STATE OF MICHIGAN DEPARTMENT OF INSURANCE AND …

1 STATEOFMICHIGANDEPARTMENTOFINSURANCEANDF INANCIALSERVICESB eforetheDirectoroftheDepartmentofInsuran ceandFinancialServicesIntheMatterof:Depa rtmentofInsuranceandFinancialServices,Pe titioner,WesternSkyFinancial, ,Respondents,andCashCall,Inc.,WSFunding, LLC,DelbertServicesCorporation, , [Issuedandenteredthisfr^dayofNfi,bx^? \ ^&irectorBased on theattachedCONSENTAGREEMENTand the files andrecordsoftheDepaitnientofInsurance and financial Services(UDIFS")relating to this matter, theDirectorofDIFS finds toExecutiveOrder2013-1,effectiveMarch 18,2013,allauthority,powers,duties, functions, andresponsibilitiesoftheCommissionerofth e OfficeofFinancial andConsent Order 2of19 InsuranceRegulation("Commissioner")have beentransferredto theDirectorofDIFS("Director"). Director hasjurisdictionand authority to accept the attached Consent Agreement andissue thisConsentOrderpursuantto the Regulatory Loan Act("RLA"), ,asamended, MCL ,and the MICHIGAN Administrative Procedures Actof1969("APA"), , asamended,MCL required notices have been issued in this case, and the notices and servicethereofwereappropriateand lawful in in the public APA have been defined terms used in this Consent Order notexpresslydefinedherein shall have themeanings ascribed to them in (1);Sections2(1)and 13(1) and (4)ofthe RLA, MCL (1) and (1) and (4).]

2 AndSections 4(1) and 6(1)ofthe Credit Reform Act, (1) (1),Respondents and Participating Parties, as the originators, assignees, and/or servicers ofWestern Sky Loans made to MICHIGAN Borrowers, contracted for, charged, or collected onthe Western Sky Loans without being properly licensed, and further charged, contracted for,orreceiveda rateofinterestand fees on theWesternSky Loans thatexceededthe maximumamounts permitted under the foregoing and Participating Partiesneitheradmitnor deny ,therefore,IT attached Consent Agreement is incorporated herein and made apailof this ConsentOrder by and Participating Parties shall comply with all terms agreed to , and without waiving full compliance with all other terms contained in theattached Consent Agreement, Respondents and Participating Parties shall CEASE ANDDESIST from engaging in any violationsofMichigan law identified in Paragraph the matterscontainedherein and has the authorityto issue such further order(s)

3 As she shall deem just,necessary, fail to comply with the termsofthe ConsentAgreement or this ConsentOrder,Section 9eofthe RLA, ,authorizes theDirector to apply to the Ingham County Circuit Court to enforce such terms, and the StateofMichigan may pursue this or any other availableadministrativeorjudicialremedie s deny anyissuesregardingjurisdiction,however,t heyexpresslyconsentandagreetojurisdictio nbefore theDIFSD irectorand MICHIGAN courts solely for purposesofexecuting theattached Consent Agreement,entryofthis Consent Order, and any Order and 4of19 CONSENTAGREEMENTTHIS CONSENTAGREEMENTis agreed and entered into by and between the StateofMichiganDepartmentofInsurance andFinancialServices("DIFS") andDepartmentofAttorneyGeneral (collectively, the"StateofMichigan"), and Respondent Western Sky financial , LLCand itssubsidiaries(collectively,"WesternSky "),RespondentMaitin ,individually(" "),andInterested/Participating Parties CashCall, Inc.

4 , WS Funding, LLC, DelbertServicesCorporationand theirsubsidiaries(collectively,"CashCall ") and CashCall'sprincipal,J. Paul Reddam, individually(" "),as assignees and/or servicers of loans to Sky and Mr. Webb are referred to collectively hereafter as "Respondents,"CashCall and Mr. Reddam are referred to collectively hereafter as the"ParticipatingParties,"and all of the above-named parties to this Consent Agreement are referred to collectivelyhereafterasthe"Parties." ,pursuantto theMichiganRegulatoryLoan Act("RLA"), , asamended, MCL ^the DirectorofDIFS ("Director") is responsible for licensing andregulating all persons that engage in the businessofmaking loansofmoney and charge, contractfor, or receive on those loans agreaterrateofinterest than the lender would be permitted by lawto charge if the lender were not a licensee under the RLA; andWHEREAS,WesternSkyFinancial,LLC is a limited liabilitycompanyorganized underthe lawsofSouth Dakota with its principal placeofbusiness located at 612 E Street, TimberLake, SouthDakota57656on theCheyenneRiver IndianReservation;andWHEREAS, Mr.

5 Webb is themanagingand solemember/ownerofWestern SkyFinancial, LLC, is anenrolledmemberoftheCheyenneRiverSioux Tribe, and resides in SouthDakotaon theCheyenneRiverIndianReservation;andWHE REAS,CashCall,Inc. is acorporationincorporatedunderthe lawsofCaliforniawith its principal placeofbusinesslocated at One City Boulevard West, Suite1000,Orange,CA92868;andWHEREAS,WSFu nding,LLC ("WSFunding")is a limitedliabilitycompanyorganizedunderdie lawsofDelaware and a wholly-owned subsidiaryofCashCall, Inc.; andWHEREAS,DelbertServicesCorporation("D elbert")is acorporationincorporatedunder the lawsofNevada with its principal placeofbusiness located at 7125 Pollock Drive, LasVegas, NV89119,and iswholly-ownedby Mr. Reddam; andConsent Order thechiefexecutiveofficer,president,and soleownerofCashCall,Inc.; the president and sole member/owner of WS Funding; and the director and ownerofDelbert;andWHEREAS, pursuant to the RLA, a person engaged in the business of making loans toMichiganresidentsfor personal, family, or household use is limited to charging, contracting for,or receiving an interest rate that does not exceed the usury limitof7% per annum on a writtenagreement (or 5% on an unwritten agreement) provided in the MICHIGAN Interest Rates Act, , asamended,MCL ("InterestRates Act"), unless the person has firstobtaineda licensefromtheDirectorundertheRLA,theMic higanConsumerFinancialServicesAct("CFSA" ), , ,or isexemptfromlicensurepursuanttoSection20 ofthe RLA.

6 AndWHEREAS,undertheauthoritygrantedbySec tion9bofthe RLA, ,DIFS staffconducted aninvestigationofRespondentsanddetermine dthatRespondents,via Internetand televisionadvertisementsreceived by or visible to residentsofthe StateofMichigan,solicited,advertised,and offeredloans, and via theInternetandtelephone,made loans toindividuals who, at the timeofmaking the loan, were residentsofthe StateofMichigan (a"MichiganBorrower,r);andWHEREAS, Western Sky assigned to WS Funding the loans that it made to MichiganBorrowers (the"WesternSkyLoans"),makingWSFundingth eownerofthe loans, andCashCall*Inc. orDelbertservicedthe loans onbehalfofWSFunding,makingCashCall,Inc. orDelbert responsible forservicing,charging, andcollectingallprincipal,interest, and feesprovided for in the loanagreements;andWHEREAS,at all pertinent times referred to herein, Respondents and ParticipatingParties did not possess a license under the RLA or CFSA, and the StateofMichiganalleges thatneitherRespondentsnorParticipatingPa rties wereexemptfromlicensureunder Section 20oftheRLA.

7 AndWHEREAS,theStateofMichiganallegesthat alloftheWesternSky Loans includedand chargedinterestratesexceedingthe 7% perannuminterestratepermittedforunlicens edlenders under theInterestRatesAct, as well as the 25%interestratepermittedforlicensedlende rs under the RLA andMichiganCreditReformAct("CRA"), , as amended, \andWHEREAS, the StateofMichigan alleges that allofthe Western Sky Loans includedand charged late feesexceedingthemaximumlate feepermittedunderthe RLA and , the StateofMichigan alleges that manyofthe Western Sky Loans included andcharged loan processing fees exceeding the maximum loan processing fee permitted under theRLA;andConsent Order 6of19 WHEREAS, pursuant to Section 9aofthe RLA, MCL , on July 25,2013,DIFSS enior DeputyDirectorStephen R. Hilker issued aNoticeofIntentiontoIssuea Cease andDesistOrder and Order for Hearing (the"Noticeand Hearing Order") directed toRespondentsrelative to theforegoingallegedviolationsofMichiganl aw.

8 TheNoticeandHearingOrderwasreferred to theMichiganAdministrativeHearing System("MAHS")and assigned MAHSD ocket (the"PendingAdministrativeProceeding");a ndWHEREAS,toaccommodateongoingdiscussion sbetweenthePartiesandtheircounselregardi nga potential resolutionofthis matter, the Administrative Law Judge assigned to presideover thePendingAdministrativeProceeding, Steel, hasenteredvarious ,thePendingAdministrativeProceedingissch eduledfor acontestedcasehearingon May 28,2015at 9:00 ; andWHEREAS,thePartiesand theircounselhavereviewed,discussed,and negotiated further time,expense,anduncertaintyassociatedwit h thePendingAdministrativeProceedingand any related litigation orappeals,thePartiesnow agree toresolve this matterpursuantto the terms contained in ,THEREFORE,inconsiderationofthe foregoing facts and the following mutuallyagreed upon promises and covenants and other good and valuable consideration, the adequacyandsufficiencyofwhich the Parties herebyexpresslyacknowledge,the Parties agree as Consent Agreement becomes fully effective and binding after its executionby eachofthe Parties and upon the date that the DIFS Director signs and enters theaccompanying Consent Order (the "EffectiveDate").

9 And Participating Parties will immediately cease and desist fromviolating the RLA, the CRA, and the Interest Rates Act. The Parties agree that the collectionactivity on existing Western Sky Loans permitted under Paragraph 7 below is allowed solely forpurposesof and in accordance with the termsofthis Consent , unless and until they are properly licensed and/or otherwise complywith applicable MICHIGAN law, Respondents and Participating Parties will cease and desist fromsoliciting, advertising, offering, or making any loans of any kind to MICHIGAN residents. For theavoidanceofdoubt, thisprohibitionmeans and includes that if Respondents or ParticipatingParties offer loans that are not fullycompliantwith MICHIGAN law (including 7 of 19requirements, if any),RespondentsandPaiticipatingParties: (a)willremove MICHIGAN from thedrop down listofstates in which their loans are available on any and all websites that Michiganresidents may access to apply for loans from Respondents or Participating Parties; (b) will addMichigan to all lists and noticesappearingon anywebsitesor othermarketingmaterials thatidentify states in whichtheirloans are notavailable.

10 And (c) willotherwiseensure thattheirloansareunavailableto any applicants who identify themselves as MICHIGAN residents or who provideaddresses located within the willimmediatelycease and desist frommaking any negative credit reports to credit bureaus, and within fourteen (14) calendar daysofthe Effective Date will submit a request to remove all pre-existing credit reports made by them,with respect to of the Effective Date, Respondents and Participating Parties will permanentlycease and desist fromsellingorassigningall Western Sky Loans made to MICHIGAN Borrowers toanyunaffiliatedthird and Participating Parties will immediately surrender any Michiganlendinglicenses they currently hold, and will withdraw any pending appealsoflicense (45) calendar days of the Effective Date, foralloutstandingWesternSky Loans made to MICHIGAN Borrowers still owned byRespondentsorParticipatingParties on the Effective Date, Respondents and Participating Parties will permanently reset theinterest rate on the loan's then-outstanding balance of principal to 7% per annum.