Jonathan Bilyk Sep. 25, 2013, 11:02am

A group of Chicago area residents have filed a class action racketeering suit against a group of West Coast financiers, alleging the lenders conspired to make and collect on illegal predatory loans, and then use corporations based on American Indian reservations to skirt state and federal lending laws.

On Sept. 20, three plaintiffs --Jennafern Kemph and Dan Dehmlow, who reside in Cook County, and Glenn Allhoff of Kane County-- brought the action in Chicago’s federal court against defendant John Paul Reddam, of Sunset Beach, Calif., and his Anaheim, Calif.-based companies CashCall Inc. and WS Financial LLC,  and WS Funding LLC, which is listed to a Delaware address.

Also named as defendants in the suit are Cesar Guzman, of either California or Nevada, and Sunshine Thayer, Greg Dalton, and Melissa Dalton, all of Las Vegas, who are executives with the Las Vegas-based Delbert Services Corp., which is described in the court filing as specializing in servicing troubled or distressed consumer loans.

Represented by Chicago attorneys Daniel Edelman, Thomas Soule, Cathleen Combs and James Latturner of Edelman, Combs, Latturner & Goodwin LLC, the plaintiffs allege that, in 2012 and 2013, they each received loans from Western Sky Financial LLC, a company based on an Indian reservation in South Dakota.

Kemph borrowed $1,000, Dehmlow borrowed $2,500 and Allhoff borrowed $5,075, each in response to advertisements from Western Sky “directed at Illinois residents.” All loans were dealt at interest rates of more than 100 percent.

The plaintiffs assert that Western Sky, one of a group of companies known as the Webb Entities, did not have a charter to lend in Illinois, and thus were prohibited by law from lending to Illinois residents at a rate greater than 9 percent interest.

As such, all loans made by Western Sky in Illinois were “civilly and criminally usurious under Illinois law,” the plaintiffs assert in their suit.

In March, Illinois regulators ordered Western Sky to stop lending money to Illinois residents.

Western Sky’s loans, however, were backed by Reddam and his various business entities, the plaintiffs allege, creating a system by which “Reddam would give funds to the Webb Entities to make high-interest loans to residents of Illinois” and the loans would then be transferred and serviced by Reddam’s businesses.

Those loans were also later serviced and collected upon by Delbert, through a business relationship with Reddam’s companies.

None of Reddam’s companies or Delbert were authorized by  law to lend money in Illinois.

The suit also alleges that Reddam, Guzman and their companies attempted to use Western Sky and the Webb Entities as “a ruse” to “attempt to take advantage of tribal sovereignty as a means to evade state and federal regulation.”

The plaintiffs contend these lending actions violated a number of state and federal laws, including the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

The plaintiffs have asked the federal court to certify their suit as a class action to allow them to add more people who may have borrowed money from Reddam’s companies and Delbert, through Western Sky and the Webb Entities, to the action.

In their suit and accompanying memo in support of its motion to certify a class, the plaintiffs contend that at least 100 other borrowers could be added to the class. They also have demanded a jury trial.

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