Online Lending Scammer Fined $7M, Concealed Funds

James and Melissa Carnes hid money to avoid paying millions in court fines

The operator of a now-defunct online lender that scammed consumers out of nearly $40 million is accused of using banking tricks in an attempt to avoid paying his fines.

The Consumer Financial Protection Bureau (CFPB) alleges that James and Melissa Carnes used a series of revocable trusts to hide $7 million from federal regulators attempting to collect on the $43 million in fines Carnes owed. The $43 million fine was assessed for illegal and deceptive actions by Carnes in his capacity as owner of online lender Integrity Advance.

“James and Melissa Carnes concocted a scheme to hide money to avoid paying victims of an illegal lending scam,” said CFPB Director Rohit Chopra. “The CFPB’s action today makes clear that the agency will not allow lawbreaking companies and individuals to escape the consequences of their misdeeds.”

Integrity Advance made misleading claims about the cost of loans and also withdrew money from customer accounts without authorization. $38 million of the $43 million in fines is money owed to wronged borrowers.

The CFPB's enforcement action would require Carnes to pay the $7 million to the CFPB. The regulator also says it will continue attempting to collect the full $38 million owed to consumers.

Photo byJohn SchnobrichonUnsplash