work with the Wall Street Project to increase low-income families’ access to capital, and holding hearings on “predatory” lending practices, including faxless payday advance lending and the credit card industry’s targeting of those who can’t pay off their bills.

Unfair lending practices have come under fire in recent years as mortgage delinquencies and foreclosures surge.

The trend is expected to continue: in December, the Center for Responsible Lending predicted that lenders will foreclose on nearly a fifth of the subprime mortgage loans - high-interest home loans given to people with poor credit - issued in 2005 and the first three quarters of 2006.

“For these people, the American dream can truly become a nightmare, in a sense,” Dodd said.

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Attorneys for two payday advance lenders told Georgia’s highest court Monday that their clients were singled out for prosecution while out-of-state companies were left alone.

Bainbridge financiers Nathaniel Glenn and John Dunlap are challenging the law on grounds it violates the federal Equal Protection clause by victimizing only businesses based in Georgia. The law levies stiff penalties on lenders who market short-term, high-interest loans.

Prosecutors say the two continued to charge the high interest rates but called them by another name after the law took effect in May 2005. The two men, who were charged with 49 violations of the law, have been sentenced to a year of probation on those charges and another 15 years of probation on a racketeering violation.

Joseph Mulholland, district attorney for five counties in south Georgia, called the men “modern-day loan sharks.”

“They didn’t use bats or knives, they used contracts,” he said.

The duo’s lawyer, Gilbert Murrah, argued that the case should be thrown out because the men were prosecuted even when other providers of payday cash loans with out-of-state headquarters were left alone.

“These men were singled out for prosecution because of their residence in Georgia,” Murrah told the justices.

Mulholland said the out-of-state lenders were not prosecuted because they are banks, which fall under federal regulations rather than state law. All of those lenders have since either moved out of Bainbridge or been shut down by the federal government.
Dunlap and Glenn were not covered by such federal regulations, making them subject to the state’s fast cash advance law, Mulholland said.

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