Consumer complaint received 2021-10-10
Product: Payday loan, title loan, or personal loan — Payday loan
Issue: Charged fees or interest you didn't expect — 
Company: LDF Holdings, LLC (LA)

Due to financial stress caused by unexpected medical bills and Hurricane Laura, I took out 3 loans with Loan at Last in XXXX and XXXX totaling {$1800.00} and 1 loan with National Small Loan totaling {$800.00}. To date I've paid Loan at Last {$2900.00} and National Small Loan {$1400.00}. I stopped payment on all withdrawals for my final loan with Loan at Last when I attempted to work with a debt consolidation company to resolve these issues. Thereafter, I learned that these companies aren't licensed to do business in Louisiana and their interest rates far exceed amounts allowed by Louisiana law. I filed a complaint with the Louisiana XXXX XXXX XXXX XXXX on both companies. 

LDF Holdings dba Loan at Last and Niizhwaaswi , LLC and National Small Loans/XXXX XXXX claim to be wholly owned and operated by the XXXX XXXX XXXX XXXX XXXX XXXX XXXX located in Wisconsin. Despite their best attempts to obscure the true owners and operators of these online payday lending companies, several lawsuits and studies have revealed them to be engaged in an illegal " rent a tribe '' scheme. The president of LDF Holdings has even gone so far to announce in XXXX that LDF Holdings was forming a consulting group to assist other tribes in entering the payday lending market. See : https : //ldf-holdings.com/ldf-holdings-launches-new-business/. This excerpt from the most recent lawsuit involving LDF Holdings ( Combs v LDF Holdings et al 3:21-cv-50307 ) filed XX/XX/XXXX explains this scheme : " In an attempt to evade prosecution under usury laws of states like Illinois, non-tribal owners of online payday lending businesses frequently engage in a business model commonly referred to as a rent-a-tribe scheme. 

In such schemes, non-tribal payday lenders create an elaborate charade claiming their non-tribal businesses are owned and operated by Native American tribes. 

The illegal payday loans are then made in the name of a Native American tribal business entity which purport to be shielded from state and federal laws prohibiting usury due to tribal sovereign immunity. However, the tribal lending entity is simply a facade for an illegal lending scheme ; all substantive aspects of the payday lending operation funding, marketing, loan origination, underwriting, loan servicing, electronic funds transfers, and collections are performed by individuals and entities that are unaffiliated with the tribe. 

In exchange for use of the tribes name, the beneficial owner of the payday lending scheme pays the cooperating tribe a fraction of the revenues generated. While the percentage varies from scheme-to-scheme, the number is almost always in the single digits. 

However, an entity must function as a legitimate arm of the tribe in order to fall under that tribes sovereign immunity. See Breakthrough Mgmt. Grp., Inc. v. Chukchansi Gold Casino & Resort , 629 F.3d 1173, 1183 ( 10th Cir. XXXX ). 

To determine if a particular entity is entitled to sovereign immunity, the majority of courts have adopted the framework laid out in Breakthrough, which analyzed ( 1 ) [ the entities ' ] method of creation ; ( 2 ) their purpose ; ( 3 ) their structure, ownership, and management, including the amount of control the tribe has over the entities ; ( 4 ) whether the tribe intended for the entities to have tribal sovereign immunity ; ( 5 ) the financial relationship between the tribe and the entities; and ( 6 ) whether the purposes of tribal sovereign immunity are served by granting immunity to the entities. Breakthrough at 1183, 1187-88. 

These so-called tribal lenders usually do not survive scrutiny when examined closely, since virtually all business functions occur far from tribal land, by nontribal members, and overwhelmingly benefit non-tribal members to such a degree that tribal involvement is effectively nil. 

Where non-tribal individuals and entities control and manage the substantive lending functions, provide the lending capital necessary to support the operation, and bear the economic risk associated with the operation, they are not in fact operated by Native American tribes and, therefore, are not shielded by sovereign immunity. 

Further, sovereign immunity, even if legitimately invoked, still does not turn an otherwise illegal loan into a legal one. See, e.g., United States v. Neff, No. 18-2282, 787 F. App'x 81 ( 3d Cir. XXXX XXXX, XXXX ) ( upholding criminal convictions of two individuals engaged in an online payday lending rent-a-tribe scheme ; sovereign immunity does not transform illegal loans into legal ones, and reasonable people would know that collecting unlawful debt is unlawful ). 

Attempting to circumvent state interest rate caps by fraudulently asserting tribal sovereign immunity has been found to constitute criminal conduct. See United States v. Tucker, et al., No. 1:16-cr-91-PKC, XXXX U.S. Dist. LEXIS 134265 ( S.D.N.Y. XXXX. XXXX, XXXX ). '' I would like CFPB to open an investigation into LDF Holdings and prosecute them to the fullest extent of the law including utilizing RICO laws. These companies can not be allowed to continue evading state and federal regulation under the guise of " tribal immunity '' in order to defraud millions of people such as myself who have found ourselves in difficult financial circumstances.