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Campaign cash from payday loan industry under scrutiny in Missouri, Kansas races

Campaign contributions from payday lenders are now a dispute in two local political contests — one for Missouri’s governor, the other for a Kansas U.S. House seat.
Campaign contributions from payday lenders are now a dispute in two local political contests — one for Missouri’s governor, the other for a Kansas U.S. House seat. Sacramento Bee Staff Photo

Campaign contributions from payday lenders are now a dispute in two local political contests — one for Missouri’s governor, the other for a Kansas U.S. House seat.

In a news conference call Tuesday, Missouri Republicans accused Democrat Chris Koster, his party’s candidate for governor, of taking money from payday lenders during his campaigns for attorney general. In exchange, Republicans charged, Koster declined to aggressively pursue the companies for egregious lending practices.

“The clear evidence shows that if they gave him money, he didn’t lift a finger,” said John Hancock, chairman of the Missouri Republican Party.

A review of campaign finance disclosures shows that Eric Greitens, Koster’s GOP challenger in the Missouri governor’s race, has received little in the way of contributions from individuals with ties to the payday loan industry. Josh Hawley, the Republican candidate for Missouri attorney general, has received a $2,500 check from Advance America, one of the companies that Hancock said contributed money to Koster but then escaped scrutiny.

Campaign records also show Rep. Kevin Yoder, a Kansas Republican, has taken nearly a quarter of a million dollars in campaign contributions from people associated with the payday loan industry. Democrats say Yoder has aided the payday loan industry in Washington.

Records do not show any payday loan-related donations to Jay Sidie, the Democratic challenger for Yoder’s seat in Congress.

Payday lenders face increasing legal and political scrutiny. They’re accused of charging exorbitant interest rates for small loans that can sometime cost borrowers thousands of dollars in additional fees and interest.

Here’s what the record shows:

Koster

Since 2007, Koster has received roughly $200,000 in contributions from individuals and companies involved with the payday loan industry. The array of sources runs the gamut from payday loan companies to industry trade groups to call centers and portfolio managers that support the industry.

It’s an industry that for years was quietly a large, profitable business in the Kansas City area. Various federal investigations have put a number of payday loan moguls in the area under scrutiny for the vast profits made through loan terms that regulators have called misleading and usurious.

Some of the contributions to Koster were large checks from established payday loan corporations, such as the $10,000 contribution from Overland Park-based QC Holdings earlier this year. Others were smaller contributions, such as $1,250 coming from James Carnes.

Carnes, a Mission Hills businessman, was the target of a Consumer Financial Protection Bureau investigation that led to a recommendation that he and his company, Integrity Advance, pay $38 million in restitution, not including civil penalties. The agency accused Carnes and the company of extended loans on terms that deceived consumers. Carnes is appealing the penalty handed down by an administrative law judge in that case.

Koster’s campaign responded that as Missouri attorney general, he took enforcement actions against several payday loan outfits.

“The Attorney General always makes decisions based on sound legal reasoning and what’s in the best interest of Missourians,” Koster campaign spokesman David Turner said in an email. “Any allegations to the contrary are baseless and unfounded. He has implemented the strongest conflict-of-interest policy in the country, refunding or returning more than $115,000 during this campaign cycle. Furthermore, he has taken a number of actions against payday lenders during his tenure, including shutting down 8 operations in 2015.”

Among the targets of Koster’s enforcement actions was Martin “Butch” Webb, accused of running several payday loan enterprises out of an American Indian reservation in South Dakota that Koster’s office said charged excessive fees and was not licensed to offer loans in Missouri. In that instance, loan balances for Missouri consumers were erased and Webb was to provide $270,000 in restitution.

Koster’s office has filed lawsuits against three other payday loan companies.

Koster’s office also investigated 500 Fast Cash, a lending operation that operated out of the Modoc Tribe of Oklahoma, which also has ties to Leawood payday loan businessman and professional race car driver Scott Tucker. Tucker has been the target of several civil lawsuits and faces criminal charges in New York, all related to his lending activities.

Koster’s campaign also cited a report that charged Republicans with taking 65 percent of the payday loan industry’s political contributions in Missouri between 2000 and 2010.

Two payday loan companies that did contribute to Koster faced scrutiny from the attorney general’s office. Those were Check Into Cash and Cash Cure. According to Koster’s office, Check Into Cash was investigated, but appeared to be out of business. Cash Cure received a civil investigative demand from Koster. The company stopped extended loans to Missouri consumers , according to Koster’s office.

Hancock dismissed those efforts.

“Good for him that he sent them a letter,” Hancock said.

Yoder

The Center for Responsive Politics says Yoder has taken more than $248,000 in donations from people and groups associated with the industry during his career, more than any other member of the House or Senate.

Some of those donations have come from current or former local figures involved in the payday loan industry, including Carnes.

Yoder has accepted $48,200 in payday loan contributions for his race this year against Democrat Jay Sidie. Only GOP Sen. Richard Shelby of Alabama and Rep. Alcee Hastings of Florida, a Democrat, have taken more this election cycle.

In 2015 the Campaign for Accountability filed an ethics complaint against Yoder for his payday loan contributions. The group accused Yoder and 10 other members of the House — including Rep. Blaine Luetkemeyer of Missouri — of voting repeatedly to weaken oversight of the industry while accepting tens of thousands of dollars in donations from its operators.

Part of the complaint is based on a letter written in August 2013 to the Justice Department. In the letter, Yoder and other members of the House said the administration’s efforts to “ ‘choke off’ short term lenders” were improper and harmful to low-income families.

The ethics complaint claims the opposite.

“The payday lending industry preys on some of the most vulnerable members of our society,” the complaint says. “The idea that members of Congress are trading the power of their offices to help unscrupulous payday lenders avoid badly needed oversight and regulation in return for campaign contributions undermines public confidence in the institution.”

There is no evidence the Office of Congressional Investigations has reached a decision about the complaint.

“Kevin Yoder has been clear and consistent from day one that fighting against excessive government regulations, including Nancy Pelosi’s disastrous Dodd-Frank law, is one of his top priorities,” said Yoder campaign spokesman C.J. Grover. “Kansans continue to support those efforts at the ballot box and he plans to continue those efforts in Congress.”

While Yoder has taken major cash from the payday loan industry, other local politicians have taken money from the industry as well, CRP says. Rep. Lynn Jenkins of the Kansas 2nd District is third on the all-time payday loan list, with more than $165,000 in contributions. Rep. Anne Wagner of Missouri has taken $43,000; Rep. Sam Graves of Missouri, and Sens. Roy Blunt, Jerry Moran and Pat Roberts have all taken donations from contributors with connections to payday loans.

Democrats have taken payday loan money too, including former Rep. Dennis Moore, who has endorsed Sidie. Moore took more than $57,000 from payday loan groups during his terms in Congress.

Other Democrats getting payday loan donations include Sen. Harry Reid of Nevada, Rep. Debbie Wasserman Schultz of Florida, and former Rep. Barney Frank of Massachusetts. In the 2008 and 2010 election cycles, the CRP says, payday lender companies gave more to Democrats than Republicans.

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