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Thu January 26, 2012
Lawyer says ex-inmates fell victim to predatory loan company
Several former prison inmates who received a multi-million dollar abuse settlement from the state may never see the money. Some may actually owe more than they would have received.
In 1996, more than 800 women filed a class action suit against the Michigan Department of Corrections. The women said they’d been repeatedly raped and abused while in prison.
In 2009, they were awarded a $100 million settlement.
While they were waiting for the money, some of the women were approached by a New York loan company and were given advances, using their settlement for collateral.
What the women didn’t realize was the interest rate could be 100 percent -- or more.
Attorney Ralph Sirlin represents some of the women. He says the loan company preyed on the women because they were unlikely to understand the contract.
"She actually received from the company $65,000 in March of 2008," he says about one of his clients. "Two years later, she owed the company $280,000.
"There's no way these women could ever have been aware of what they were signing, and what that meant. It's another example of the small print, legal mumbo-jumbo, and they never explained to these women what it was they were getting involved in."
A federal magistrate this week in the loan company’s favor. The case is now under review by a U.S. District Judge.