Overland Park payday lending service provider needed money in a pinch, got PPP loan
An Overland Park company that does administrative work for four tribal payday lenders accused by a federal government watchdog agency of tricking people into paying debts they did not owe received at least $1 million from the Paycheck Protection Program.
Upper Lake Processing Services in Overland Park received between $1 million and $2 million from the U.S. Small Business Administration under a loan program aimed at keeping workers on the payroll during the coronavirus pandemic. Records released this week by the SBA indicate Upper Lake was able to retain 200 jobs under the loan program. Kansas City’s Lead Bank was the originator of Upper Lake Processing Services’ PPP loan, records show.
The Overland Park company is owned by Habematolel Pomo of Upper Lake, a federally recognized tribe in northern California. The tribe also owns four payday or installment lending operations: Golden Valley Lending, Silver Cloud Financial, Mountain Summit Financial and Majestic Lake Financial.
According to a sworn statement filed in a court case in 2017 by Sherry Treppa, the chair of the Habematolel Pomo’s executive council, the tribe formed Upper Lake Processing Services.
Upper Lake Processing Services then in 2013 bought an administrative support company in Overland Park that it previously used as a contractor for the tribe’s lending operations. It re-hired most of those employees and kept the business in Overland Park, where employees carry out functions like implementing loan underwriting, legal compliance and collections, according to Treppa’s statement.
Treppa did not respond to a phone message or an email. The Tribe also did not respond to a request for comment.
The Consumer Financial Protection Bureau, a government watchdog agency formed in 2011 after the Great Recession to defend consumers against financial scams, sued the Habematolel Pomo tribe’s four online lending businesses. The lawsuit accused the tribe’s lending businesses of violating usury laws by charging interest rates in excess of what some states allow, as well as withdrawing money from bank accounts to recover debts that consumers did not legally owe.
The tribe at the time denied wrongdoing.
The CFPB dropped the lawsuit in 2018 without explanation, a move that consumer advocates feared was a sign of the agency backing off from its mandate under the Trump administration. The CFPB’s director at the time was Mick Mulvaney, who prior to his work in the Trump administration was a South Carolina congressman who took thousands of dollars in contributions from the payday lending industry and derided the agency’s mission.
Mulvaney became President Donald Trump’s acting chief of staff while still overseeing the CFPB before he moved on to become special envoy for Northern Ireland earlier this year.
Upper Lake Processing Services’ receipt of PPP funds presents a unique legal question. The SBA doesn’t allow companies engaged in lending to receive loans under the PPP program.
But companies that provide services to lending companies can generally receive PPP loans.
Gerald Weidner, a partner in the Kansas City office of the Stinson law firm, said for example companies that originate or are servicers for mortgage loans but don’t own the mortgages themselves could be eligible for PPP loans. But a mortgage lender itself could not receive the government loan.
“A payday lending company itself would not be eligible because it’s primarily engaging in lending,” Weidner said. “If there’s a company that provides services but itself is not engaged in lending operations, that company may well qualify. As with many things under the PPP lending program, things aren’t always clear.”
Nor is it clear with Upper Lake Processing Services. The Habematolel Pomo tribe said in court records that it originates loans on tribal land.
The CFPB’s lawsuit said the tribe’s lending businesses were organized in California but that most its day-to-day operations occurred in Overland Park. The CFPB’s lawsuit said no more than 15 jobs on tribal lands were created by the lending businesses, while the PPP data indicates that 200 workers are employed in Overland Park’s Upper Lake Processing Services.
One of the tribe’s lending operations, Silver Cloud, in 2013 received funding from a Kansas company called RM Partners LLC under an agreement that allowed RM Partners to buy up to 30% of interest in Silver Cloud’s loans. RM Partners’ managing member was Rick Moseley Sr., a payday loan tycoon in Kansas City who is serving a 10-year prison sentence following a 2017 conviction on federal racketeering charges related to his illegal lending enterprise.
Use this database to see which companies received PPP loans of $150,000 or more in Kansas:
This database shows which companies received PPP loans of $150,000 or more in Missouri:
McClatchy D.C.’s Bryan Lowry and the Wichita Eagle’s Amy Renee Leiker contributed reporting to this story.
This story was originally published July 8, 2020 at 3:30 PM.
