United States Attorney for the Eastern District of Pennsylvania Announces Participation in National Money Mule Initiative; Obtains Three Civil Injunctions Against Alleged Money Mules Involved in Lottery Scams
PHILADELPHIA – Charles M. Hallinan, 75, of Villanova, PA, and Wheeler K. Neff, 67, of Wilmington, DE, were charged by indictment, unsealed today, with two counts of conspiracy to violate the Racketeering Influenced and Corrupt Organizations Act (“RICO”) relating to “payday lending” businesses, announced United States Attorney Zane David Memeger. A third defendant, Randall Ginger, 66, a Canadian citizen, was charged with Hallinan and Neff in one count of conspiracy to commit mail fraud, wire fraud, and money laundering, as well as two counts of mail fraud and three counts of wire fraud. Hallinan and Ginger were also charged with nine counts of international money laundering.
According to the indictment, Hallinan and Neff participated in a conspiracy that violated the usury laws of Pennsylvania and other states and generated more than $688 million in revenues, between 2008 and 2013, from hundreds of thousands of customers, including residents of Pennsylvania which prohibits such loans. It is further alleged that Hallinan, Neff, and Ginger conspired to defraud nearly 1,400 people, who had sued one of Hallinan’s payday loan companies, into abandoning a lawsuit valued as high as $10 million.
Hallinan owned, operated, financed, and/or worked for more than a dozen businesses between 1997 and 2013 that issued and collected debt from small, short-term loans that were commonly known as “payday loans” because the customers were supposed to pay them back with their next paychecks. Hallinan’s companies allegedly charged customers about $30 for every $100 they borrowed, which meant that the annual interest rates on the loans often exceeded 700 percent. Pennsylvania and more than a dozen other states have passed laws criminalizing such loans as usurious. The indictment alleges that Hallinan and Neff conspired to evade such laws by, among other things, paying thousands of dollars each month to three Indian tribes to pretend that they were the actual payday lenders and claim that “tribal sovereign immunity” shielded their conduct from state laws and regulations.
Hallinan and Neff are also charged with helping another payday lender, Adrian Rubin, charged elsewhere, evade state anti-usury laws by entering into sham contracts with an Indian tribe that were designed to give the false impression that the tribe was the true lender.
Ginger, it is alleged, claimed to be a “hereditary chief” of one of the tribes that Hallinan and Neff used to try to hide Hallinan’s payday lending activity from state law enforcement officers and regulators. In 2010, a class action lawsuit was filed in Indiana against Apex 1 Processing, a payday lending company that Hallinan ran out of offices in Bala Cynwyd, Pennsylvania. According to the indictment, Hallinan offered to pay Ginger $10,000 every month to pretend that he owned Apex 1 and that Apex 1 had no assets, so the plaintiffs would settle their lawsuit for pennies on the dollar. Neff allegedly facilitated that scheme.
If convicted of all charges, Hallinan faces a possible advisory sentencing guideline range of at least 12 years in prison, three years of supervised release, a possible fine, and a $1,700 special assessment. Neff and Ginger both face sentencing guideline ranges of at least eight years in prison. Restitution may also be ordered.
The case was investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service, and Internal Revenue Service Criminal Investigations. It is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Joel M. Sweet.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.