EDWARDSVILLE -- An investment corporation has filed a putative class action lawsuit against a Madison County bank, alleging the bank misrepresented the amount of interest it charged on loans.

LDJ Investments claims defendant First Banks enticed customers to borrow money from it by promising to charge a low interest rate on complex standardized loan documents.

However, First Banks based its purportedly lower interest rates on a per annum period of less than 12 calendar months, according to the complaint filed May 24 in Madison County Circuit Court.

"By using only 360 days, the Bank charged over 12 calendar months 1.4 percent more than the contract cost of credit at a rate of 101.4 percent of the represented rate," the suit states.

"In utter disregard of the rights of the Class, the Bank willfully and wantonly engaged in an ongoing systematic pattern and common practice of deception and unfairness throughout the loan transactions that included common misrepresentations, half-truths, and omissions on the loans of Plaintiff and Class in order to conceal the true 12 calendar month rate of interest and costs credit thereby surreptitiously increasing its profits at the expense of its borrowers."

By using inconspicuous, vague, confusing and contradictory language in all of its loan documents, First Banks intentionally created confusion among its clients about the actual interest rates they were being charged, the complaint says.

For instance, it represented that its interest rate was charged "per annum," a statement many of the bank's clients believed to mean per year, the plaintiffs claim. In fact, under Illinois law, when the phrase "per annum" is used in regard to interest rates, it must mean per year, according to the complaint. However, First Banks utilized the phrase "per annum" to mean 360 days, the suit states.

"The public policy of the State of Illinois as set forth in Promissory Notes and Bank Holiday Act and Interest Act prohibit the deceptive and unfair acts of the Bank set forth above," the complaint says. "The conduct of the Bank was intentional, deliberate, willful and wanton, based solely on greed, and performed in utter disregard of the rights of the Plaintiff and the Class."

In its complaint, LDJ wants the court to certify its complaint as a class action, to award damages of more than $50,000, to place a constructive trust on the sum of the unlawful interest plus gains and profits thereon charged by using less than 12 calendar months to compute interest and an accounting of all loans on which the bank used less than 12 calendar months to compute interest, plus pre-judgment interest, costs, attorneys' fees and other relief the court deems just.

It is also seeking an injunction preventing the bank from using a year less than 12 calendar months to determine interest rates, an award of the twice the amount of interest paid by the class members and compensatory damages.

Eric W. Evans of Roth Evans in Granite City will be representing it.

Madison County Circuit Court case number: 10-L-560

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