Man Charged in Arizona Payday Loan Scheme
By Lindsay Frankel
A Paradise Valley man was indicted in late July for allegedly providing false statements to investors in a payday loan business scam that funneled the funds from investors into lavish purchases.
A businessman, 46, was accused of 22 felony counts of money laundering and wire fraud by a grand jury in the U.S. District Court in Phoenix. He allegedly drained $2.9 million from investors between 2010 and 2015. Court documents also revealed an estimated $89 million moved in and out of his bank accounts between 2009 and 2018.
According to the indictment, he “misrepresented virtually every material aspect of the purported investment opportunities,” which included lying about his background, how the money would be used, and the rate of return. “Investors were falsely told their funds would be used only as short-term loans to small and start-up businesses,” the indictment reads.
The businessman claimed that the payday loans, which are short-term loans with high interest rates, wouldn’t be risky for investors because they were issued to businesses. He guaranteed returns greater than 20 percent to prospective investors.
Allegedly, the money was actually used to support his excessive lifestyle; including travel on private jets, purchase golf resort memberships, and throw expensive parties. He also put the money towards his mortgage payment and personal credit cards. To get away with it, he used money from later investors to pay back earlier investors.
He presented the scheme to investors at several luxury resorts in Palm Springs, Mexico, Idaho, and Scottsdale, as well as at Arizona State University football games.
He has pleaded not guilty and is facing several years of prison time. A trial is set to begin in October.
Arizona payday loans are illegal.