Colorado lawsuit sheds new light on LTS Management, Del Kimball payday loan operations
A tremendous amount of money is at stake in such operations, which is why everybody involved in them is scrambling to conjure up new ways to replace the unrealistic profit margins that businesses like LTS Management once enjoyed. One way to do that is to go international — to find countries where the laws are looser regarding predatory lending. Del Kimball, owner of LTS Management, has been attempting to build up payday operations in Russia since at least 2012, according to documents obtained by The Pitch. A new lawsuit, filed by a lobbying firm last month in federal court in Colorado, offers some interesting details about Kimball’s efforts.
Background on the suit: In 2009, Kimball and his brother, Cole Kimball, formed a nonprofit called Online Consumers Network. Through that entity, they enlisted lobbying services from Chesapeake Enterprises, a D.C. consulting firm run by Republican strategist Scott Reed, to help it navigate various regulatory issues in the online-lending industry.
Since 2012, Chesapeake had a monthly $25,000 retainer from OCN to do the types of things that consulting firms and lobbyists typically do: “analysis and strategic counseling regarding [OCN’s] business operations and compliance with a multitude of regulations in various jurisdictions; intelligence gathering on behalf of [OCN] from key sources in Washington, DC and in multiple states; strategizing with [OCN] regarding critical information and strategic guidance related to political risks and opportunities in Washington, DC and in various states; and, strategic advocacy in support of [OCN’s] interests in multiple contexts, states, forums and venues,” according to the lawsuit.
Sometime around July 2012, the lawsuit claims, the Kimball brothers stopped paying Chesapeake for its services. Chesapeake argues in the suit that the Kimball brothers owe it $575,000 in unpaid fees.
In making its case, Chesapeake notes that OCN was always a “slow-pay account” — meaning OCN “never made timely payments” and frequently made “catch-up payments” after failing to pay for several consecutive months. The irony is almost too much to bear.
Chesapeake also furnished examples of the ways the Kimballs would stall via e-mail. On September 9, 2013 — several months after the government began choking off the business model of lending companies the Kimballs owned — Cole Kimball wrote to Reed about an “$8 billion euro deal” in Kiev holding up OCN’s payment to Chesapeake:
Hey Scott – I wanted to update you on the latest with Del. They [business associates and enterprises operated by OCN] left Sunday to go back to Kiev to close the deal. They should be back in the next week or so. Keep in mind this is a $8 billion euro deal and it’s quite complicated to move that kind of money around the world. There are literally dozens, if not more, of lawyers, financial experts, compliance officers/experts and politicians involved in the deal.
Another e-mail, on October 9, 2013:
Hey Scott – Sorry for the delay. I’m here. Waiting on updates [regarding payment to Chesapeake]. They [business associates and enterprises operated by Defendants] were in Kiev and London for a month. Obviously a lot going on with the FDIC actions against the industry. Soon as I hear something [regarding payment to Chesapeake] I’ll give you a ring.
January 4, 2014:
Hey Scott – Hope you had a Merry Christmas and Happy New Year. Still playing the waiting game [regarding payment to Chesapeake]. Their guy has been in Hong Kong 30 days working on the closing. They are hoping sooner than later. As soon as I hear anything further [regarding payment to Chesapeake] I’ll let you know ASAP.
Reed and Chesapeake argue in the suit that Chesapeake continued to supply OCN with industry information and services that the Kimballs then used to benefit their various business operations, which Chesapeake describes as “payday loan enterprises in other foreign countries in addition to the United Kingdom, Russia and Mexico.”
And even though the Kimballs couldn’t pay their D.C. lobbyist, they “did not provide evidence of actual financial problems,” the lawsuit contends. “[Kimballs] continued to travel abroad extensively and utilize private Gulfstream jets for their domestic travel.”