Business | Law

Florida court dissolves injunction in Indian online lender case

Monday, August 3, 2015

A television ad for Western Sky before it ceased operations.

An appeals court on Florida lifted an injunction affecting an Internet loan firm that was operated by a member of the Cheyenne River Sioux Tribe of South Dakota.

Western Sky Financial and its partners were accused of breaking Florida laws by offering loan products whose interests rates exceeded state limits. Before ruling on the merits, a judge ordered the companies to place all loan proceeds into a court registry plus deposit another $1 million in reserve.

"The evidence shows that more than 30,400 Florida consumers obtained Western Sky loans with exorbitant interest, proceeds for 6,000 of those loans approximate $10 million, and that numerous consumers are continuing to pay on loans which would be satisfied if the lawful interest rate of 18% had been applied to the loan," the July 2014 order stated.

"Therefore, potential harm to Florida borrowers far exceeds the $1 million and accordingly a reserve of $1 million does not unfairly prejudice defendants or cause them undue harm," it added.

The 2nd District Court of Appeal, however, said the judge had no basis to grant the injunction. Attorney General Pam Bondi failed to show a "clear legal right to relief," the unanimous decision stated.

Western Sky stopped offering new loans after facing numerous enforcement actions and lawsuits in several states. The company was owned by Martin Webb, a Cheyenne River Sioux citizen, but it was not sanctioned by the tribe.

Get the Story:
Injunction Overturned In Consumer Loan Fight (WUSF 8/2)

Florida Court of Appeals Decision:
Cashcall Inc v. Office of the Attorney General (July 31, 2015)