High-Cost Lenders Work to Co-op African-American Leaders

St. Louis Post-Dispatch, August 5, 2013

In February 2012, the Rev. Starsky Wilson of St. Louis sat down at a table in the Four Seasons Hotel. The floor-to-ceiling windows revealed vistas of the city’s skyline. Lined up in front of him were two lobbyists and an executive, he remembers.

The meeting was part of an extraordinary counteroffensive by payday and other high-cost lenders against a ballot initiative to cap what such lenders can charge in interest and fees. Outspending their opponents — faith, labor and community groups — by almost nine to one, the industry had launched a multipronged effort, one that offers a rare view into the lenders’ try-anything tactics to stay in business.

The lenders had targeted a community that was both important to their profits and crucial to the petition drive: African-Americans. Wilson, like the majority of his flock, is black.

So were the two lobbyists. Kelvin Simmons had just a few weeks before been in charge of the state budget and was a veteran of Missouri politics. His new employer was the international law firm SNR Denton, now called Dentons, and he was working on behalf of Stand Up Missouri, a group representing installment lenders.

Next to Simmons was Rodney Boyd, also African-American and for the previous decade the chief lobbyist for the city of St. Louis. He, too, worked for SNR Denton.

The lobbyists and Tom Hudgins, a white executive with an installment lender, urged Wilson to rethink his commitment to the rate-cap ballot initiative.

Wilson was not swayed, but he was only one target among many. At the Four Seasons, Wilson says, he bumped into two other leaders of community organizations who had been summoned to hear Stand Up Missouri’s message. He said he also knew of more than a dozen African-American clergy who met with the lobbyists. Their message, that installment loans were a vital credit resource for middle-class African-Americans, was convincing for some. As a result, Wilson found himself mounting a counter-lobbying effort. A spokesperson for Simmons and Boyd’s firm declined to comment.

In Kansas City, the Rev. Wallace Hartsfield also received an invitation from the lobbyists — but that was not the only case, as Hartsfield puts it, of an African-American being “sent into the community to try to put a good face on this.”

Willie Green spent eight seasons as a wide receiver in the NFL and won two Super Bowls with the Denver Broncos. After he retired in 1999, he opened several payday loan stores of his own and went on to hold a series of positions serving as a spokesman for payday lending, especially to minority communities. While African-Americans comprise 13 percent of the U.S. population, they account for 23 percent of payday loan borrowers, according to a Pew Charitable Trusts survey. Green was “senior advisor of minority affairs” for the Community Financial Services Association, the payday lenders’ national trade group, then director of “community outreach” for Advance America, one of the largest payday lenders. Finally, in 2012, he opened his own consultancy, The Partnership Alliance Co., which, according to his LinkedIn profile, focused on “community relations.” Over the past decade, he has popped up during legislative fights all over the country — North Carolina; Georgia; Washington, D.C.; Arkansas; and Colorado.

It is unclear who hired Green in 2012 — he declined to comment, and Missourians for Equal Credit Opportunity (MECO), the state group formed to advocate for payday lending, did not report paying him or his company. But to Hartsfield, it was clear he was there on behalf of payday lenders.

Green once wrote an open letter to Georgia’s legislative black caucus arguing that government regulation on payday loans was unneeded and paternalistic: Opponents of payday lending “believe that people unlike them are just po’ chillin’ who must be parented by those who know better than they do what’s in their best interest,” he wrote, according to the Chattanooga Times Free Press.

During their private meeting, Hartsfield said, Green made a similar argument but also discussed church issues unrelated to the ballot initiative. The payday lending industry might be able to help with those, Hartsfield recalled Green saying. The message the minister received from the offer, he said, was “we’ll help you with this over there if you stop this over here.”

Green referred all questions to his new employer, the installment lender World Finance. In a statement, World did not address specific questions but said the company was “pleased to have Mr. Green as a member of its team to enhance World’s outreach to the communities that it serves and to provide him the opportunity to continue his many years of being personally involved in and giving back to those communities.”

Hartsfield did not take Green up on his offer, but the former athlete has served as a gateway to the industry’s generosity before. In 2009 in Colorado, where payday loan reform was a hot topic (a bill ultimately passed in 2010), Green presented the Urban League of Metro Denver with a $10,000 check on behalf of Advance America. Landri Taylor, president and chief executive of the organization, recalled that Green had approached him with the offer and that he was glad for the support. He also said that lending was not a core issue for his organization and that even if it were, the contribution couldn’t have bought its allegiance.

In Georgia in 2007, Green, then a registered lobbyist, gave a state lawmaker $80,000 a few weeks before the Legislature voted on a bill to legalize payday lending. The lawmaker, who subsequently pleaded guilty to unrelated federal charges of money laundering, was one of 11 Democrats to vote for the bill.

After the Atlanta Journal-Constitution broke news of the transfer, Green produced documents showing that it had been a loan for a real estate investment: The lawmaker had promised to repay the loan plus $40,000, but had never done so, Green said. The state ethics commission subsequently found Green had broken no state laws, because lobbyists are allowed to engage in private business transactions with lawmakers.

MISSING PETITIONS

By the spring of 2012, supporters of the Missouri initiative were in high gear. Volunteers, together with some paid employees, were collecting hundreds of signatures each day. They were increasingly confident they would hit their mark.
In some areas, such as Springfield, the work resembled hand-to-hand combat. Through intermediaries, such as ProActive Signature Solutions, the initiative’s opponents hired people to oppose it.

“It was a well-funded effort,” said Oscar Houser of ProActive. He declined to say which company had retained ProActive. However, only MECO reported spending funds on what it said were signature gatherers. Those employees, according to Houser, eventually focused solely on trying to prevent people from signing the initiative.

Marla Marantz is a Springfield resident and retired schoolteacher who was hired to gather signatures for the 36 percent cap initiative. Just about every day, she could expect to be joined by at least one, and often several, of ProActive’s employees, she says. Wherever she went — the public library, the department of motor vehicles — they would soon follow. It was a tactic both she and her adversaries (with whom she became very familiar, if not friendly) called “blocking.”

“What we’re doing is preventing them from being able to get signatures,” one ProActive employee says on a video shot by a Missouri State University journalism student. Asked to describe how “blocking” works, the employee says, “Usually, we get a larger group than they have, we pretty much use the power of numbers.” In the video, Marantz is surrounded by three ProActive employees as she stands outside a public building.

ProActive’s employees did not identify themselves to voters as affiliated with payday lending, Marantz says. They sometimes wore T-shirts reading “Volunteer Petition Official” or held signs urging citizens to “Stand up for Equal Opportunity.”

Marantz shared photos and videos of her experiences. In one video, a library employee tells a group of ProActive employees they will be asked to leave if they continue to make patrons uncomfortable. At other times, Marantz says, exasperated public employees or the police simply asked anyone collecting signatures to leave the area.

The Rev. Susan McCann of Grace Episcopal Church in Liberty, Mo., also gathered signatures for the initiative and experienced “blocking.” “I had on my clerical collar, and they seemed to address a lot of their vitriol at me,” she remembers.

In May 2012, Missourians for Responsible Lending, the organization formed by supporters of the initiative, filed suit in county court in Springfield, alleging that MECO, through ProActive, was illegally harassing and assaulting its signature gatherers. The suit included sworn declarations by Marantz and three others who had said they had endured similar treatment, and it called for a temporary restraining order that would keep MECO’s employees at least 15 feet away.

MECO fired back. The suit was an unconstitutional attempt by supporters of the initiative to silence their political opponents based on alleged “sporadic petty offenses,” MECO argued. Even if the initiative’s detractors “engaged in profanity-laced insults all of the time,” they said, such behavior would still be protected by the First Amendment.

Houser called the suit “frivolous” and said he was happy to let MECO’s lawyers handle it. The suit stalled.

“Blocking” wasn’t the only problem initiative supporters encountered. Matthew Patterson ran a nonprofit, ProVote, that coordinated signature gathering in the Springfield area. On the night of April 25, 2012, Patterson put a box of petitions in his car. Then, realizing he had forgotten his phone in his office, he locked his car and went back inside.

When he returned, his passenger side window was broken and the box of petitions was gone, according to Patterson and the police report he filed. The box had contained about 5,000 voter signatures, about half of which were for the 36 percent cap initiative, Patterson said.

No arrest was ever made. Volunteers from Kansas City and St. Louis converged on the area to recoup the lost signatures. The final deadline to submit signatures to the Secretary of State’s office was less than two weeks away.

23,000 OVER, 270 UNDER

In August, the Missouri secretary of state announced that supporters of the initiative had submitted more than 118,000 valid signatures, about 23,000 more than needed.
But the state’s rules required that they collect signatures from at least 5 percent of voters in six of the state’s then nine congressional districts. They had met that threshold in five districts — but in the First District, which includes North St. Louis, they were 270 short.

A week later, initiative supporters filed a challenge in court, arguing that local election authorities had improperly disqualified far more than 270 signatures. MECO and Stand Up Missouri argued not only that signatures had been properly excluded but also that far more should have been tossed out.

Eventually, with only a couple of weeks before the deadline to finalize the November ballot, backers of the initiative decided they could not match the lenders’ ability to check thousands of signatures. They withdrew their challenge.

“It was so frustrating, disappointing,” McCann said. “People had spent hours and hours and hours on this initiative.”

LOOKING TO 2014

The initiative’s supporters now have their eye on 2014, and they have made the necessary preparation by filing the same petition again with the secretary of state.
The industry has also made preparations. MECO has reported adding $331,000 to its war chest since December. Stand Up Missouri has raised $151,000.

Last May, Jewell Patek, the same Republican lobbyist who filed the industry’s initiatives in 2011, filed a new petition. It caps annual rates at 400 percent.

The installment lenders have continued their effort to woo African-Americans. In December, Stand Up Missouri was a sponsor of a Christmas celebration for Baptist ministers in St. Louis, and in June, it paid for a $20,000 sponsorship of the National Baptist Convention, hosted this year in St. Louis. It has retained the same high-powered African-American lobbyists and added one more: Cheryl Dozier, a lobbyist who serves as executive director of the Missouri Legislative Black Caucus. Lastly, Willie Green, according to initiative supporters who have spoken with the ministers, has made overtures to African-American clergy on behalf of the installment lender World Finance.