Usury Unfriendly

An Illinois attorney who operated a consumer lending business is the subject of a bar complaint alleging that he charged criminally usurious loans to his customers.

Between March 2011 and October 2012, Respondent, as sole owner and operator of Bell Funding, extended approximately 125 loans to consumers with interest rates ranging from 100% to 300%…

…the Division of Financial Institutions of the Illinois Department of Financial and Professional Regulation issued a cease and desist order to Bell Funding which required it to cease and desist offering, making, or arranging consumer loans because it had never obtained the required state license to make consumer loans under the Consumer Installment Loan Act

The Illinois Administrator charged the attorney with engaging in criminal conduct in violation of state usury law.

He also is charged with false statements to tribunals in 20 lawsuits against borrowers.

In or about February 2012, Respondent began including an arbitration clause in the Bell Funding loan documents, under which Bell Funding could request neutral binding arbitration if any borrower was in default, and if Bell Funding chose arbitration, the borrower gave up the right to a trial in court. Between March 2012 and October 2012, Bell Funding requested an arbitration hearing for approximately 20 Bell funding loans in which the borrowers had defaulted. In the requests for arbitration, Respondent designated the Bell Funding arbitration hearings to take place at the [his] office suite, and arranged for an arbitrator to be available to attend if any borrower appeared for the arbitration hearing. No borrowers appeared for any arbitration hearings, and Respondent prepared an arbitration award in favor of Bell Funding which Respondent then sent to the arbitrator and which the arbitrator then entered…

In each of the Bell Funding lawsuits, Respondent did not disclose to the court that no actual arbitration hearing ever took place. Each of the arbitration awards which Respondent sought to confirm in the Bell Funding lawsuits stated “after having duly heard the proofs and allegations of the parties” before an award in favor of Bell Funding was entered by the arbitrator…

In each of the 20 Bell Funding lawsuits, Respondent obtained a judgment on behalf of Bell Funding and initiated collection proceedings, including wage garnishment proceedings, as lawyer for Bell Funding.

Note that the charges do not indicate that the attorney was charged or convicted. A conviction is not required to sustain a Rule 8.4(b) violation. (Mike Frisch)