Owner of Predatory Auto Loan Companies May Have Violated Fed’s Pandemic Relief Program Rules
Public Citizen has filed a complaint to the Special Inspector General for Pandemic Recovery (SIGPR), requesting that the office investigate a potential violation of a COVID-19 relief program’s rules by two auto title loan companies. This complaint is based on the results of a Public Citizen investigation which found that two companies owned by Rod Aycox, the owner of a multi-state auto title loan empire, received multi-million-dollar loans through two different facilities within the Federal Reserve’s Main Street Lending Program (MSLP), potentially violating the program’s rules for affiliated businesses.
MSLP rules limit the amount of money that affiliated businesses can receive by requiring them to apply for loans through the same MSLP facility. That said, Aycox’s businesses, Meadowwood Financial Services and Wellshire Financial Services, received $35 million in loans through two different MSLP facilities, likely allowing the companies to avoid certain Federal Reserve limits on loan amounts.
Details of the two businesses’ structures suggest that they qualify as affiliated entities, and thus should have applied for both loans within the same MSLP facility. Both businesses operate under the storefront names MoneyMax and LoanStar Title Loans, both list Aycox as the sole governing person in official business filings, and both companies list their main address as the same suite in the same building in Alpharetta, Georgia.
Although Aycox’s companies charge over 380 percent APR to their predominantly low-income customer base, his businesses both received loans at below 3.25 percent APR. Miriam Li, corporate accountability associate for Public Citizen’s Congress Watch division, stated that “government dollars should not be going to auto title lenders in any circumstances. The details of these two loans are highly questionable, and the SIGPR should take a careful look at whether they were made in accordance with MSLP rules.”
Read the report here.