North Carolina Sues Western Sky

Here is the complaint in State of North Carolina ex rel. Cooper v. Western Sky Financial LLC (N.C. Super.):


An excerpt:

1. This is an action for injunctive relief to restrain Defendants Western Sky Financial, LLC (“Western Sky”), CashCall, Inc. (“CashCall”), WS Funding, LLC (“WS Funding”), Delbert Services Corporation (“Delbert”), and John Paul Reddam (“Mr. Reddam”), (collectively, “Defendants”) from offering, funding, servicing and collecting on illegal usurious consumer loans made to North Carolina borrowers, in violation of North Carolina’s Consumer Finance Act, N.C. Gen. Stat. § 53-164, et seq.; North Carolina’s usury laws, N.C. Gen. Stat. § 24-1, et seq.; and North Carolina’s Unfair and Deceptive Practices Act, N.C. Gen. Stat. § 75-1.1, et seq.; and to obtain restitution and other relief.
2. CashCall, WS Funding, and Delbert are affiliated companies that make, fund, purchase, service, and collect on illegal loans to North Carolina consumers that accrue interest at rates far in excess of those allowed under North Carolina law. These Defendants seek to evade the State of North Carolina’s licensure, usury, and consumer protection laws by using as a front an unrelated fourth company, Western Sky. Western Sky falsely holds itself out as an Indian tribal entity that purports to be exempt from state laws under the doctrine of tribal sovereign immunity. In reality, Western Sky is a for-profit South Dakota company that is owned by an individual who happens to be a member of an Indian tribe. Western Sky is not owned or operated by any Indian tribe or for the benefit of any tribe; therefore, the doctrine of tribal sovereign immunity does not apply to the loans made to North Carolina borrowers.
3. CashCall is the real or “de facto” lender in these loan transactions, and it controls virtually all aspects of the transactions. Pursuant to its arrangement with Western Sky, among other activities, CashCall, itself or through its subsidiaries, creates and distributes advertising materials for the loans; reviews all loan applications for underwriting requirements; funds the loans; assumes all risk of loss on the loans; receives all payments on the loans; services the loans; and indemnifies Western Sky for all costs and any liability associated with the loans.
4. Based on these facts, regulators and courts have concluded that “Western Sky is nothing more than a front to enable CashCall to evade licensure by state agencies and to exploit Indian Tribal Sovereign Immunity to shield its deceptive business practices from prosecution by state and federal regulators.” In re CashCall, Inc., John Paul Reddam, President and CEO of Cash Call, Inc. and WS Funding, LLC, State of New Hampshire Banking Department, Case No.: 12-308 (June 4, 2013).
5. Since 2010, at least fourteen states, on relation of the respective State’s Attorney General or through the State’s banking or consumer credit regulator, have taken action against Defendants for unlawfully making loans without proper state licensure and in violation of state usury and consumer protection laws.