Essmann calls for investigation of Rocky Boy's Plain Green

A Republican gubernatorial candidate has called on a Democratic opponent to investigate a business on Rocky Boy's Indian Reservation.

Senate Majority Leader Jeff Essmann of Billings Tuesday called on candidate Steve Bullock, the state attorney general, to investigate Plain Green LLC, an online lending company on Rocky Boy.

"While I understand he's busy right now campaigning for a new job, Steve Bullock can't continue to ignore the job Montanans hired him to do, " Essmann, who had not replied to a request for additional comments by deadline this morning, said in the release. "First, he ignored representing our state against Obamacare. Now, his spokesman says he's decided to turn a blind eye to the enforcement of a Montana law to crack down on high-interest lending. "

Plain Green was formed on Rocky Boy last spring, offering online short-term loans at a starting interest rate of 360 APR.

It followed the creation of an online payday loan company, PDL Ventures, two years earlier. Plain Green's CEO said in October that PDL Ventures had been shut down and the tribe had researched forming Plain Green under a totally different business model.

Under Montana law the top interest rate on a loan offered in the state is 36 percent, an initiative passed in 2010 that essentially has shut down storefront payday loans in the state.

Jim Molloy, chief of consumer protection in the Montana Attorney General's Office, told the Havre Daily News in October that he had talked with Plain Green representatives about the company, and had been assured that loans would not be offered in Montana.

If loans are made in the state, Molloy said, that would raise the question of sovereign immunity, which would have to be addressed in any investigation of the legality of loans.

Essmann said in his release that more investigation should occur.

"While I disagree with the Montana law that ended the freedom of an individual to borrow from a locally owned and regulated Montana business, the law is the law and should be enforced, " he said. "Instead of just taking them at their word, Steve Bullock should immediately verify that no company is abusing a relationship with a Montana tribe to skirt our laws. To protect Montana consumers, he also needs to open an investigation to ensure that no out of state company is offering illegal, high-interest loans to Montana citizens on the Internet. "

National attention is being paid to online lenders on reservations, with some suspected to be investors linking with tribes to gain protection under the tribes' sovereign immunity.

In a case in Colorado, the state supreme court ruled that, if the business is a legitimate arm of a tribe, it is immune to prosecution. If the business is not primarily owned by the tribe, it may be open to prosecution, the court ruled.

The Colorado attorney general's office is in the process of investigating some online lenders who have made loans to residents of the state to determine if they are legitimate arms of tribes.

Neal Rosette Sr., CEO of Plain Green, told the Havre Daily in October that the business is an independent corporation wholly owned by the tribe, operating independently from the tribal government in a model similar to the Chippewa Cree Construction Company.

Rosette, who was not available for comment this morning, said the profits from the company come back to it directly, with a share to use to benefit the tribe going to the tribal council as well as projects being paid for directly by the company.

The company is listed on the website of Think Finance as being powered by that company's platform. Rosette said in October that Plain Green has a marketing agreement with Think Finance for use of its software, and for consultation. He said Plain Green also was working with a group of industry and legal experts to organize and operate the business.

The company has received an "F" rating from the Better Business Bureau, with which it has not registered. The bureau lists some of the reasons for the rating as the length of time Plain Green has been in business and that it has received 20 complaints in that time, eight of which have not been resolved.

In October, Rosette said the number of complaints — 12 at that time — was very low for the number of transactions Plain Green had done, a fraction of one percent.

In its first five months in business, Rosette said, Plain Green had gained more than 100,000 customers, grossed $2.195 million from service fees, turned over more than $896,000 to the tribe, and put more than $248,000 in its own investment account. That fit in with the intent of creating the business, to provide jobs for tribal members and economic development for the tribe, he said.

Rosette said the company is filling a needed void left vacant by most financial institutions, providing short-term loans without collateral. The high interest rate is much lower than most payday loans, he said, and is necessary to make up for defaults on loans. The interest rates drop for returning lenders, with different rates available depending on the amount and duration of the loan.

But some consumer advocacy groups say that is just shifting to a different form of high-interest loans in an attempt to avoid increasing regulation by state governments.

A resident of Ohio asked for advice on http://www.debtconsolidation.com, with the poster saying on Nov. 3 that he or she had taken out three loans — for $500, $800 and $800 — from Plain Green Loans.com and paid off the first two with total payments of $1690.30 and had paid $351.27 on the third with $819.26 listed as the balance.

"Is there something I can do living in the state of Ohio to get out of this revolving door of high interest with them and actually make my payments do something? " the poster asked.

The Havre Daily had not received a reply to a message left with the Ohio Division of Financial Regulation by deadline this morning.