Kansas payday lender QC Holdings crops up in New Mexico attorney general’s probe

An investigation into the finances of a New Mexico cabinet member has led that state’s attorney general’s office to the Kansas City area.

Demesia Padilla was the Taxation and Revenue Secretary in New Mexico until last Thursday, when she abruptly resigned after her offices were raided by the AG’s office. Padilla still hasn’t been officially charged, but the investigation — which, according to the Santa Fe New Mexican, “appears to touch on tax evasion, embezzlement, and violations of the Governmental Conduct Act” — is ongoing. 

Among the details that have been made public is that investigators discovered Padilla deposited into her personal bank account about $48,000 in checks from QC Holdings in 2012 and 2013. 

QC Holdings is an Overland Park-based payday-lending company. Owing in part to increased scrutiny of its industry, business has not been great in recent years. In its third-quarter filing from 2015, QC Holdings reported that it operated 396 branches in 22 states. This year’s third-quarter filing indicates it operates only 276 branches in 14 states — a rather steep year-over-year decline. During more flush times, though, the company gave generously to political candidates sympathetic to their model of charging high interest rates for short-term loans. 

Reached by the New Mexican, QC Holdings’ legal counsel, Justin Kohlbeck, told the newspaper that the payments to Padilla were for rent. “She was the landlord of one of our New Mexico branches,” Kohlbeck said.

According to the New Mexican, though, in an affidavit made public last week, a special agent with the AG’s office in New Mexico said he could find no evidence that Padilla owned any of the properties occupied by QC Holdings in New Mexico. As a result, it was the special agent’s conclusion that the payments were not rental income. 

QC Holdings has 16 storefront operations in New Mexico. Asked by the New Mexican which QC branch rented from Padilla, QC’s attorney declined to do so, telling the paper, “QC Holdings does not wish to provide any further comments on this matter at this time.” 

Also: When Padilla was asked by investigators whether she had ever received compensation from QC Holdings, Padilla’s attorney instructed her not to answer the question and cut the interview short. The New Mexican notes that this move raises questions, given that Padilla “had already answered many of the investigators other questions about other parts of the probe during a voluntary interview.” 

The New Mexico AG’s office has issued to QC Holdings a search warrant seeking all Padilla-related records from 2011 to 2013. Kohlbeck, QC’s lawyer, told the paper that the company is “in the process of gathering the documents to respond to it.”