Settlement will pay back Colorado victims of illegal predatory lending

An online subprime loan company accused of charging consumers rates in excess of Colorado law has been barred from doing business in the state. And 5,000 Colorado consumers who were charged illegally-high interest rates will soon be seeing checks to reimburse them for those illegal charges, totaling nearly $7.5 million, in their mailboxes.

A consent judgment obtained last year by Colorado Attorney General Cynthia Coffman forbids online subprime lender CashCall and its owner, J. Paul Reddam of Canada, from directly or indirectly servicing, collecting or attempting to collect on consumer loans in Colorado. The judgment also applies to CashCall subsidiaries WS (Western Sky) Funding and Delbert Services Corporation.

The judgment, filed in Denver District Court, requires CashCall to pay restitution and to discharge loans for 5,000 Coloradans. Checks to affected consumers began going out June 1, according to the Attorney General’s office. 

CashCall and its affiliates charged annual interest rates in excess of 355 percent on some loans. “In the most egregious cases, consumers paid over five times the amount they borrowed in unlawful fees and interest,” according to a statement by Coffman.

“I am pleased to be returning money to Coloradans who were ripped off by these unscrupulous operators,” said Coffman. “This is not the way we do business in our state.”

The lawsuit was originally filed in 2013 by then-Attorney General John Suthers. According to the original complaint, at the time the suit was filed, CashCall did not even have a license to operate in Colorado. It had allowed a previous license to lapse in 2011. Western Sky, according to the complaint, was never authorized to do business in Colorado. The company for years ran ads on local TV and cable stations advertising their loans, although those ads stopped about three years ago.

Delbert Services is a collection agency licensed to do business in Colorado and is a subsidiary of CashCall that handles the company’s collection accounts.

Rich Jones of the Bell Policy Center says that borrowers should be wary of online lenders, calling many of them “bad actors.” He commended Coffman and her predecessor, John Suthers, for doggedly pursuing online lenders who charge interest rates over and above what’s allowed in the state. The Attorney General has clearly taken the stand that “if you’re a borrower in Colorado, Colorado law applies” with regard to the interest rates these lenders can charge, Jones said.

The judgment sends the message to online lenders that if they loan to Colorado consumers, they have to play by Colorado rules, Jones said.

Western Sky has maintained in the past that its loans are not subject to Colorado’s usury laws because the company is owned by an Indian tribe, which provides “tribal immunity and preemption.” That argument was rejected by a Denver District Court in 2013.

According to Coffman, the settlement is the second time Western Sky Financial has gotten into trouble in Colorado. Two years ago, the company and its owner, Martin “Butch” Webb was barred from doing business in Colorado and to pay the state $565,000 to Colorado consumers for charging rates on payday loans that exceeded state law limits.

Colorado is not alone in going after CashCall and its affiliates; at least 15 states bar the kinds of high-interest loans offered by the company, according to a 2013 NPR report. Michigan obtained a $2.2 million judgment against Western Sky and CashCall last year for the same issue.

For the past two years, lawmakers at the state Capitol have attempted to push forward a bill to change the interest rate structure for Colorado-based subprime lenders. The measure was prompted by complaints from lenders that they couldn’t make enough money on loans they issued to Colorado residents. Gov. John Hickenlooper vetoed the 2015 proposal. The 2016 bill died in the House.

CashCall’s Reddam, who lives in Windsor, Ontario, owns Nyquist, the horse that won this year’s Kentucky Derby.

has been a political journalist since 1998. She covered the state capitol for the Silver & Gold Record from 1998 to 2009 and for The Colorado Statesman in 2010-11 and 2013-14. Since 2010 she also has covered the General Assembly for newspapers in northeastern Colorado. She was recognized with awards from the Colorado Press Association for feature writing and informational graphics for her work with the Statesman in 2012.


  1. Besides these folks, one better also look at the practices of CollegeInvest, as well as the Colorado Student Obligation Bond Authority (“CSOBA”), for whom CollegeInvest is acting on their behalf these days.

    When I consolidated my loans in the early-1990s, I tried to do so under “Sallie Mae”, and the CSOBA refused, forcing me to consolidate all my loans under the CSOBA’s more-expensive consolidation scheme.

    I made regular payments first to UniPac, and then to Nelnet from 1995 until 2010 with an unemployment deferment between 2003 and 2004 and another from 2008 to 2010 when the economy went south for me here in California.

    When I resumed payments in 2004, Nelnet jacked up my minimum payment from $372 to $395, but I paid under the new amount.

    And then I defaulted on the note in 2010.

    When Colorado students default on their loans from CSOBA, Nelnet then sold off the note to such predatory collection agencies as Account Control Technologies (“ACT”) of Oxnard, California, who continue to add to the principal with exhorbitant fees and make outrageous demands on the debtor like attend a student loan default hearing in places that aren’t easy to get to for the debtor, like in Bakersfield, California, which was over 5 hours’ drive time from where this writer lives in Livermore, California these days.

    I wound up declaring Bankruptcy under Chapter 13, which put a stop to ACT’s debt collection efforts and they in turn sold the note back to either CSOBA or CollegeInvest.

    Now, CSOBA and/or CollegeInvest considers the new principal to be the original principal ($23,000) from 2010 when I defaulted plus the additional fees that subsequent debt collectors added ($28,000) so know that I owe $51,000 and spare change.

    So besides looking at payday loan predators, also look at the folks issuing out student loans, especially ones issued through anybody other than “Sallie Mae”, which is a federal program like the CSOBA.

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