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Pol Says Payday Loan Firm Owes $575K

DENVER (CN) - A political consulting firm run by Republican heavyweight Scott Reed claims in court that a payday loan company defrauded it of $575,000.

Chesapeake Enterprises sued payday loan business Online Consumers Network and its owners Stephen Cole Kimball and Del Kimball, on Dec. 31 in Federal Court.

Chesapeake specializes in federal and state legislative affairs.

Its chairman, Scott Reed, was appointed executive director of the Republican National Committee in 1993, ran Bob Dole's 1996 presidential campaign, and is chief strategist for the U.S. Chamber of Commerce.

Reed personally is not named as a party to this lawsuit.

Chesapeake claims that Online Consumers Network agreed to pay it $25,000 a month to help it navigate through regulations involving payday loans nationwide - then the loan specialists ducked their own bills.

"Defendants repeatedly misrepresented to Chesapeake that their payment was forthcoming, that Chesapeake should be patient and that Chesapeake should continue to render services to defendants pursuant to the $25,000 flat fee monthly retainer agreement," the complaint states. "Defendants' misrepresentation were specifically designed to defraud Chesapeake, harm Chesapeake, benefit defendants, wrongfully extract vital information from Chesapeake and to prevent Chesapeake from working for any of defendants' competitors in a highly competitive industry." Chesapeake claims that Cole and Del Kimball dissolved their company to get out of paying their bills.

"Cole and Del intentionally orchestrated the dissolution and demise of OCN with the wrongful intent to evade making payment to Chesapeake for services that Chesapeake performed," the complaint states. "The actual beneficiaries of Chesapeake's services were Cole and Del OCN did not maintain the most minimal level of existence, as it filed only one timely annual report and was deactivated three times."

Chesapeake claims Online Consumers Networks owes it $575,000.

It wants the money, and damages for racketeering, breach of contract, fraud, misrepresentation and conspiracy.

Chesapeake is represented by Richard Sander with Shook, Hardy & Bacon, in Denver.

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