(Reuters) - A Delaware lawyer was sentenced on Friday to eight years in prison for helping clients including a pioneer of the payday lending industry to collect on hundreds of millions of dollars in illegal loans, prosecutors said.
Wheeler Neff, 70, was sentenced by U.S. District Judge Eduardo Robreno in Philadelphia after a federal jury in November found him guilty on charges including racketeering conspiracy, mail fraud and wire fraud.
He was convicted alongside Charles Hallinan, who prosecutors said owned and operated more than a dozen payday lending businesses and who was indicted along with Neff in April 2016 amid a U.S. crackdown on abusive practices by payday lenders.
Such companies say they help consumers by offering small loans that are to be repaid in a short time, often from the person’s next paycheck, but critics say they exploit borrowers through high interest rates and fees.
Robreno also ordered Neff to pay $50,000 and forfeit $356,000. His lawyer did not respond to a request for comment.
Prosecutors said Hallinan operated payday lending companies with names like Easy Cash, Apex 1 Processing and Payday Loan Direct and directed some to charge fees that resulted in annual interest rates of 780 percent.
More than a dozen states effectively prohibit payday lending, while many others impose limits on payday loans.
Prosecutors said Hallinan and Neff conspired to evade those state laws by paying three native tribes to pretend they were the actual lenders in order to claim sovereign immunity.
U.S. Attorney William McSwain in a statement said Neff preyed on people who were struggling by drafting sham contracts for Hallinan and another payday lender, Adrian Rubin, who engaged in a similar scheme.
“As an attorney, Mr. Neff should realize that a civilized society requires obedience to the law, including those laws he didn’t happen to like,” McSwain said.
Prosecutors said Neff also helped Hallinan defraud borrowers pursuing a class action against Apex 1 Processing by making it appear it had no assets and was owned by a Canadian who was a hereditary chief of the Mowachaht/Muchalaht First Nation in British Columbia.
In total, Hallinan’s companies generated $688 million in revenue from 2008 to 2013 from hundreds of thousands of customers, prosecutors said.
Hallinan is scheduled to be sentenced on July 6. Rubin pleaded guilty to racketeering conspiracy and other charges in 2015 and has yet to be sentenced.
Reporting by Nate Raymond in Boston; Editing by Cynthia Osterman