A conservative group that is not required to disclose its donors is ramping up its campaign against Democratic Gov. Dannel P. Malloy and the state Banking Department for action it’s taken regarding two tribal lending organizations.
The Institute for Liberty claims that it sent 100,000 pieces of direct mail to Connecticut voters last week. The postcards say things like “Gov. Malloy, Don’t take away my healthcare.” It also directs people to its website: www.NativeKidsFirst.com
But what does Malloy have to do with the healthcare of the Otoe-Missouria tribe from Oklahoma?
The answer: nothing.
Malloy and the chairmen of Connecticut’s two federally recognized tribal nations stood side-by-side Monday at a press conference to resolve any confusion about the campaign targeting the governor with images of Native Americans.
Malloy said if the tribally owned lending companies benefiting from the advertising campaign want to do business in the state of Connecticut, then they need to follow Connecticut’s laws and traditions. He said Connecticut’s Banking Department acted appropriately last year when it took enforcement action against the two tribal lending companies owned by the Otoe-Missouria tribe.
The two companies were using the Internet to sell short-term, high-risk loans with interest rates of more than 448 percent to Connecticut residents.
After receiving three consumer complaints, Connecticut’s Banking Department issued a cease and desist order to Great Plains Lending LLC and Clear Creek Lending in October 2014.
The Banking Department refused to allow the two organizations to dismiss the cease and desist order, which alleged they were violating the state’s small loan law by charging Connecticut borrowers annual interest rates ranging from 199.44 percent to 448.76 percent on short-term loans of less than $15,000. Loans for less than $15,000 are capped at 12 percent in Connecticut.
According to the Great Plains Lending website, “First-time Great Plains Lending customers typically qualify for an installment loan of $100 to $1,000, repayable in 8 to 30 bi-weekly payments, with an APR of 349.05% to 448.76%, which is less than the average 662.58% APR for a payday loan. For example, a $500 loan from Great Plains repaid in 12 bi-weekly installments of $101.29, including $715.55 of interest, has an APR of 448.78%.”
The Banking Department imposed a $700,000 fine on Great Plains, a $100,000 fine on Clear Creek, and a $700,000 fine on John Shotton, the head of the tribe. The organizations then sought an injunction in New Britain Superior Court in January.
In its argument to the court, lawyers for the tribal lending organizations maintain that they shouldn’t have to follow Connecticut’s laws and regulations because they are the extension of a sovereign nation. But the same argument of protection and sovereignty could be made on behalf of the state.
“The attempts by each sovereign to manage its own internal affairs by combating poverty within its borders have collided in this case,” former Banking Commissioner Howard Pitkin wrote in his denial of the tribes’ attempt to have the banking enforcement action dismissed.
The tribal lending organizations contend that they could be subject to federal laws, but are not subject to state laws.
Lawyers for the two tribal lending organizations have asked Connecticut’s Supreme Court to decide whether their tribal sovereignty bars the Superior Court from ordering them to put up a bond.
Last week an attorney for the lending organizations withdrew their complaint from Superior Court. Judge Carl Schuman decided that if there’s no longer a complaint, then the Banking Department’s enforcement order and $1.5 million penalty should stand.
Aside from the legal back-and-forth, adding to the confusion for the public is the fact that the group paying for the advertising campaign claims it is not directly connected to the two tribes.
Institute for Liberty President Andrew Langer, whose group is paying for the advertising campaign, said last week that the tribe is a sovereign nation struggling to finance the social service needs of its members. Unlike other tribes it’s not in the casino business. It’s in the payday lending business.
“This is a product folks want,” Langer said. “It’s needed in the marketplace.”
Langer, a former lobbyist for the National Federation of Independent Business, said he admires the entrepreneurial spirit of the tribe, but declined to say who is funding the campaign.
Kevin Brown, the chairman of the Mohegan Tribal Nation, and Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation, said they were approached by people who wanted them to diversify their business model by starting a similar payday loan company, but they declined.
Butler said they respect the sovereignty of other tribes to pursue economic development initiatives, but hope they would abide by Connecticut’s laws if they are doing business in the state like any other non-tribal entity.
“Tribes and the entire industry should assure they are being responsible and that their customers can repay those loans without being charged unreasonable fees,” Butler said.
Brown said they don’t want Connecticut residents to confuse the actions of a dark money group with the actions of Connecticut’s tribal nations.
“We were approached to add this to our portfolio of non-gaming business ventures,” Brown said. “We told folks we were not interested.”
He said denying this business pursuit in the state of Connecticut is not about tribal sovereignty “it’s about protecting the consumers in the state of Connecticut.”
Rep. Matthew Lesser, D-Middletown, said there is legislation pending before the General Assembly that would nullify the loans issued by payday lenders at outrageous interest rates.
“These tribal lenders are already violating our state law and we will do whatever is necessary to protect Connecticut’s consumers,” Lesser said.
House Speaker Brendan Sharkey said he’s upset that a “dark money” group would use Native Americans in a campaign to smear the governor. He said it “is the height of hypocrisy.”
“That anyone who would utilize our relationship with Native Americans in our state and in our country to promote what is essentially a slick business deal — that is the most egregious aspect of this. That is most upsetting,” Sharkey said.
He said there is great respect for Native American tribes in Connecticut.
