CHARLESTON – State Attorney General Darrell McGraw has filed another lawsuit against a payday loan lender.
On Tuesday, McGraw's office said it seeks $3.9 million in penalties from Government Employees Credit Center Inc. and the Dollar Financial Group for making and collecting illegal payday loans in contempt of a court order.
McGraw's office sued the Delaware-based GECC, its owner Vincent Ney, and related companies who continued to collect GECC's loans in West Virginia after a February 2007 court order telling them to stop. The suit also named the now-defunct PD Recovery Inc., its parent corporation Dollar Financial Group of Pennsylvania, and their owner Jeffrey Weiss, for collecting GECC's accounts in West Virginia in violation of the February 2007 court order.
McGraw's complaint also says none of the companies are licensed to do business in West Virginia.
In November 2006, McGraw's office first sued 14 Internet payday lenders -- including GECC -- after the companies refused to disclose their account records in response to investigative subpoenas.
Following a hearing, the Kanawha Circuit Court ordered GECC to comply in full with McGraw's subpoenas and to cease making and collecting loans in West Virginia. GECC defied the court order, prompting McGraw's office to charge GECC with contempt. At a Nov. 20, 2007, hearing, Kanawha Circuit Judge Paul Zakaib set a fine of $3,000 per day until GECC complied.
McGraw's lawsuit seeks a judgment against GECC and Ney for $3.9 million in fines that have accrued since the original contempt citation. The suit also asks that all of GECC's loans be voided; that all payments collected be returned to West Virginia consumers; and that GECC's collection agencies -- PD Recovery and Dollar Financial Group -- return all payments collected and be similarly penalized for collecting debts without a license in violation of the November 2007 injunction.
Last week McGraw's office sued two other collection agencies -- Ezell, Williams and Associates dba D&R Recovery, of Bolling Brook, Ill., and owners Charles L. Dickey and Charles L. Dickey III plus Frontier Financial -- and owners Salvatore Mazzara and Paula Englebrecht -- for collecting Internet payday loans without a license and for ignoring the attorney general's investigative subpoena.
Both companies collected Internet payday loans originated by a now-defunct company, Money and More, that signed a settlement agreement on April 17, 2009, with McGraw's office agreeing to void all of its loans.
According to a press release, since McGraw's Consumer Protection Division began an investigation of the Internet payday lending industry and its collection agencies in 2006, the Attorney General's office has reached settlement agreements with 109 Internet payday lenders and their collection agencies, resulting in nearly $2.5 million in cash refunds and cancelled debts for 8,044 West Virginia consumers.