EAST ST. LOUIS - Online lender Stanley Chao of Orlando, facing a class action complaint that he charged 677% interest under a false cover of tribal immunity, settled with borrower Katherine Schnefke of Edwardsville in two months.
Schnefke’s counsel, Daniel Edelman of Chicago, posted a settlement notice at U.S. district court on Oct. 23.
No one had entered an appearance for Chao or his First Loan website, and their deadline to answer the complaint had passed three days earlier.
Edelman copied the settlement notice to Chao’s counsel in Miami, Justin Hassani.
Magistrate Judge Mark Beatty gave the parties 60 days to finalize it.
According to the complaint, Schnefke borrowed $1,500 from First Loan in 2021 and agreed to pay $448.27 every two weeks for a year.
Edelman claimed she paid the full amount, $11,655.02.
He claimed the Elem colony of the Pomo tribe acted as a front for First Loan but received less than 2% of its revenues.
Edelman called the arrangement Rent-a-Tribe.
He claimed sovereign immunity doesn’t turn an illegal loan into a legal one.
He alleged violation of state laws on interest, predatory loans, and consumer fraud.
He also alleged racketeering under federal law.
Edelman claimed First Loan stopped making loans in Illinois last year to avoid enforcement.