Man Pleads Guilty to Payday Loan Scheme Fraud and Embezzlement

Mon, 29 Jun 2009

An unregistered broker in Clarksville, Baltimore, has pleaded guilty to securities fraud and embezzlement in a payday loan scheme. Alvin Allister Ambrose may now face up to 8 years in prison and fines of up to $75,000 for his involvement as the owner and operator of First Cash Express. The company used more than $5,000,000 gathered from 180 investors to provide borrowers with payday loans with extremely high interest rates .

The news was revealed by Maryland Attorney General Doug Gansler, who also revealed that 37 year old Mr Ambrose has used $609,792 of his investors’ money for personal use, including home improvements, a Caribbean cruise, diamond rings and his wife’s law school tuition.

Mr Ambrose admitted that he had not registered himself or his business as a securities broker-dealer, nor did he or his business have a license to offer consumer loans . In addition, Mr Ambrose did not establish an escrow account for the funds he received, instead integrating the funds into his own business and personal funds.

Payday loans have proved a popular form of credit in the USA, as is the case in many countries. This surge in popularity has prompted a number of state legislators to pass laws regulating the payday loan market. Payday loan lenders in a number of states are now subject to an interest rate cap, resulting in many lenders moving to the unregulated or generously regulated Canada.

Mr Ambrose will be sentenced on Friday August 28th.
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