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Mississippi judge blocks order closing payday lender

JEFF AMY

Associated Press

JACKSON — A judge on Friday blocked an order by state regulators shutting down one of Mississippi’s largest payday lenders and fining the company more than $1.5 million.

The Thursday order by state Banking Commissioner Charlotte Corley followed a monthslong proceeding examining whether All American Check Cashing broke state law in its payday and title pawn lending operations.

All American’s stores remain open, though, after the lender’s lawyers persuaded Hinds County Chancery Judge Dewayne Thomas to sign a temporary restraining order. Thomas has yet to schedule a hearing in the case.

Federal and state regulators in 2014 had accused Madison-based All American of a systematic scheme orchestrated by corporate leadership to evade Mississippi’s prohibition against rolling over payday loans by pushing customers to pay only interest and continue the loan. Consumer advocates have long fought that practice, because rolling over payday loans means borrowers continue paying sky-high interest rates.

The Mississippi Department of Banking and Consumer Finance revoked lending licenses held by All American’s 42 stores and ordered an immediate stop to new loans. Corley also ordered the company to pay civil fines of $1.58 million and pay refunds to at least 700 customers. All American says the largest penalty ever previously imposed by the department was about $50,000.

“I had no option but to permanently revoke all licenses held by All American or its owner, Mr. Michael Gray,” Corley said in a statement. “Fault lies with Michael Gray and those individuals that he placed in positions of authority within his company.”

The department cited numerous other violations of state law and regulations, and said the company tried to shut down stores in 2014 so state examiners couldn’t observe transactions, delayed providing documents, interrupted attempts by state examiners to interview customers and even followed examiners’ vehicles after they left stores.

The U.S. Consumer Financial Protection Bureau is suing All American in federal court in Jackson, seeking to force repayment to more customers. A federal magistrate judge this week denied All American’s attempts to freeze that case on claims that the bureau is unconstitutional and ordered the company to submit documents the agency demanded.

All American strenuously disputes the enforcement actions, saying regulators are biased, examiners in the 2014 raid entered areas without authority and forced employees to answer questions using threats of jail time.