Henderson councilman’s payday loan business facing class action lawsuits

A Henderson city councilman’s payday loan business is under scrutiny in federal court, after two class action lawsuits alleged its lending license through a Native American tribe helped it offer loans with interest rates above 700 percent, recent court records show.

A lawsuit in the U.S. District Court of the Southern District of Indiana was settled in January. Councilman Dan Shaw’s spokeswoman said the case settled for a “nominal amount.” The other lawsuit is expected to be settled Friday in the Massachusetts District Court in Worcester. Terms of the settlement are unclear.

An attorney for the plaintiffs in Massachusetts and Indiana did not respond to multiple requests for comment.

That case alleges Green Arrow Solutions, a Big Valley Band of Pomo Indians business providing short-term loans through Green Arrow Loans, used its association with the Northern California tribe — and therefore, the tribe’s immunity from U.S. federal and state laws — to avoid interest rate caps for its online short-term lending operation.

The suit, along with the case settled last month, names Shaw and several limited liability companies managed by him and business partner Greg Jones that work with Green Arrow, along with the tribe’s business.

A spokeswoman for Shaw said Thursday that he and his LLCs have been dropped from both suits. Both court dockets still listed Shaw as a defendant as of Thursday night.

Shaw and Jones, as managers of the subsidiaries behind the operation, are not tribal members nor is the business conducted on tribal land, according to the lawsuit. But the plaintiff’s attorneys argued that the lenders were using the tribe’s sovereign immunity to avoid state laws that define lending limits for consumer protection.

Shaw’s spokeswoman said his companies are service agents for the tribe and do not make the loans. She said Green Arrow and Integra Financial Services, an LLC associated with Shaw also named in the suits, have never garnished a borrower’s wages or sued a borrower.

“The tribe, as is the case with any lender, has the responsibility to establish the terms and conditions of the loan,” the spokeswoman said in an email.

A $300 loan with 825 percent interest

Short-term loans often have a high interest rate but offer immediate cash relief. The industry has earned a reputation for being predatory because borrowers are often unable to qualify for better loans.

Green Arrow Loans’ website states as an example that a $300 loan could have an annual interest rate of 825 percent, resulting in about $915 in total payments.

In Massachusetts, the maximum annual percentage rate, or APR, that can be levied on a loan of less than $6,000 is 12 percent. In Indiana, a small loan can’t exceed more than 20 percent of the borrower’s monthly gross income, and depending on the amount advanced, finance charges can’t be more than 15 percent.

Several other small lending websites also use tribal licensing, according to the lawsuits.

Defendant attorneys in the Indiana case said the tribe joined the online consumer lending industry in 2012 to diversify its revenue sources, in absence of brick-and-mortar economic development in the rural area.

A response to the complaint in the Indiana case indicated that loans are approved from places within the tribe’s jurisdiction and that representatives of an arm of the tribe, its Tribal Consumer Financial Services, are part of Green Arrow’s board of directors.

Shaw has served on the Henderson City Council since his appointment in June 2017. His career experience includes development and construction of commercial and residential building projects in Southern Nevada.

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on Twitter.