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Making Extortionate Extensions of Credit

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Under federal law, lenders are specifically prohibited from making extortionate extensions of credit. In fact, even conspiring to do so is punishable by up to 20 years in prison and a substantial fine, so if you are being investigated for making an extortionate extension of credit or another fraud-related offense, you should consider speaking with an experienced white collar crime attorney who can explain your legal options.

Necessary Elements 

Before a person can be convicted of making an extortionate extension of credit, prosecutors must establish a series of specific elements. Specifically, they must demonstrate the following:

  • The payment of the credit extension would not be enforceable against the debtor in court;
  • The offer of an extension was made with an interest rate in excess of 45 percent per year; and
  • The total outstanding amount of extended credit, including unpaid interest exceeded $100.

Finally, prosecutors must prove that at the time the extension was offered, the debtor thought that either:

  • An extension of credit had already been collected by the lender using extortion, or nonpayment had been punished by extortionate practices; or
  • The creditor had a reputation for using extortionate methods to collect extensions of credit or to punish debtors for a failure to pay.

When these elements are fulfilled, courts will consider it prima facie evidence that an extension of credit was extortionate in nature. Further, when there is no direct evidence as to the debtor’s belief regarding the creditor’s collection practices, courts do permit the introduction of evidence attempting to establish the creditor’s reputation in the community.

Financing Extortionate Extensions of Credit 

Aside from prohibiting the actual use of extortionate methods when extending credit, federal law also makes it unlawful to finance such extensions. Specifically, the law prohibits willfully advancing money or property, regardless of whether it is a gift, a loan, an investment, or pursuant to a partnership agreement, if there are reasonable grounds to believe that the recipient will use the assets either directly or indirectly to make an extortionate extension of credit. Those who are convicted of this offense will be fined an amount equal to twice the value of the money or property advanced and could also spend up to 20 years in prison.

Call Today to Schedule a Free Consultation with an Experienced White Collar Crime Attorney 

If you are being investigated for committing a white collar crime or have already been charged with a similar offense, please contact Jeffrey S. Weiner, P.A., Criminal Defense Attorneys in Miami at 305-670-9919 to speak with a dedicated and skilled white collar crime lawyer about your case. Our legal team has the experience and resources necessary to help you navigate an investigation, trial, and potential plea deals. You can also reach a member of our team by sending us a brief online message.

Resource:

law.cornell.edu/uscode/text/18/892

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