Last updated on 2013.10.10
Western Sky Financial boss Martin "Butch" Webb is trying to get the Cheyenne River Sioux Tribe to back his legally challenged predatory lending business. Webb claims that "substantial government interference" forced him to lay off 94 Eagle Butte workers last month. Webb claims that since he is an enrolled member of the Cheyenne River Sioux Tribe, tribal sovereignty shields his company from any of the lawsuits states have filed against his predatory lending practices. Webb's lawyer claims that Western Sky Financial clients themselves surrendered to tribal authority when they chose to do business with Webb:
...[T]he New York attorney general followed other states’ regulators in suing Western Sky Financial and its affiliate Cash Call Inc. The lawsuit contended that rates charged to borrowers by the companies — from 89 to 343 percent, depending on loan size — far exceed the caps determined by the state’s civil and criminal usury laws. A borrower receiving $1,000 could wind up owing almost $5,000 in finance charges, fees and principal over two years, the complaint said.
...Katya Jestin, a lawyer at Jenner & Block who represents the companies, said that because Western Sky operated on the Cheyenne River Indian Reservation in Eagle Butte, S.D., New York officials had no jurisdiction over it.
“We will be moving to dismiss the suit against Cash Call and the other parties,” Ms. Jestin said in an interview on Thursday. “Consumers voluntarily entered into the loans and agreed when they signed the loan agreements to be bound by the laws and the courts of the Cheyenne River tribe. The A.G.’s lawsuit is an attempt to sidestep these agreements and is an infringement on the tribe’s inherent sovereign rights and the rights of its members” [Gretchen Morgenson, "Find the Loan Behind the Loans," New York Times, 2013.09.07].
I invite the legal scholars in the audience to help clarify, but I'll go out on a limb and issue this legal opinion: Ha!
First, as this Native lending industry website notes, Martin Webb incorporated Western Sky Financial under the laws of South Dakota. Secretary of State Chris Nelson certified Western Sky's corporate existence in 2009. Webb continues to file annual reports to the state of South Dakota to maintain his corporation. Webb thus does not operate as a somehow autonomous tribal lending entity. Acting as an individual businessman, Webb submits his authority to do business to the laws of South Dakota.
Second, Webb is not a tribe. He is an individual. Lending operations run by tribes may have sovereignty, but that does not empower individual tribal members to run around the country breaking the law.
Third, the notion that Webb's customers can free Webb from accountability to off-reservation laws is ludicrous. Suppose Webb was running a nationwide taxi service. He pulls up to a customer's door in New York. Before the customer gets in, he requires the customer to sign an agreement exempting their interaction from New York law. Having lobbied his tribal government back home to lift its speed limits, Webb then proceeds to take his customer for a ride across New York at 110 miles per hour.
Citizens, you can't do that. You and I don't have the authority to say that our laws don't apply to someone with whom we are doing business. If Webb is going to take people for financial rides, he has to follow the law.
Tribal sovereignty has its merits, but it should apply to tribal affairs on tribal lands. The states suing Western Sky Financial have as much right to protect their citizens from predatory lending as tribes have to protect tribal members on their turf from harm at the hands of non-tribal entities. But at the point where Western Sky operates as a South Dakota corporation, the argument about tribal sovereignty becomes moot. Book 'em, Danno!
"Tribal sovereignty" Cory you seem to have a different interpretation to suit different circumstances and it just doesn't happen that way in a sovereign nation.
"The states suing Western Sky Financial have as much right to protect their citizens from predatory lending as tribes have to protect tribal members on their turf from harm at the hands of non-tribal entities."
Not even close. You cant be happy telling the world that a nation should enjoy sovereignty part of the time but not all of the time. Or are you ready to admit that a nation within a nation doesn't make any sense?
Look at all the nontaxable income derived from businesses that operate on tribal ground by native Americans. If what you are saying is or was correct that income would be taxable, but it isn't.
Whether the sleazball Webb has state approval to operate such a business means nothing when it is done in a "sovereign nation." It means no more then if the business operated out of Libya, those states could tell their people not to do business with that company. They could even say that company couldn't do business within their states, but they will never get back a single dime in revenue.
You cant have it both ways. Either you have to give the tribes their sovereignty or take it away, you cant pick and choose when it applies. The sooner that people understand this problem the sooner it can be addressed and fixed.
Nation within a nation will never work with the laws we have on the books now.
The Blindman
There is no sovereign issue to talk about concerning Western Sky. His company(s) are chartered under South Dakota law. He may have a business license with the tribe, but that does not give him exclusivity to violate State laws. As a matter of fact, his own tribe is against this and have their own civil/criminal usury laws which he is violating. It has been stated time and time again....an individual of a tribe is not immune when acting on his own-especially off the reservation. The internet should not be a mode for any business to violate a consumers state laws. Furthermore, Western Sky solicited their business quite heavily on radio and TV ads in a consumers home state. No-one travelled to the reservation to get a loan. There is no such thing as "virtual visiting". Western Sky has brought the issue more to forefront. Whether tribal or not, state laws of the consumer should apply. By the way....regardless of whether you are tribal or not, someone is lining their pockets with these high interest fee loans. They say it to benefit those less likely to obtain credit elsewhere.....that is bull.....it is all about the money they are making for themselves