Plaintiff Awarded Treble Damages for Usurious Interest Charges

A mother pawned some jewelry and coins in exchange for a loan which carried an interest rate of twenty percent per month. After the mother died, her son attempted to regain possession of the pawned items. The pawnbroker refused to return the items until the full balance due on the loan was repaid. Because the son believed the loan transaction to be usurious, he refused to pay the outstanding balance. The pawnbroker later sold a portion of the items. The son, as executor of his mother’s estate, then filed suit against the pawnbroker and alleged claims of state law conversion and federal RICO violations, among other actions.

The son moved for summary judgment against the pawnbroker and the US District Court judge granted the motion as to the conversion and RICO claims. In his motion, the son had also requested treble damages. After reviewing the case, the judge granted his request for treble damages as to the RICO claim but denied it for the conversion claim.

The Court explained that the federal RICO statute provides that any person injured as a result of a RICO violation is entitled to treble damages. To recover treble damages, a plaintiff must show that the defendant’s RICO violation actually caused the plaintiff’s injury. The Court held that the usurious interest rate (which constituted the collection of an unlawful debt and therefore meet the definition of a RICO violation) had directly resulted in the mother paying more interest than legally authorized. As a result, the Court granted the son’s request for treble damages.

The Court, however, denied the son’s request as to the conversion claim. The Court found that because the son had not offered evidence that the usurious interest rate had prevented the recovery of his mother’s property, he had failed to prove that the pawnbroker’s RICO violation had caused the damages related to the conversion claim. Therefore, the son’s request for trebling of the conversion damages was denied.

Gilmore v. Pawn King, Inc., 2016 U.S. Dist. LEXIS 39089 (D. Conn. Mar. 25, 2016)

About Patrick Siegfried

Patrick Siegfried is the author of the Usury Law Blog. Patrick is a practicing attorney in Bethesda, Maryland. Patrick’s work focuses on issues regarding alternative small business financing. He can be reached at psiegfried@usurylawblog.com
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