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November 20, 2012 05:58 PM

Tribal Member Facing Scrutiny Over Loan Business

Sioux Falls, SD

A member of the Cheyenne River Sioux Tribe is facing numerous state and federal lawsuits over his high-interest loan companies located in Timber Lake, South Dakota. But Martin 'Butch' Webb claims that his nine loan companies, including Western Sky Financial, have tribal immunity because they are being run on the reservation.

Webb is a member of the Cheyenne River Sioux Tribe and his businesses advertise overnight installment loans with interest from 89 to more than 340 percent.

The Federal Trade Commission and at least a half dozen states say the businesses Webb is operating are illegal.

Webb has argued in court that he is a tribal member operating on the Cheyenne River Reservation so he has tribal immunity and his businesses don't have to follow state and federal rules.

In fact, lawsuits in Illinois and Minnesota have been dismissed because the loan agreements say that consumers of the loan are subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe.

Webb defended his businesses Tuesday.

"I think the biggest thing to address is that we're an open and honest company. We're here to make an impact on people's lives and it’s been a positive impact.  We hope to keep doing it. We're not offering anything that isn't being offered elsewhere. We're an online lender,” Webb said.

Western Sky's website shows that some of the loan rates can be as high as 343 percent.

Washington State recently fined Webb's companies. The state Department of Financial Institutions is also filing legal action claiming the businesses are working in the state without a license and exceeding interest rate limits.

"They are actually getting the loan here and the jurisdiction for any case they would bring we believe is here," Deb Bortner Director Division of Consumer Services for the Washington Department of Financial Institutions said.

Officials in Washington don't buy Webb's tribal immunity argument since the loans are granted to people off the reservation.

"They claim that our folks, because they contact them, that the loan is on the reservation. The fact is I can't go for very long without watching TV or listening to the radio here in Washington that Western Sky doesn't have an advertisement,” Bortner said.

The Federal Trade Commission is suing Webb, Western Sky and the other eight loan companies being operated in Timber Lake claiming that the companies are illegally garnishing wages without a court order of those who don't payback their loans.

In Missouri, the Attorney General's Office will be asking that the courts freeze Webb's bank accounts at a December hearing while its lawsuit makes its way through court.

  • Business
  • Banking/Finance
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