Dayton payday lender could lose big if reform bill passes

State representative working with lender to block bill.

Dayton businessman Lee Schear and his company NCP Finance stand to lose big time if House Bill 123 — a sweeping reform of the payday lending industry that may get a floor vote this month — becomes law in Ohio.

The legislation, sponsored by state Rep. Kyle Koehler, R-Springfield, aims to close a loophole in state law that for the past decade has led to Ohio consumers paying some of the highest interest rates and fees in the country for short-term loans.

Under the loophole, it takes two to tango: payday lenders licensed by the state as Credit Services Organizations that interact with the consumers and a company licensed under the Ohio Mortgage Loan Act to act as the lender.

In Ohio, NCP Finance is the lender of record for six of the biggest payday operators.

Related: Fight over payday lending reform pits David against Goliath

“Without any compromise to the current bill, HB123 also eliminates the entire small consumer lending industry in Ohio,” Schear said in a written response to questions. “There’s nothing positive about that for anyone.”

For more than a year, Koehler and his allies have insisted that the CSO loophole be closed so that payday lenders must adhere to caps on fees and interest rates.

On the other side of the issue is state Rep. Niraj Antani, R-Miamisburg, who is working with NCP Finance lobbyist Jeff Jacobson, a former Miami Valley lawmaker and Montgomery County GOP chairman.

“I believe access to credit — it should be preserved,” Antani said. “House Bill 123, as it is, will kill the industry.”

Antani and Jacobson collaborated on Antani’s May 9 letter to the Ohio Consumer Lending Association asking the trade group to respond to Koehler’s allegations that lenders want to stall reforms. The two also worked together on OCLA’s May 15 response to Antani.

“I was assuming you would distribute copies and quote from them, but obviously not read it all verbatim. We are lining up others who are willing to be vocal in opposition inside the (House Republican) caucus,” Jacobson wrote to Antani in an email sent at 1:50 a.m. May 13.

“Will have edits back to you within 20 hours,” Antani responded at 2:22 a.m. the same morning.

Koehler said the “bogus” letters demonstrate that “the lobbyists for the payday lenders have been orchestrating a charade” and a “false narrative” to mislead the public and lawmakers.

The OCLA, an industry group that includes NCP Finance, maintains that it supports “reasonable caps” on loans and fees “provided that they are such that the industry remains viable…” The group complained in the letter to Antani about how former Ohio House Speaker Cliff Rosenberger handled HB123 behind the scenes.

Rosenberger resigned, effective April 12, and is now under FBI investigation. Sources say the FBI is looking into Rosenberger’s international trips with payday lenders and his handling of the bill.

When Rosenberger resigned, HB123 suddenly gained momentum, passing out of committee and receiving a public pledge from Speaker Pro Tempore Kirk Schuring that it would get a floor vote in May. But a nasty internal fight over who would serve as speaker for the remaining seven months of Rosenberger’s term bottled up dozens of pending bills, including HB123.

Related: Payday lender made 3 international trips with former Ohio House speaker

Consumer advocates, including Nick Bourke of the Pew Charitable Trusts, believe HB123 will pass if it gets a floor vote but its future in the Ohio Senate is uncertain. Any bill not adopted by both chambers by the end of December dies when the two-year legislative session ends. If it doesn’t pass the Senate, advocates have to start from scratch again next year.

“The Senate leadership has expressed support for real payday lending reform but there is no clear timeline so it’s to-be-determined,” Bourke said.

Schear is a major donor to Republican candidates and parties in Ohio. Since 2012, he and his wife Patti have contributed $540,219, including $25,000 to the Ohio GOP on April 4 of this year, records show.

Schear’s grandfather founded Liberal Markets grocery store chain in 1921, which grew to 48 stores before being sold in the early 1980s. In 1987, Lee Schear founded Cashland Inc. and grew it to 117 cash-advance and check-cashing outlets. In 2003, Cashland, Inc. sold to Texas-based Cash America International Inc. for $32-million in cash and $21-million in stock.

In 2012, Schear moved his business operations — NCP Finance, a grocery wholesale brokerage and a network of sports Internet sites — from downtown Dayton to Sugar Camp in Oakwood.

Schear said his political contributions reflect his political ideology. “I have created more than two dozen companies in Dayton since 1981 and have relationships in many business areas other than consumer finance. I support the Republican Party principles of free markets and consumer choice and, therefore, support candidates for local, state, and national offices who feel the same way.”

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