Criminal Usury in New York

What is Criminal Usury?

Criminal usury refers to the unauthorized charging of interest on a debt of more than 25% annually and generally refers to lenders charging exorbitant interest rates.

The policy considerations here include protecting borrowers from predatory lending practices that essentially guarantee they will never have the ability to get out from under the debt, and preventing predatory lenders from securing wealth via unfair means.

What law defines Criminal Usury in New York?

Under New York State law, Article 190 of the Penal Code defines criminal usury and related offenses. Section 190.42 defines criminal usury in the first degree, a class C felony, as a lender knowingly charging an interest rate of more than 25% annually or the equivalent of such a rate.

Wherein the lender is not allowed to charge such a rate by law, and the lender has a prior conviction for criminal usury or attempts to commit criminal usury, and such lender’s actions were part of a plan or business having the goal of making usurious loans.

Criminal Usury in the First Degree

Taking a closer look at Section 190.42 details the elements of the defined crime that must be proven in order for prosecutors to secure a conviction for criminal usury against the charged individual. Let’s consider the text of the law, its precise language, and what it means in practice.

Criminal Usury in the First Degree

Section 190.42 Criminal usury in the first degree

A person is guilty of criminal usury in the first degree when, not being authorized or permitted by law to do so, he knowingly charges, takes, or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period.

And either the actor had previously been convicted of the crime of criminal usury or of the attempt to commit such crime, or the actor`s conduct was part of a scheme or business of making or collecting usurious loans.

Criminal usury in the first degree is a class C felony.

The first element here requires that the lender not have authorization by law to make loans with annual interest rates exceeding 25% and knowingly does so nonetheless. The statute also requires that the defendant has a prior conviction for criminal usury, or attempted criminal usury. In addition, the lender’s actions must be part of an ongoing plan or organized business specializing in offering usurious loans and collecting usurious interest rates.

Note that the provision requires that the defendant engages in this conduct knowingly. If the defendant does not know that excessive rates are being charged, that may preclude them from being convicted under this provision, although an argument could be made that the defendant should have known about the usurious rates.

Further, the statute requires that the rates not be authorized by law. If the lender operates under a legal exception that allows them to charge such rates, they may not be subject to liability under this provision.

In addition, the law states that the defendant has a previous conviction either for criminal usury or attempted criminal usury. If the lender does not have a prior conviction for these crimes, they may not be liable under this particular law but may have other legal liability.

Lastly, the statute requires that the defendant’s actions must be part of an ongoing scheme or business that serves to offer usurious loans and collect usurious interest on those loans. If the defendant’s conduct is not part of such a scheme or business, they may not be liable under this provision but may face liability under other provisions.

Criminal Usury in the Second Degree

Section 190.40 defines criminal usury in the second degree, a class E felony, as knowingly charging interest on a loan of greater than 25% annually, without lawful authorization.

Taking a closer look at Section 190.40 details the elements of this offense that must be proven in order for prosecutors to secure a conviction against a defendant. Let’s consider the text of the law, its precise language, and what that language entails.

Section 190.40 Criminal usury in the second degree

A person is guilty of criminal usury in the second degree when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period.

Criminal usury in the second degree is a class E felony.

The first element above requires that the defendant knowingly commited the acts defined in the provision. Should a defendant be unaware that such acts have taken place, there may be some room for that defendant to avoid full prosecution.

In addition, the defendant must not be lawfully authorized to commit these acts. If there is lawful permission for these acts, and this permission applies to the defendant, that permission may serve to protect the lender from legal consequences. Lastly, the defendant must have charged a debtor an annual interest rate of over 25% annually.

Possession of Usurious Loan Records

Section 190.45 defines possession of usurious loan records, a class A misdemeanor, as the defendant knowingly having in his or her possession any form of recording of illegal criminal usurious deals.

Taking a closer look at Section 190.45 details the elements of the offense that must be proven in order to enable prosecutors to secure a conviction against a charged individual. Let’s consider the text of the law below, its precise language, and what it may mean for the parties involved.

Section 190.45 Possession of usurious loan records

A person is guilty of possession of usurious loan records when, with knowledge of the contents thereof, he possesses any writing, paper, instrument or article used to record criminally usurious transactions prohibited by Section 190.40.

Possession of usurious loan records is a class A misdemeanor.

The first element requires that the defendant knows of the problematic conduct. If the prosecution cannot prove that the defendant knew about the illegal acts, this may serve as an out of sorts for the defendant.

In addition, the statute states that the defendant must have or have had possession of records of criminally usurious transactions, whether those records be in the form of a writing, hard copy documentation, or other forms of record. If it cannot be shown that the defendant had possession of such records, this will likely prevent prosecutors from successfully convicting the charged individual.

Unlawful Collection Practices

Section 190.50 defines unlawful collection practices, a class B misdemeanor, as intentionally working to obtain enforcement of a claim for assets by knowingly distributing documents that have no official force behind them, but which are created to resemble documents that do have official force behind them, such as a court order.

Taking a closer look at Section 190.50 details the elements of this offense that must be proven in order for prosecutors to secure a conviction. Let’s consider the text of the law, its precise language, and what it means in practice.

Section 190.50 Unlawful collection practices definition

A person is guilty of unlawful collection practices when, with intent to enforce a claim or judgment for money or property, he knowingly sends, mails or delivers to another person a notice, document or other instruments.

In which it has no judicial or official sanction and which in its format or appearance, simulates a summons, complaint, court order or process, or an insignia, seal or printed form of a federal, state or local government or instrumentality thereof, or is otherwise calculated to induce a belief that such notice, document or instrument has a judicial or official sanction.

Unlawful collection practices is a class B misdemeanor.

The first element requires that the defendant have the intent to collect money or property via directing to the debtor documents that give the impression that such documents have official force in order to effectively trick the recipient into believing the documents are officially authorized.

Should the prosecution be unable to show the defendant’s knowledge about such efforts against the debtor, the defendant may have some room to avoid conviction. In addition, the documents sent must have no real judicial or governmental authorization. If the defendant distributes properly authorized court orders or similar documents, then the defendant will likely be able to avoid successful prosecution.

Further, the documents must be formatted in such a manner as to resemble properly permitted official documents. If the documents are written in crayon on the back of a napkin, for example, it’s unlikely that the recipient would reasonably believe they have official force, and this may excuse the sender from a criminal conviction.

Making a False Statement of Credit Terms

Section 190.55 defines making a false statement of credit terms, a class A misdemeanor, as knowingly violating the Truth in Lending Act via making untrue statements of credit terms by not disclosing interest rates, or by making insufficient statements of credit terms.

Taking a closer look at Section 190.55 details the elements of the defined crime that must be proven in order for prosecutors to successfully convict a defendant. Let’s take a closer look at the text of the statute below, its precise language, and what it means for the interested parties.

Section 190.55 Making a false statement of credit terms.

A person is guilty of making a false statement of credit terms when he knowingly and willfully violates the provisions of chapter two of the act of congress entitled “Truth in Lending Act” and the regulations thereunder.

As such act and regulations may from time to time be amended, by understating or failing to state the interest rate required to be disclosed, or by failing to make or by making a false or inaccurate or incomplete statement of other credit terms in violation of such act.

Making a false statement of credit terms is a class A misdemeanor.

The first element described above requires that the defendant’s conduct be knowing and willful. If the prosecution cannot prove knowing or willful conduct, the charged individual may be able to avoid conviction.

The law further requires violation of the Truth in Lending Act by improperly stating, or failing entirely to state, the relevant interest rate or other credit terms. Should prosecutors be unable to show that the defendant failed to comply fully with the Truth in Lending Act, it’s likely that conviction will not be secured against the charged individual.

What are some related crimes?

Under certain circumstances, various charges similar or related to usury may be brought in addition to the usury charge, or instead of it, depending on the situation. These may include more specific usury-related charges or those that fall into a category similar to usury, but do not fit within any of the usury-specific charges discussed above. For example, let’s consider the example of the fraud offense below.

Scheme to Defraud in the Second Degree

Section 190.60 lays out the legal definition and elements required for conviction of, perpetrating a scheme to defraud in the second degree, a Class A misdemeanor, as participating in actions that amount to systematic and outgoing behavior intended to defraud others or to receive assets from individuals by making false statements. In addition, a minimum of one person who the defendant received property from must be identified.

Section 190.60 Scheme to defraud in the second degree.

A person is guilty of a scheme to defraud in the second degree when he engages in a scheme constituting a systematic, ongoing course of conduct with intent to defraud more than one person or to obtain property from more than one person by false or fraudulent pretenses, representations or promises, and so obtains property from one or more of such persons.
In any prosecution under this section, it shall be necessary to prove the identity of at least one person from whom the defendant so obtained property, but it shall not be necessary to prove the identity of any other intended victim.

Scheme to defraud in the second degree is a class A misdemeanor.

The first element of the statute above requires that the charged individual be engaged, or have been engaged, in behavior that evinces systematic and ongoing conduct. If the prosecutors cannot show that the defendant’s conduct was part of a scheme involving systematic and ongoing conduct, such as a one-off act, the defendant may have some room to alleviate consequences for their actions.

Further, the prosecution must be able to prove that the defendant had the intent to defraud multiple individuals to secure a property from them via making false representations or false promises and then consequently obtains such property. If the charged individual’s intent cannot be sufficiently established, their culpability may be reduced or even avoided entirely.

The statute also requires prosecutors to prove the identity of multiple individuals who provided the problematic property to the defendant. Should the prosecutors be unable to prove the identity of such individuals adequately, the charged individual may avoid conviction.

What are the statutory penalties if you are convicted of this crime?

Note that each of these offenses is classified by their severity. Felony charges are generally more serious than misdemeanor charges, and a Class A charge is generally more serious than a Class B charge. New York’s sentencing statutes spell out the possible sentence for each category, which ranges from no time in prison to life sentences.

When judges determine to sentence, certain factors may be considered, including prior convictions, persistent offender status, and youthful offender status.

For example, a Class A misdemeanor is an offense other than a traffic violation and carries a sentence of no prison time, or a prison term-limited to 15 days to a full year. A Class B misdemeanor carries a sentence that is limited to a maximum of three months in prison and no more than $500 in fines.

A Class C non-violent felony conviction may bring with it a sentence ranging from no prison time to probation to one to 15 years in prison. A Class C violent felony can result in a sentence of 3.5 years to 15 years in prison.

The sentence for a Class D non-violent felony can be anything from no prison time to probation, or one to seven years in prison while a Class D violent felony can result in two to seven years in prison.

A Class E non-violent felony carries a sentence that may range from no jail to probation to one and a third to four years in prison, while a Class E violent felony sentence ranges from no jail time to probation to 1.5 years to four years in prison

What are some of the additional consequences of being convicted?

Regardless of the sentence given by a court, a conviction may cost additional consequences. Professional consequences can include loss of licenses, reputational damage, and financial costs to associated companies. Conviction may also make finding a job or housing more difficult, and require a fight in court that may be costly, both personally and financially.

Convictions may appear in all manner of routine background checks for things as innocuous as opening a bank account or credit card. It’s essential to take all possible action to avoid a conviction to protect your future opportunities, as well as your family’s.

If you think about how many times you fill out forms that ask whether you’ve ever – ever – been convicted of a felony, the import of doing all that you possibly can to avoid such a conviction becomes clear; In addition, felony convictions can have disruptive effects on your voting rights.

What are some defenses to Criminal usury in New York?

There are powerful tools you and your attorney can use to fight charges in court. An affirmative defense is spelled out in the criminal statute. To successfully win with an affirmative defense, the defendant has the burden to prove that the defense is available to them, by a preponderance of the evidence.

When non-affirmative defenses are raised, the burden is on the prosecution to prove beyond a reasonable doubt that the defense does not apply to the defendant.

Defenses that may be available to charges of usury include justification, which is essentially a claim that the high-interest rates were necessary because an emergency situation developed such that the rates were justified to prevent immediate public or private injury, which emergency developed by no fault of the defendant.

The justification defense reflects the recognition that there are times when circumstances emerge to create a situation in which a defendant may not realistically have full control over their options.

Infancy may be another available defense. This defense is available to those under 18 years of age as a means to potentially shield them from criminal liability. This defense depends heavily on the circumstances of the case and specific facts as minors are not automatically relieved of responsibility for their actions.

This defense reflects the general policy that minors may lack the understanding to know how their actions are wrong, or illegal. It also considers that courts may take a different approach to minors so as to minimize damage to their future options if the crime is sufficiently minor. Duress may be an effective defense as well. The presence of duress may remove responsibility for the commission of a crime as the defendant’s actions may not be their own.

What are these statutes require in mounting an effective defense?

In terms of mounting an effective defense, note that these statutes require that the defendant knew about the problematic actions. Proving this can be difficult as it can be seen as trying to “read minds.” While the defendant’s knowing may be explicitly stated or otherwise determined, it can be quite elusive to establish without an explicit statement by the defendant.

This may be a defense angle worth raising with your attorney and exploring how you can prevent prosecutors from proving this requirement. An experienced and effective criminal defense attorney should be able to work with you on establishing doubt regarding this element.

Help is Available

Facing any of the charges discussed above requires the assistance of a knowledgeable attorney who can help you navigate the various processes involved in the legal process. It’s crucial to engage an experienced criminal defense lawyer as soon as possible to ensure your rights are protected, and your case receives the best outcome possible.

Eliminating or minimizing any charges or sentencing is possible and well worth placing the call. Contact us to review your situation with an experienced legal professional who can help you take charge of your situation and guide your way forward.