Cane Bay Partners Faces Payday Loan Class Action * Update: Cane Bay Responds *

David Johnson, left, and Kirk Chewning, founders and co-owners of Cane Bay Partners, receive the 2019 St.Croix Chamber of Commerce Nonprofit of the Year Award on behalf of Cane Bay Cares, the charitable arm of Cane Bay Partners. (Photo from Cane Bay Partners website)

St. Croix-based Cane Bay Partners and founding co-owners David Johnson and Kirk Chewning face class action lawsuit over alleged national payday loan program that charged exorbitant annual interest rates while using Native American tribes as a facade to evade state usury laws, according to a lawsuit filed in April with the Maryland District Court.

According to the complaint, Cane Bay Partners essentially manages MaxLend, the loan service at the center of the lawsuit. It says MaxLend charges extreme annual interest rates – up to 841% – for payday loans up to $ 2,500. In an effort to avoid state and federal regulations on usurious loan programs, Cane Bay Partners reportedly hid behind the MHA Nation, a Native American group made up of the Mandan, Hidatsa, and Arikara tribes located in Fort Berthold, a remote reservation in Dakota. North, the alleged pursuit. While the MHA nation acts as the tribal paper lender, Cane Bay Partners is leading the loan operation, leaving only a tiny percentage of the profits to the tribes, according to the lawsuit.

Cane Bay Partners is a Virgin Islands Economic Development Commission company, benefiting from tax breaks such as a 90 percent reduction in corporate and personal income tax.

Maryland resident Glenadora Manago, who detailed her experience in the 18-page complaint, represents a proposed class of complainants that could number in the thousands. From his Maryland home, Manago said he took out a $ 400 loan in February 2019 from MaxLend, which charged an interest rate of 605%. This resulted in a payment of $ 209 for the first month alone and ultimately resulted in finance charges of $ 1,436.20.

By the time Manago paid the full amount, his loan of $ 400 had climbed to $ 1,836.20.

In December 2019, Manago said they took out another MaxLend loan, this time for $ 600 with what they said was an annual interest rate of 581% and finance charges that amounted to over $ 2,000. . Maryland law caps consumer loan interest rates between 24% and 33%, depending on the loan amount.

Manago said she ultimately revoked authorization to allow MaxLend to access her bank account and filed a complaint, listing two violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), two violations of loan laws. the consumption of Maryland, unjust enrichment and civil conspiracy.

Update: Cane Bay Partners responded to the allegations on Thursday

“We are aware of the recent lawsuit in Maryland. We are confident that all named parties have complied with the law, and we are confident that this process will make that fact crystal clear, ”Cane Bay Partners CEO John Clark said in an email.

“While we cannot comment on the pending litigation, we can say that Cane Bay Partners is not and never has been a lender, and has no ownership interest in a lender. You can find more information about the services we offer to independent financial services companies on our website: Cane Bay Partners is proud of its contribution to job growth and economic activity for the benefit of St. Croix, ”said Clark.

Tribal loan

According to the complaint, Johnson and Chewning approached the MHA Nation in 2011 to create loan websites. Make Cents, Inc. was formed later that year as a tribal corporation, operating as MaxLend, but Cane Bay Partners runs the business, the lawsuit says, including “getting the funding, the domain registration, website design, business marketing, loan underwriting and approval and performance analysis to adjust lending algorithms ”, with MHA Nation having“ little significant involvement in lending. ‘business “.

The MHA Nation, for example, has a “benchmark agreement” with a company called TranDotCom Solutions for marketing and consulting services, as well as other support services “with respect to developing the business of ready, ”according to the complaint. Johnson and Chewning were both executives of TransDotCom, which is now affiliated with Strategic Link Consulting, also owned by Johnson and Chewning. Strategic Link offers a suite of services to “provide clients with the most comprehensive lending solutions available to enable optimal return on investment,” according to its website.

With the discovery pending, the complaint did not specify how much of the profits went to the MHA Nation, instead pointing to an earlier agreement between Cane Bay Partners and another Native American tribe, the Lac Courte Oreilles Band of Lake Superior Chippewa. Cane Bay and its affiliates signed a service agreement in 2014 with the Lac Courte Band, which receives just 1.8 percent of the company’s revenue, according to the lawsuit.

The presumed configuration reflects a typical tribal loan scheme, in which a lender partners with Native American tribes who have sovereign legal status and some level of immunity from prosecution under federal and state laws. The Native American tribe creates the loan company and enters into a service or advisory agreement with a non-tribal entity that controls virtually the entire operation. This allows the lender to isolate itself from state and federal laws while injecting the majority of the profits into non-tribal entities, leaving the tribes with a tiny fraction – between 1 and 2% – of the income generated.

A screenshot of the company's website.
A screenshot of the company’s website.

Persistent claims
This is not the first time Johnson and Chewning have faced allegations of extreme payday lending practices. A 2014 Bloomberg article drew attention to Johnson and Chewning loan websites, including and, at least one of which harassed an Arkansas woman over her loan payments from $ 775 when she had already paid more than $ 3,000.

“Cash Yes” and “Cash Jar” were owned by Hong Kong Partners, a Belizean company owned by Johnson and Chewning. Hong Kong Partners’ operations have followed the old successful overseas lending model, which allows lenders to appear as if they are operating in a foreign country and evade federal and state lending regulations in the process. The practice declined after the launch in 2013 of “Operation Chokepoint,” the US Department of Justice’s crackdown on banks doing business with companies deemed to be at high risk of fraud and money laundering.

Operation Chokepoint dramatically reduced the number of banks and payment processors willing to do business with offshore online lending companies, prompting lenders to resort to tribal loans, which sparked this latest lawsuit.

Potential remedies
The scrutiny of payday loans by the federal government provides insight into potential remedies for plaintiffs like Manago. In 2018, the Southern District of New York case against infamous loan shark Scott Tucker resulted in 16 years in prison for federal racketeering and convictions for telling the truth. Like the allegations regarding Cane Bay Partners, Tucker has also charged exorbitant annual interest rates – up to 1,000 percent – and has also been accused of using Native American tribes as a shield against federal and state laws on land. ready.

Manago’s class action lawsuit seeks a jury trial, injunction, costs and triple damages in Maryland federal court, allowing courts to triple the amount of compensatory damages.

Editor’s Note: This has been changed slightly from its original form, to expand the multiple statements indicating that the details are claims made in a court record.

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