2015 Progress Missouri Payday Report

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Payday Payday: How Predatory Lending Money Flows Through Missouri Politics
2015 Update
Predatory lenders spend a lot of money on Missouri politicians and political consultants to
protect their obscene business practices from basic interest rate limits and other reforms.
Predatory lenders spend a lot of money on Missouri politicians and political consultants to
protect their obscene business practices from basic interest rate limits and other
reforms. ​
"Missouri is fertile soil for high-cost lenders​
," due to triple digit interest rates on
payday loans and other high-cost loans that target families in crisis.
In 2012, there was a major ballot initiative push to limit the interest rates and fees on
payday loans​
and cap the state’s interest rate at 36 percent.​
The initiative’s opposition –
primarily out of state funders - raised and spent millions of dollars to prevent this grassroots
action from being on the ballot.
This report tracks how predatory lending money flows to lender front groups and how
predatory lending money flows to public officials, political candidates, and consultants.
The facts are startling:
● An incredible $1.53M moved through the​
payday lenders' main front group,

Missourians For Equal Credit Opportunity (MECO) ​
during the 2014 ​
ballot initiative
campaign cycle, ​
even though there was no payday lending ballot measure that
cycle.​
● The installment lenders’ “Stand Up Missouri” front group, funded almost entirely
by out-of-state companies who charge triple-digit interest rates to Missourians,
also remains active. In fact, they’ve moved almost $450,000 into their campaign
committee this cycle​
, allegedly to fight the same non-existent ballot measure.
Where is all of this money going? As you'll see below, it's going to consultants, lawyers and
politicians from across the state -- and from both major political parties. Below, you'll read:





How predatory lending money moves through ballot issue committees In Missouri
Who is getting paid by the lenders’ ballot issue committees
Which politicians are receiving campaign contributions from predatory lenders
What real reform looks like

Our lack of real predatory lending laws is an embarrassment and harmful to the thousands
of Missouri families ensnared in tragic cycles of debt.

How Predatory Lending Money Moves Through Ballot Issue Committees In Missouri
In ​
July 2011​
, James C. Thomas III established Missourians for Equal Credit Opportunity
(MECO),​
“a front for the payday loan industry,”​

as the first industry campaign committee
with the Missouri Ethics Commission. Thomas ​
is associated with Jeff Roe​
, founder of Axiom
Strategies and a former chief of staff to Rep. Sam Graves.

This relationship extends into the financial realm. From 2013 to July 2015, MECO paid Axiom
$483,982.30 for strategic planning, r​
egional operations management, and field research.
Ninety-four percent of the receipts reported by MECO have come from Missourians for
Responsible Government (MRG), a 501(c)(4) organization that is not required to disclose
the sources of its funding.​
Missourians for Responsible Government​

has been led by​
Patrick

Tuohey​
, the “the western Missouri field manager” for the Show-Me Institute, a State Policy
Network affiliate for which radical ideologue Rex Sinquefield is president.
Despite MECO’s funders’ attempts to remain anonymous, filings by QC Holdings with the
Securities and Exchange Commission provide “strong clues” about who is footing the bill.
From ​
ProPublica​
:
Payday lender QC Holdings declared in a 2012 filing that it had spent
"substantial amounts" to defeat the Missouri initiative [to reform predatory
lending laws in Missouri]. QC, which mostly does business as Quik Cash (not to
be confused with Kwik Kash), has 101 outlets in Missouri. In 2012, one-third of
the company’s profits came from the state, twice as much as from California,
its second-most profitable state. If the initiative got to voters, the company
was afraid of the outcome: "ballot initiatives are more susceptible to
emotion" than lawmakers’ deliberations, it said in an annual filing. And if the
initiative passed, it would be catastrophic, likely forcing the company to
default on its loans and halt dividend payments on its common stock, the
company declared.
In late 2012, QC and other major payday lenders, including Cash America and
Check into Cash, contributed $88,000 to a group called Freedom PAC. MECO
and Freedom PAC shared the same treasurer and received funds from the
same 501(c)(4). Freedom PAC spent $79,000 on ads against [former Rep.
Mary] Still [a payday lending reformer] in her 2012-losing bid for a state
senate seat, state records show. (The mention of Still seems to have come out
of nowhere.)
Missourians for Equal Credit Opportunity was established in 2012 to defeat the grassroots
ballot initiative to cap interest rates on payday loans to 36 percent. The other ballot
committee established in 2012 to defeat the popular ballot initiative to reform predatory
lending laws was Stand Up Missouri, which reported no contributions from QC Holdings. It
therefore is reasonable to conclude that QC’s money moved through MRG to MECO.
The following table summarizes MECO’s contributions reported to the Missouri Ethics
Commission.
MECO has actually been three separate administrative committees with the MEC since
2011, and we have removed balance transfers between the committees for clarity.
Missourians for Equal Credit Opportunity Contributions, 2011-2015​
:





















Missourians for Responsible Government - 8/19/2011 - $200,000.00
Missourians for Responsible Government - 9/26/2011 - $250,000.00
Missourians for Responsible Government - 11/10/2011- $150,000.00
Missourians for Responsible Government - 4/11/2012 - $46,000.00
Missourians for Responsible Government - 4/11/2012 - $140,000.00
Missourians for Responsible Government - 4/12/2012 - $100,000.00
Missourians for Responsible Government - 4/20/2012 - $75,000.00
Missourians for Responsible Government - 4/25/2012 - $321,400.00
Missourians for Responsible Government - 1/5/2012 - $250,000.00
Missourians for Responsible Government - 3/2/2012 - $250,000.00
Missourians for Responsible Government - 3/21/2012 - $260,000.00
Missourians for Responsible Government - 10/26/2012 - $414,000.00
Missourians for Responsible Government - 12/28/2012 - $96,432.00
Missourians for Responsible Government - 7/26/2012 - $210,000.00
Missourians for Responsible Government - 6/11/2012 - $181,500.00
Missourians for Responsible Government - 1/22/2013 - $153,260.00
Missourians for Responsible Government - 3/21/2013 - $81,480.00
Missourians for Responsible Government - 10/24/2013 - $395,000.00
Missourians for Responsible Government - 1/28/2014 - $395,000.00

Note that MECO raised more than one million dollars​
through MRG in the 2013-14 ballot

initiative cycle plus 2015 (an off year), during which there was not an attempt to collect
signatures for a predatory lending reform initiative petition.
Missourians for Equal Credit Opportunity (MECO) is not the only committee raising and
spending lending industry money to block consumer protections. The ironically named
Stand Up Missouri committee has raised more than $1.4 million since 2011, almost entirely
from out-of-state predatory lending corporations. ​
Less than three percent of Stand Up
Missouri’s money actually came from Missouri addresses​
– just $36,810 out of $1,392,336
collected since 2011.
Stand Up Missouri’s CEO and chairman​
is also the Vice President of Western Shamrock
Corp​
, a high-interest “consumer installment” lender from Texas.
The following companies represent 95 percent of Stand Up Missouri’s contributions.
Stand Up Missouri Contributions, 2011-2015​
:










World Acceptance Corporation
National Installment Lender Association
Tower Loan
Brundage Management Company, Inc
Wallace Management Co.
American Financial Services Association
Security Group Inc
SourceLink
Western Shamrock Corporation

$323,300.00
$165,000.00
$156,000.00
$109,550.00
$82,050.00
$75,000.00
$58,750.00
$44,375.73
$36,450.00

● Stand Up Missouri
● RBS Computer System

$23,410.44
$18,500.00

Who is getting paid by the Lenders’ Ballot Issue Committees?
The monies raised and spent by lenders to oppose basic consumer protections are
staggering.
But which consultants and companies are getting paid by these committees to thwart
citizens’ demands through the initiative petition process and through pliable politicians in
Jefferson City?
Filings with the Missouri Ethics Commission show committee money going to relatively few
firms and consultants.
Here’s a breakdown of top MECO expenditures since inception through 2015:












Axiom Strategies
Silver Bullet Group, Inc.
Graves & Garrett
Stinson Morrison Hecker
Revolution Media Group
Law Office of James C Thomas III
Wilson Perkins Allen
Kansas City Call
The St. Louis American
Joseph Haslag
Kinetic 5

$1,125,333.77
$1,004,000.00
$386,340.41
$267,381.20
$241,835.00
$51,956.50
$24,380.00
$7,140.00
$4,599.00
$3,750.00
$2,600.00

As you can see, money went to just a few hired guns, namely:




Jeff Roe’s Axiom Strategies​
for “regional operations management,” “compliance
oversight,” and other unspecified services.
The Silver Bullet Group​
for “signature gathering” on​
sham petitions​

and “signature
verification.”
The Graves Bartle Marcus & Garrett, Stinson Morrison Hecker ​
and​
James C Thomas
III ​
law firms.

What’s especially interesting is how much money some of these firms have received
during the 2015 and 2014 initiative petition cycles, during which no signature gathering
effort was mounted​
. A breakdown of the firms pocketing predatory lending money during
this two-year period of non-activity is as follows:
● Axiom Strategies - ​
$160,336.50
● Graves Bartle Marcus & Garrett / Graves & Garrett - $25,461.58
● Kinetic 5 - $1,900.00

Stand Up Missouri’s committee reports show money going to numerous additional
consultants and firms.
Top Stand Up Missouri expenditures for 2011-2015:















Denton US LLP
SNR Denton
Saveer Entertainment
Missouri Legislative Black Caucus
National Convention LEC
One Goal Consultants
Keymer, Inc
Harold Black
Renewal Financial
Kansas City Urban Summit
Kwame Foundation
Kansas City Freedom Schools
Tom Miller
St. Louis Baptist Ministers Union Christmas Celebration

$241,256.45
$100,828.25
$42,000.00
$25,000.00
$20,000.00
$12,500.00
$11,639.50
$7,120.81
$6,000.00
$5,000.00
$5,000.00
$2,500.00
$2,049.19
$1,000.00

What sort of work did these companies provide for predatory lenders during this cycle?
MEC records don’t reveal much. SNR Denton and Bardgett & Deutsch, LLC Blitz, were paid
for unspecified professional services such as “legal,” “lobbying,” and “media consulting.”
Lobbyist Cheryl Dozier​
, who is also the Executive Director for the Missouri Legislative Black
Caucus, was paid for “professional services” and “community outreach.” Saveer
Entertainment of Olivette and St. Louis was paid for “professional services” and “media.”
Stand Up Missouri’s consultants continued to be paid through the 2013-2015 cycle of very
limited initiative petition activity as well:















World Acceptance Corporation
American Financial Services Association
National Installment Lender Association
Security Group Inc
Tower Loan
Brundage Management Company, Inc
Wallace Management Co.
Stand Up Missouri
Personal Finance Company,LLC
RBS Computer System DBA Royal Management
Western Shamrock Corporation
Empire Finance Co LLC
Don's Loan Service, INC
Ponca Finance Company, Inc.

$134,600.00
$115,000.00
$115,000.00
$82,250.00
$66,500.00
$58,750.00
$33,150.00
$23,410.44
$19,750.00
$12,500.00
$12,250.00
$12,200.00
$7,000.00
$4,700.00

Which politicians and political committees are receiving predatory lending contributions?
Missouri Ethics Commission reports show that enormous sums of money move from
predatory lending companies and interests to politicians, parties and PACs across the state –
and across party lines. ​
Significant sums are funneled through the​
MO Consumer Lenders

PAC​
, managed by lobbyist​
Randy Scherr​

of Jefferson City. Scherr is a lobbyist for many
corporations, including the​
United Payday Lenders of Missouri​

(UPLM). The ​
UPLM Board
of Directors​
includes representatives of QC Financial Services, Just Say Cash, Advance
America and The Loan Machine.
Many predatory lending companies also contribute to politicians, party committees and
PACs directly. Top ten recipients of predatory lending money from companies and via the
MO Consumer Lenders PAC, 2007-2015, include:











House Republican Campaign Committee
Majority Fund (Senate GOP)
Steve Tilley
Missouri Republican Party
Senate Democratic Campaign Committee
Chris Koster
House Democratic Campaign Committee
Tim Jones
Missouri Democratic Party
Kevin Engler

$215,950.00
$173,425.00
$87,850.00
$79,725.00
$79,725.00
$78,700.00
$53,350.00
$52,325.00
$50,000.00
$46,262.50

A full list of payday, installment, title and other predatory lending donations used to
calculate these totals may be found here​
.

What Real Change Looks Like
Predatory lending is gutting our communities and corrupting our democracy. It is time for
real reform, not laws written by the payday lending industry and rubber-stamped by
legislators.
The average interest rate on a payday loan in Missouri is 455 percent. That’s one of the
highest averages in the nation, and it’s 27 times the interest rate cap in Arkansas, where
lenders cannot charge more than 17 percent annual percentage rate (APR). Families pay
fees upon fees upon fees, lining the pockets of predatory lenders in exchange for what was
advertised as a “quick fix.” In reality, these loans are a stepping-stone toward bankruptcy.
Real reform ends this debt trap. Real reform outlaws triple digit interest rates and prevents
payday lenders from fleecing poor families who have absolutely no capacity to repay a loan.
The Missouri Legislature can stop the debt trap. A 36 percent (APR) cap, just like what
Congress put in place for the military and what thousands of Missouri voters support a,
would immediately provide relief for hundreds of thousands of our working families.

Capping interest rates is not an extreme step. Eighteen states and the District of Columbia
already have measures to ensure their residents are empowered to step outside the debt
cycle, propelled by payday loan vendors.
For example, in Georgia, payday lending is explicitly prohibited and a violation of
racketeering laws. New York and New Jersey prohibit payday lending through their criminal
usury statutes, limiting loans to 25 percent and 30 percent annual interest, respectively. The
Arkansas Supreme Court ruled in 2008 that the state Check Cashers Act, which purported to
authorize high-cost payday lending, violated the state's constitutional usury cap.
Payday lending is not specifically authorized and is de facto prohibited by several state small
loan rate caps. These states include Arizona, Connecticut, Maryland, Massachusetts, North
Carolina, Pennsylvania, Vermont, and West Virginia.
The Consumer Financial Protection Bureau (CFPB) can also reform the industry. Though this
federal agency is not empowered to end the debt trap nationally by capping payday loan
interest rates, the CFPB can take significant steps to protect consumers. For example, the
CFPB can pass rules to make sure that lenders take into account a borrower’s ability to
repay a loan. If the CFPB is aggressive in its rulemaking, some of the worst predatory
practices of the industry could be eliminated. You can be a part of the solution.
The vast majority of Missourians support a 36% APR cap on payday loans, but this moral
imperative has been drowned out by the deep pockets of predatory industry operatives.
Missouri legislators need to hear from voters like you more than they hear from the
payday-lending lobbyists, and we must demand nothing less than a 36% APR cap on all
lending products. Meanwhile, you can make sure your members of Congress know that the
CFPB must pass the strongest rules possible to reign in the payday industry.

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