Saturday, May 10, 2014

TOP STORY >> Pawnshop or loan shark?

Toby Troutman, who owns US Pawn and Loan in Austin, is being sued by the state attorney general for allegedly selling dozens of illegal car loans with interest rates of more than 300 percent in violation of the Arkansas Deceptive Trade Practices Act.

“US Pawn and Loan offered auto-title loans, also known as title pawns, to Arkansas consumers. Title pawns are short-term, high-interest loans in which the borrower provides the lender with the title and a key to his or her vehicle as collateral. In a title pawn, the borrower retains the vehicle, but the lender keeps the right to seize or sell the vehicle if the borrower fails to meet payment obligations,” according to a news release from Attorney General Dustin McDaniel.

The pawnshop is accused of engaging in at least 86 title-loan transactions with at least 63 customers. The interest rate for each loan exceeded 300 percent.

“For example, the business charged $375 a month in interest and fees on a $1,500 loan, with the monthly rate being assessed every month the loan was outstanding,” the release continued.

“These types of lending activities are bad for consumers and are illegal in Arkansas,” McDaniel said.

The lawsuit claims Troutman tried to disguise the type of loans as the sale of the borrower’s vehicle with the simultaneous sale or lease of the same car back to customers by using terms like “sales and leaseback loan.”

McDaniel filed the lawsuit in Pulaski County Circuit Court.

The attorney general asked that US Pawn and Loan be required to cancel consumers’ debt obligations, return vehicle titles to their appropriate owners and pay restitution, civil penalties, attorneys’ fees and costs.

In 2012, Troutman pleaded no contest to misdemeanor theft of property and was placed on probation for one year for forging his ex-wife’s signature on an insurance check for storm damage in the amount of $8,579.38.

He also ran unsuccessfully for Lonoke County justice of the peace that year.

He is the son of former longtime Lonoke County Judge Charlie Troutman.