The feds' crackdown on KC-based predatory lenders continues with two high-profile lawsuits.
On Wednesday, September 10, U.S. Marshals, local law enforcement and a temporary receiver appointed by a federal judge arrived at the headquarters of CWB Services LLC, at 6700 Squibb, in Mission.
Larry Cook, the temporary receiver, ordered all employees present to step away from their desks. Photos and video were taken of the premises. Employees submitted to in-depth interviews and filled out questionnaires about their roles in the company. All items in the office that could contain information about the business — desktop computers, laptops, filing cabinets, phones — were seized.
Tim Coppinger, whom investigators say owns CWB Services, was served papers informing him that the Federal Trade Commission had filed a civil lawsuit charging him with operating a payday-lending scheme. Every bank account on which Coppinger was a signatory — CWB Services accounts, other business accounts, his personal accounts, his family members' accounts — was frozen.
Around the same time, authorities changed the locks at 7301 Mission, the Prairie Village office from which, according to the FTC, Ted Rowland assisted Coppinger's operation. All of Rowland's assets were also frozen.
And in Waldo, at 2 East Gregory Boulevard, the feds were unplugging computers and confiscating documents at the headquarters of the Hydra Group, a separate alleged payday-lending scheme, charged the same day by the Consumer Financial Protection Bureau. Like Coppinger and Rowland, Hydra Group's owners — whom the CFPB contends are Richard F. Moseley Sr. Richard F. Moseley Jr. and Christopher Randazzo — suddenly found their credit cards not functioning.
Both lawsuits are civil, not criminal. None of the five Kansas City businessmen was arrested. But the actions sent a clear signal from the federal government to the notoriously shady online-lending industry, which has deep roots in Kansas City.
The steps taken in both cases are unusually severe for
a civil complaint. The FTC's and the CFPB's lawsuits were filed under seal in federal court the week prior to the raids. On September 9, U.S. District Judge Dean Whipple granted motions for ex parte temporary restraining orders in both complaints. He found good cause to believe that the defendants have engaged in, and were likely to continue to engage in, practices that violate several federal laws and acts and put U.S. consumers in harm's way. Whipple also was convinced that giving advance notice to the defendants would allow them to transfer and conceal their assets. Moseley Sr. for example, had $10.6 million in bank accounts as of August 31.
"Because of Defendants' ties to Nevis and New Zealand, Defendants are likely to move this money offshore upon notice of this action," the CFPB's attorneys wrote in the filing.
Richard Cordray, head of the CFPB, explained Hydra Group's foreign connections and intentionally complex structure in colorful terms.
"Rarely is a company so appropriately named," Cordray said in a joint FTC-CFPB announcement of the charges September 17. "Like the multi-headed serpent in Greek mythology, the Hydra Group is actually a conglomeration of about 20 businesses with various names. Although their payday lending operations are based in Missouri, many of the companies are incorporated offshore in New Zealand and the Commonwealth of Saint Kitts and Nevis. Their maze of businesses and shell companies seems designed to evade effective law enforcement and includes names like SSM Group, Hydra Financial Limited, and Piggycash Online Holdings." (Yes, really: Piggycash Online Holdings.)
Both lawsuits charge that the companies deceived consumers about the cost of their loans. Instead of assessing a one-time finance fee for the loans (often $90 on a $300 loan — already an extraordinary rate), both defendants, the agencies say, made repeated withdrawals of $90 every two weeks from borrowers' bank accounts, without ever reducing the principal.
Category: Payday loans