PHILADELPHIA – U.S. Attorney William M. McSwain announced that Charles Hallinan, 77, of Villanova, Pennsylvania, was sentenced today to 168 months in federal prison and ordered to pay a $2.5 million fine in connection with a scheme to collect hundreds of millions of dollars in unlawful debt obtained from high-interest loans. In November 2017, a federal jury convicted Hallinan of all 17 counts of criminal conduct the government charged in its superseding indictment: two counts of conspiracy to violate the Racketeer Influenced and Corrupt Organization Act (“RICO”); one count of conspiracy to commit mail fraud, wire fraud, and money laundering; two counts of mail fraud and aiding and abetting; three counts of wire fraud and aiding and abetting; and nine counts of international money laundering and aiding and abetting.
Hallinan, a former investment banker, was in the payday lending business from at least 1997 to 2013. Dubbed “the Godfather of payday lending” by the media during his trial, Hallinan owned, operated, and financed companies that issued small-amount, fixed-fee loans and collected debts on these loans in excess of $690 million. The loans were known in the industry as “payday loans” because borrowers often took them out to cover expenses and then paid back the principal, plus fees and interest, with their next paychecks or other steady income, such as social security payments. Hallinan made his illegal fortune by charging fixed fees and high interest rates far in excess of what was permitted under states’ usury laws.
“Charles Hallinan, a sophisticated, highly educated business person, was nothing more than a loan shark whose entire business model was built on trapping his victims in an endless debt cycle,” said U.S. Attorney McSwain. “For years, this defendant unabashedly preyed on those who could least afford it—struggling borrowers who made these loans oftentimes to pay for life’s necessities. He bet his lifestyle on the fact that we would not catch him. He lost that bet,” McSwain commented. “Now, it’s time for Hallinan to repay his debt with the only currency we will accept: his freedom and his fortune, amassed at his victims’ expense.”
The government proved at trial that Hallinan knew these loans violated state law, so he hid his personal involvement behind a series of “straw” lenders, including a federally-insured bank and three Indian tribes. Hallinan’s co-defendant, Delaware attorney Wheeler K. Neff, assisted Hallinan in structuring the scam and hiding Hallinan’s involvement. Neff was sentenced in May 2018 to eight years’ imprisonment for his part in the scheme.
“Charles Hallinan devised an ugly way to make a pretty penny,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “This multimillionaire lived large on the proceeds of his sleazy payday lending empire, built on the backs of people literally living paycheck to paycheck. Exorbitant fees and usurious interest rates were the name of the game, and Hallinan always walked away the winner. Well, not this time. Now he’s walking away in handcuffs, headed to federal prison.”
As part of the sentence imposed today, the government sought and obtained a significant forfeiture judgment against Hallinan, which will strip him of the trappings of success he acquired as a result of his unlawful conduct. The district court ordered the defendant to pay a forfeiture money judgment of just over $64 million as proceeds of the RICO conspiracy, and also ordered him to forfeit his interest in approximately $1.2 million in funds in 18 bank accounts; two Mercedes Benz vehicles; one Bentley vehicle; and his Villanova mansion.
“IRS Criminal Investigation is committed to using our forensic accounting skills to help unravel complex financial fraud and money laundering schemes,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. “We are proud to work with our law enforcement partners to investigate and prosecute individuals who attempt to enrich themselves by fraudulent means. Charles Hallinan’s prison sentence is a reminder that there are detrimental consequences for this type of criminal behavior.”
Daniel Brubaker, Inspector in Charge of the United States Postal Inspection Service, Philadelphia Division, praised the investigatory work behind the conviction: “This Office prides itself on investigating this type of criminal behavior. We too are proud to have worked with our law enforcement partners to aggressively investigate those who scheme to prosper at the expense of others.”
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, and the United States Postal Inspection Service. It is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Maria Carrillo.