Sunday, September 24, 2023
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Punitive Damages Sought From Payday Lender

CLAYTON, Mo. (CN) - World Acceptance Corp. conspired with an attorney and a notary to get fraudulent default judgments against borrowers, a class action claims in St. Louis County Court. The class claims World Acceptance, which has more than 1,000 outlets, provided attorney Steven Mandlman with generic loan verification pages, signed by a World Acceptance branch manager, which Mandlman photocopied en masse for notary Lori Swanson to sign and notarize.

The class adds that World Acceptance operates its 1,005 retail locations in 11 states and Mexico, and that "the loans carry interest rates which often exceed 150 percent. ... The interest rates on the loans are considered usurious in the majority of states, except the 11 states, including Missouri, in which WAC operates."

The complaint states: "Swanston often notarized the documents with blue ink creating the appearance that the entire document, including the employee's signature, was original. Mandlman then attached these pages to thousands of petitions that he filed throughout the State of Missouri."

The generic "verification pages" contained "no specific information relating to any one account or defendant," the complaint states.

Once a default judgment was obtained, named plaintiff Rance Reed says, Mandlman served garnishments to collect the money.

"In the case of every proposed class member, the judge entering the default judgment failed to recognize that the verification contained a photocopied signature and fraudulent notarization," the complaint states.

World Acceptance makes high-interest, short-term loans, often called payday loans. The class claims the interest rates are so high that only 11 states, including Missouri, allow World Acceptance to operate in their jurisdictions.

The class consists of all Missourians who were sued by Mandlman and World Acceptance after 2007, in which default judgments were entered after the filing of notarized photocopied verifications. The class alleged conspiracy, unjust enrichment and fraud upon the court. It seeks compensatory damages, an injunction prohibiting the defendants from collecting money through garnishments and $10 million in punitive damages. It is represented by Neil Smith.

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