The government's recent efforts to rein in consumer fraud are well-known. In a significant development, however, the U.S. Department of Justice is now applying a statute more commonly known in organized crime cases - the Racketeer Influenced Corrupt Organization Act - to the conduct of online payday lenders.

RICO prohibits the "collection of unlawful debt," but its use in dealing with the online lending industry charts new ground. Prosecutors have cited the statute in three recent criminal cases, against Adrian Rubin, Scott Tucker and Charles Hallinan. They must prove the defendants were in the business of lending money "at a [usurious] rate" that was at least twice the enforceable rate. The indictments allege the defendants' business models fit this description perfectly, and that they were able to operate mainly through "sham" arrangements with Indian tribes to claim sovereign immunity from state usury laws.

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