News Column

Agreement halts lending company targeting Iowa military

July 29, 2014

By Rod Boshart, The Gazette, Cedar Rapids, Iowa



July 29--DES MOINES -- A coalition of prosecutors has halted a predatory loan operation that targeted U.S. service members.

Nearly $92 million in relief is expected to come to Iowa and 12 other states due to a court agreement with 13 states and the Consumer Financial Protection Bureau that puts the lender out of business, according to Iowa Attorney General Tom Miller.

Rome Finance Company -- based in California and Georgia -- must liquidate operations and provide more than $91 million in debt relief to at least 17,800 consumers, including more than 100 Iowans.

Miller said the agreement means the company must stop collecting debt, forgive outstanding balances and help repair damaged credit.

Along with requiring the company to mark all outstanding debts as "paid in full" with consumer finance reporting agencies, the agreement bans the company and its principals from engaging in any form of future consumer lending, and demands cooperation in vacating judgments -- which include more than 5,400 additional consumers.

Miller expects the agreement to aid more than 23,000 service members and veterans.

James Wilson, 29, a staff sergeant with the Iowa Air National Guard from Winterset, said he purchased a laptop computer through the company via a monthly allotment that would have cost him about $5,000 -- but half of the financing payments will be halted under the agreement.

"They were very military friendly so I was trustworthy with them right off the bat," said Wilson, who admitted he did not keep close enough tabs on the financing arrangement and was "a little angry and slightly embarrassed" by the experience. He attended a Tuesday news conference with Miller.

Rome, which also did business as Colfax Capital Corporation and Culver Capital LLC, targeted active duty service members by marketing computers, gaming systems and other goods and services, Miller said. The company and its associated retailers typically lured service members at mall kiosks near military bases, and products also were sold online.

Buyers were promised instant financing with no money down. Consumers approved for credit would be asked to sign financing agreements and payments would be deducted via military "allotments." In most cases, Rome withdrew money monthly from a service member's paycheck, even before the service member received his or her pay.

"We allege that these individuals and their companies deliberately trained their sights on active duty men and women," Miller said. "Unfortunately, thousands of men and women who have served our country had to deal with an adversary, in the form of a deceptive and abusive lender."

Miller alleged that, through its "outrageous price-gouging" and deceptive contracts, Rome artificially and very substantially inflated the disclosed price of goods and services and did not accurately disclose the financing charges or true purchase amount.

The inaccurate information prevented consumers from making informed decisions about whether to take out credit, Miller said. In many cases, the true annual percentage rate exceeded 100 or 200 percent.

Rome also withheld complete information about the loans on billing statements and illegally collected on loans that were void, Miller said. Service members who attempted to stop payment damaged their credit record. In many cases Rome also would notify commanding officers, so service members could face the threat of discipline or damage to their military career, including the potential loss of their security clearance, the attorney general added.

Under the agreement, the company neither admits nor denies wrongdoing.

Victims may be eligible for additional future relief, but Miller said that has not yet been determined.

l Comments: (515) 243-7220; rod.boshart@sourcemedia.net

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(c)2014 The Gazette (Cedar Rapids, Iowa)

Visit The Gazette (Cedar Rapids, Iowa) at thegazette.com

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Source: Gazette (Cedar Rapids, IA)


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