A Philadelphia-area businessman and a member of an indigenous group in Canada are the targets of a U.S. investigation involving the payday lending industry, according to court records.
Charles Hallinan, the operator of several online payday lending companies, and Randall Ginger, a hereditary chief of the Mowachaht/Muchalaht First Nation in British Columbia, are targets of a federal grand jury investigation, according to a Sept. 18 court ruling.
The investigation was detailed in a decision by U.S. District Judge R. Barclay Surrick in Philadelphia that required two law firms to produce documents in the probe.
The decision, originally filed under seal, was accessed by Reuters on Thursday through a public docket. After Reuters made inquiries, the ruling became unavailable.
It is unclear at what stage prosecutors are in the investigation. It is also possible charges will ultimately never be brought.
A spokeswoman for U.S. Attorney Zane Memeger in Philadelphia said she could neither confirm nor deny the probe. Hallinan's lawyer declined to comment. A lawyer for Ginger did not respond to requests for comment.
The probe comes as U.S. authorities scrutinize payday lenders, which provide small extensions of credit that borrowers agree to repay in a short time, such as when they next receive a paycheck.
Payday lenders say they help strapped-for-cash consumers. Critics say their loans leave borrowers with lots of debt due to high interest rates, fees and loan rollovers.
Eighteen states and the District of Columbia prohibit payday lending, according to the Consumer Federation of America, an advocacy group.
But authorities say some in the U.S. online payday industry - which made $17.3 billion in loans in 2014, according to Jefferies Group - try to get around those laws by linking up with Native American tribes which claim sovereign immunity, a model critics call "rent-a-tribe."
Federal prosecutors in Philadelphia in July secured the guilty plea of one payday lender, Adrian Rubin of Jenkintown, Pennsylvania, who they said engaged in a racketeering conspiracy involving a tribe pretending to be the lender.
Federal prosecutors in Manhattan are investigating racecar driver Scott Tucker, who regulators say controlled payday lending firm AMG Services Inc, which claimed a tribal affiliation.
Both Rubin and Tucker had previously worked with Hallinan, court records show.
In the probe of Hallinan, who founded Bala Cynwyd, Pennsylvania-based Hallinan Capital Corp, prosecutors have examined the ownership of payday lender Apex 1 Processing, which he established, the ruling said.
During a class action against Apex 1 by Indiana borrowers, the plaintiffs received a 2008 document detailing Hallinan's purported sale of Apex 1 to GR Financial, which Ginger, the tribal chief, owned, the ruling said.
Hallinan in a deposition claimed to have "no involvement" with Apex 1, the ruling said, and Ginger said Apex 1 was out of business with no assets.
After Hallinan's deposition, the case was settled for $260,000, 10 percent of what the plaintiffs sought, the ruling said. Prosecutors have since found a check from a company Hallinan owned for that amount, the ruling said.