Minto Money Operates Illegal ‘Rent-a-Tribe’ Lending Scheme, Class Action Says

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The operators of online payday lending website Minto Money have fraudulently hidden behind tribal sovereign immunity to circumvent Illinois interest rate caps and charge consumers excessive interest rates on small loans, a proposed class action alleges.

According to the 21-page case, defendants Minto Development Corporation (MDC), Benhti Economic Development Corporation (BEDCO), Minto Financial and one individual have falsely claimed that Minto Money is owned and operated by the Minto tribe, a federally recognized Native American tribe in Alaska. The tribal lending entity is, in truth, a “facade” for an illegal lending scheme given that the operation is almost completely run far from tribal land by non-tribal members, the lawsuit says.

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Per the suit, the defendants have engaged in an apparent “rent-a-tribe” scheme in an effort to evade prosecution under state usury laws, as Native American tribal business entities are shielded from statutes prohibiting very high interest rates. The filing alleges that they have used this “charade” to extend to consumers through MintoMoney.com illegal loans with annual percentage rates of over 700 percent.

Although the defendants claim Minto Money is a wholly owned subsidiary of BEDCO, an economic development corporation purportedly owned by the Minto Tribe, the suit alleges defendant Douglas William Isaacson, a non-tribal member, actually controls BEDCO. Indeed, the servers used to host the Minto Money website are nowhere near Alaska, and its purported address in the state is in an area that lacks any high-speed internet service providers, the case adds.

The filing contends that when a consumer applies for a loan, non-tribal members like Isaacson “unilaterally determine the minimum qualifying score for a loan approval, the interest rate, repayment terms, and all other meaningful aspects of the loan.” If the consumer is approved and elects to take out a loan, a Minto Tribe representative supposedly located in the Minto village performs a pro forma “review” and provides “final approval” to the loan, the case explains.

The suit says that 98 percent of loan revenues go to Isaacson and his non-tribal investors, and the Minto tribe receives a two percent “commission” in exchange for cooperating with the scheme.

“The main function of the Minto Tribe is to appear, on paper at least, to control the lending operation so that Isaacson and his investors may use the specter of sovereign immunity as a way to ward off the consumers they victimize, as well as state and federal regulatory authorities,” the complaint summarizes.

Ultimately, the business is not operated by Native American tribes and is therefore not shielded by sovereign immunity, the case contests. As such, the “tribal lending license” Minto Money operates under is void and unenforceable, the suit argues.

The plaintiff, an Illinois resident, claims to have obtained in October 2022 a $1,200 loan from Minto Money at an annual percentage rate of over 458 percent.

According to the case, Minto Money violated state law by making loans to Illinois residents at more than nine percent interest without a proper lending license or bank or credit union charter. Additionally, the complaint relays that the Illinois Predatory Loan Prevention Act prohibits any non-bank entities from making loans to state residents at annual percentage rates exceeding 36 percent. It is also a felony in Illinois for an unlicensed person to make a loan with rates that exceeds 20 percent, the suit adds.

The lawsuit also accuses the defendants of violating the federal Racketeer Influenced and Corrupt Organizations (RICO) Act for charging consumers excessive interest rates via the alleged “rent-a-tribe” scheme operation.

The lawsuit seeks to represent Illinois residents to whom a loan was made in the name of Minto Money at more than nine percent interest and who has not paid the loan in full in the past two years.

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