GUILFORD COUNTY, N.C. (CN) – Three lenders that provide cash advances to litigants in personal injury and workers’ compensation cases preyed on vulnerable claimants, charging up to 100 percent annual interest on loans, a class action claims in Guilford County Superior Court.
Legal Bucks, the LB Fund I and the Logan Financial Network, all registered in North Carolina, intentionally targeted personal-injury claimants with limited resources, knowing they would agree to the exorbitant interest rates in order to fund their claims, borrowers say.
The three lead plaintiffs allegedly borrowed between $11,000 and $20,000 from the cash-advance firms during a three-year period, and each has been expected to repay the defendants at least double the original loan amount.
Joe Brown borrowed a total of $15,000, and has since repaid more than $48,000. Mark Thompson took out $20,000 in loans, and has so far repaid $31,200.
Alexander Lee borrowed $21,000, but challenged the excessive fees in an underlying lawsuit. His attorneys are holding $31,300 in escrow pending resolution of this case.
Legal Bucks and LB Fund I advanced them cash against the money they were expected to win in pending cases. However, after receiving the loans, borrowers say they learned that the fees and interest far exceeded the amounts authorized under the federal Consumer Finance Act and North Carolina’s usury statute.
The loan agreements also stipulated that once borrowers accepted funds, they had to take the defendants’ claims into account as they considered when and whether to settle underlying claims.
Once the borrowers won their underlying claims, the cash-advance companies claimed an absolute right to the money recovered, the complaint says.
Keith Tart, Lynn Tart, Philip Smith and Virginia Smith, identified as either managers or officers of the three lenders, are also named as defendants.
Filing counsel is Frederick Berry of Barron & Berry in Greensboro, N.C.