BUSINESS

New York Prosecutors File Criminal Charges Against Payday Loan Companies

Payday loan businesses, some of them open 24-hours a day, advertise their services in Phoenix on Wednesday, April 7, 2010, on
Payday loan businesses, some of them open 24-hours a day, advertise their services in Phoenix on Wednesday, April 7, 2010, one of 650 operating in the state with some open 24-hours a day. A growing backlash against payday lending practices have prompted legislatures around the country to crack down on the businesses. (AP Photo/Ross D. Franklin)

Aug 11 (Reuters) - Manhattan prosecutors filed criminal charges against a dozen companies and their owner, Carey Vaughn Brown, accusing them of making payday loans that defied New York's limits on interest rates, the New York Times reported.

Prosecutors explained how Brown amassed "a payday syndicate," controlling every part of the loan process, the Times said. Payday loans are usually taken by employees before they get their paychecks and are paid when they receive their salaries.

Brown, along with the chief operating officer for several companies, Ronald Beaver, and legal adviser Joanna Temple, "carefully crafted their corporate entities to obscure ownership and secure increasing profits," New York Times quoted the authorities as saying. (http://nyti.ms/1kXYOej)

Brown incorporated Mycashnow.com, an online payday lending arm, in the West Indies, to try to put the company beyond American authorities' reach, the Times said.

Brown's other companies were incorporated in states with little regulation and modest corporate record-keeping requirements, prosecutors said, according to the Times.

The three executives accused of orchestrating the scheme were charged on Monday with violating usury rates and a count of conspiracy, New York Times reported.

Brown's lawyer could not immediately be reached for a comment. (Reporting by Kanika Sikka in Bangalore; Editing by Lisa Shumaker)

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