NEW YORK (AP) - A Tennessee man who founded a network of payday loan companies that prosecutors say charged interest rates far beyond New York limits pleaded not guilty Tuesday.
Carey Vaughn Brown made millions of dollars by extending small, short-term loans at rates that amount to as much as 800 percent a year, Manhattan District Attorney Cyrus R. Vance Jr.’s office said. Under New York law, unlicensed lenders can’t charge more than 25 percent per year in interest on any loan under $2.5 million.
Brown made the loans through companies set up to try to avoid being subject to state regulations, prosecutors said.
Brown, 55, of Ooltewah, Tennessee, near Chattanooga, pleaded not guilty to usury and conspiracy charges.
“Mr. Brown acted in good faith and looks forward to a jury trial,” his lawyer, Paul Shechtman, said after court.
Payday loans are short-term cash advances against a borrower’s paycheck. Lenders say they can help people cover unexpected expenses and avoid bouncing checks, but they’ve gotten regulators’ and prosecutors’ scrutiny because debt can accrue rapidly if borrowers extend their loans.
“Payday lending is a short-term fix that can result in a lifetime of debt and credit problems,” Vance said in a statement.
Brown established an offshore company, MyCashNow.com, to take loan applications online, while the actual lending and processing was done through a complex web of other companies he controlled, prosecutors said. The site was down Tuesday.
The companies’ chief operating officer, Ronald Beaver, 55, and legal adviser, Joanna Temple, 58, both of Chattanooga, also have been charged.
Beaver expects “he will be fully exonerated,” said his lawyer, Dennis Patrick Kelleher. Temple’s lawyer, Priya Chaudhry, said her client - a former prosecutor and judge - gave her advice in good faith, believed it was appropriate and would “vigorously litigate” the case.
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