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Facing Federal Extortion Charges in North Carolina

Extortion is defined as obtaining property from another person by using an express or implied threat of force, or violence, for reputational harm. Three different federal statutes make the extortionist creation or collection of a loan unlawful. Making Extortionate Extensions of Credit (18 U.S.C. § 892), Financing Extortionate Extensions of Credit (18 U.S.C. § 893), and the Collection of Extensions of Credit by Extortionate Means (18 U.S.C. § 894). The penalties associated with criminal charges under the statute are severe. 

If you were convicted, you would face a jail sentence of up to 20 years. Other serious criminal charges, such as assault or racketeering, often accompany these charges. Due to the potentially severe consequences of being convicted for federal loan extortion in North Carolina, it is crucial that you retain an experienced attorney who can provide you with an effective legal defense.

Making Extortionate Extension of Credit - 18 U.S.C. § 892

Extortion involves wrongfully obtaining property from another person through the implied or express threat of force, violence, or harm. 18 U.S.C. § 892 makes it a crime to offer extortionate extensions of credit. Specifically, the statute states the following:

18 U.S.C. 892(a) says, "Whoever makes any extortionate extension of credit or conspires to do so shall be fined under this title or imprisoned not more than 20 years, or both." Subsection (2) says, "The extension of credit was made at a rate of interest over an annual rate of 45 per centum calculated according to the actuarial method of allocating payments made on a debt between principal and interest."

What Constitutes an Extortionate Extension of Credit?

The term' extension of credit refers to a loan that must be paid later, almost always with additional interest. Offering loans is legal and usually, an innocuous practice used by financial institutions and individuals. What makes offering a loan become illegal extortion? According to 18 U.S.C. § 892, an extension of credit is considered illegally extortionate if one or more of the following conditions have been met:

  • Repayment of the loan would be unenforceable in a civil court in the local jurisdiction. In other words, if a civil court in the jurisdiction in which the loan was taken out would not enforce the loan because it violated state or local ordinances or is considered unconscious, the loan is considered excessive.
  • The interest rate on a loan is higher than 45% per year, making it nearly impossible for the average person to repay the loan; or 
  • The borrower knows or has reason to believe that the lender has previously collected on their debts using "extortionate means," such as violence or threats. 

If all three of these factors are present, it will be considered prima facie evidence that the defendant violated 18 U.S.C. § 892, making it easier for prosecutors to secure a conviction. Prosecutors can also show additional factors to prove that loansharking, or extortion, occurred. 

For example, they may be able to show evidence of the creditor having a prior reputation for 4A offering extortionate loans. The court may permit prosecutors to bring evidence showing that the borrower knew the lender was engaged in loan sharking practices and has that type of reputation in the local community. 

Penalties

The crime of making an extortionate extension of credit is considered a federal felony under U.S.C. 892. As a result, if you are convicted, you will face severe consequences. For example, if you are convicted of this crime, you could face fines of up to $250,000 and up to 20 years in prison.

Legal Defenses 

Prosecutors must prove that the alleged perpetrator deliberately tried to make, finance, or collect an extension of credit using threats or force. When prosecutors can prove that the defendant acted knowingly by providing the court will circumstantial or direct evidence, they will not meet their burden of proof, and the defendant will likely not be convicted. 

An attorney may be able to argue that there is no evidence of your employer's extortionate collection practices by demonstrating you have never threatened or used force to collect. Your attorney may be able to argue that you had no intention of predatory lending.

Contact a Skilled Federal Criminal Defense Attorney in Charlotte

Have you been charged with a federal crime related to extortion? If so, it is crucial that you speak to an experienced criminal defense attorney as soon as possible. Contact the skilled Charlotte criminal defense attorneys at Arnold & Smith, PLLC, to schedule a case evaluation.