United States of America v. Intercept Corporation, d/b/a "Intercept EFT"

Philadelphia, PA - Intercept Corp., Payment Processor for Illegal Payday Loans is Ordered to Forfeit Nearly $6 Million



Intercept Corporation, d/b/a “Intercept EFT” (“Intercept”), was placed on two years’ probation and ordered to forfeit $5,928,893 in criminal proceeds after pleading guilty to one count of operating an illegal money transmitting business. Intercept was also fined an additional $500,000 to be paid to the Court. The conviction stems from Intercept’s processing of illegal short-term, high-interest consumer loans commonly known as “payday loans.”



Intercept is a North Dakota-based company that processes electronic funds transfers for its clients through the Automated Clearing House (“ACH”) system. The ACH system is an electronic payments network that processes financial transactions without using paper checks.



During Intercept’s guilty plea hearing, Intercept’s president, Bryan Smith, admitted that from May 2008 through August 2013, Intercept knowingly helped certain clients collect unlawful payday loans. Smith later testified at the racketeering and fraud trials of former client Charles M. Hallinan and Hallinan’s attorney, Wheeler K. Neff. Smith told the jury that Intercept helped Hallinan’s payday lending companies collect more than $490 million from borrowers living across the United States. The jury eventually convicted Hallinan and Neff of all charges.



United States District Judge Eduardo C. Robreno sentenced Hallinan to 14 years’ imprisonment and Neff to 8 years’ imprisonment. Another former Intercept client, Scott Tucker, was convicted of similar crimes in New York and sentenced to 200 months’ imprisonment.



Intercept’s role within the illegal payday lending networks was essential. Without Intercept’s use of the ACH system, the payday lenders would not have been able to collect nearly as much money from their usurious loans. Most of the loans involved in the scheme had annual interest rates exceeding 780 percent.



“Charles Hallinan, the so-called ‘Godfather of Payday Lending,’ made millions by preying on vulnerable victims, and Hallinan’s financial success was due, in large part, to Intercept’s willing participation in the scheme,” said U.S. Attorney McSwain. “The substantial forfeiture order the Court entered today sends a powerful message to companies who profit from doing business with criminals like Hallinan and Neff: my Office will use every law enforcement tool we have to hold you accountable under federal law.”



“Today's sentencing is a direct result of the excellent partnership we have with our law enforcement partners and the U.S. Attorney’s office,” said IRS-Criminal Investigation Special Agent in Charge Guy Ficco. “We will continue to be relentless in our mission to dismantle these types of illicit schemes and bring the criminals who run them to justice.”



The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, and the U.S. Postal Inspection Service.

Charge:

18:1960(a),(b)(1)(C) OPERATING AN ILLEGAL MONEY TRANSMISSION BUSINESS

(1)

NOTICE OF HEARING as to INTERCEPT CORPORATION Sentencing reset for 11/20/2018 03:00 PM in COURTROOM 15A before HONORABLE EDUARDO C. ROBRENO. (rv) (Entered: 11/15/2018)

See above