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Payday lenders say ex-Ohio House Speaker Cliff Rosenberger threatened them, delayed bill

May 24, 2018 GMT

Payday lenders say ex-Ohio House Speaker Cliff Rosenberger threatened them, delayed bill

COLUMBUS, Ohio -- Former Ohio House Speaker Cliff Rosenberger used strong-arm tactics to tank a bill to regulate the payday loan industry, including threatening loan companies that were trying to work on a compromise with reform advocates, according to two payday loan CEOs and their lobbyists.

The Ohio Consumer Lenders Association, a group of payday lenders, says Rosenberger stopped their efforts for a compromise on House Bill 123 so he could keep promises to other lending companies that objected to any changes in the law. The bill was introduced in March 2017 but languished in a House committee for over a year before advancing without a single change.

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“He was telling members and editorial boards that he favored reform while telling certain lobbyists and their clients that he would prevent any reform from taking place on his watch,” association members Ted Saunders and Cheney Pruett wrote in a May 15 letter to Rep. Niraj Antani, which cleveland.com obtained through a public records request.

Association lobbyists Neil Clark and Jeff Jacobson corroborated the events outlined in the letter in interviews.

Rosenberger, a Clarksville Republican, resigned in April amid reports the FBI was asking questions about a trip he took to London in August, where he was accompanied by lobbyists for the short-term lending industry.

FBI agents searched and retrieved items from Rosenberger’s home and a storage unit on Thursday. Rosenberger’s attorney David Axelrod said the former speaker is cooperating with officials, and that he has acted “lawfully and ethically.”

“Speaker Rosenberger denies misconduct of any kind,” Axelrod said Thursday. “The letter appears to be a setup created for no reason except being leaked to the media to create a false narrative and Speaker Rosenberger remains confident of his ultimate vindication.”

Remarks to lenders in London

Rosenberger traveled to London in August 2017 with the GOPAC Education Fund, a conservative group. Also on the trip: Two lobbyists for Select Management Resources, which offers auto title loans as LoanMax, Steve Dimon and Leslie Gaines, and Advance America executive Carol Stewart.

Clark said lobbyists who went on the trip told him Rosenberger stated in a private meeting there that he could have eliminated the industry if he wanted, but he wasn’t going to.

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Clark and Jacobson said the group divided at that point, with Select Management Resources, Advance America and Check Into Cash opposing any changes.

The association did not know about the London trip before it happened, Saunders said in an interview, and after learning of it asked Select Management Resources to resign its membership in the group.

The association warned remaining members and legislative leaders that Rosenberger was not being honest about his plans for the bill.

Statehouse politics

The letter was sent to Antani, a Miami Township Republican, in response to allegations by bill sponsor Rep. Kyle Koehler and Rep. Ryan Smith that the industry wanted to indefinitely stall action on the bill.

Smith is embroiled in a contentious battle to replace Rosenberger, who favored him as his successor, for the rest of the year. Antani is one of a dozen lawmakers who do not support Smith’s election to the speaker post. Smith claimed Wednesday that Clark and payday lenders are trying to kill the bill.

But Saunders, Jacobson and Clark said that’s not true. They were working on compromise legislation that would probably put some bad apples out of business but wouldn’t kill the industry.

“Let’s state the obvious: our industry is not well loved by the press so I try not to stick my head out,” Saunders said. “This is an extreme circumstance because I don’t believe the truth is being told.”

Saunders is the CEO of Community Choice Financial, which makes loans under the CheckSmart name. Pruett is the CEO of DMP Investments, which operates CashMax stores in Ohio.

Rosenberger’s political campaign committee has received at least $54,250 from payday industry political action committees and executives since 2015. The House Republicans’ campaign arm, the Ohio House Republican Organizational Committee, has received at least $29,000. 

The largest chunk came from Select Management Resources owner Rod A. Aycox, who contributed $103,500 to lawmakers and OHROC since 2015, according to state campaign finance records.

Bill stalled twice

Rosenberger had a heavy hand in preventing action on the bill, according to Saunders, Clark and Jacobson. The former House leader tasked Rep. Bill Seitz, a Cincinnati Republican, with working with both sides on an amendment to the bill in June 2017. Over the following months, lenders gave Seitz suggestions for balancing their interests with ways to better protect consumers.

In October, Seitz told OCLA’s lobbyists he was ready to introduce an amendment. Clark said he relayed the message to the other lenders and cautioned them against opposing the bill.

The next morning, without explanation, Rosenberger removed Seitz from that role and gave it to Rep. Kirk Schuring, a Canton Republican and Rosenberger’s No. 2.

Jacobson, who was the No. 2 Ohio senator when the legislature enacted payday lending reforms in 2008, said he had never seen anything happen like that.

When Saunders, Pruett and others first met with Schuring, Rosenberger walked into the room and threatened them with “unspecified negative consequences” if the lenders’ lobbyists continued to talk with legislators or reform advocates, including the Pew Charitable Trusts, they said.

Jacobson subsequently had a conversation with Pew’s lobbyist. Clark said House Chief of Staff Shawn Kasych later questioned him about why they were still talking with Pew against Rosenberger’s orders.

“When I was in office, I’d say, ‘have you talked to the other side?’ It’s the one thing you want people to do -- solve their own problems,” Jacobson said. “The only reason you wouldn’t want that is if you don’t want anything to happen.”

In late March, Schuring outlined a possible compromise proposal, which lenders considered viable but reform advocates claimed wouldn’t close the loophole that allows lenders to charge high interest rates.

On April 6, Schuring called OCLA and said Rosenberger was threatening to pass the as-introduced version of the bill unless they agreed to different compromise language, according to the letter. Lenders had not yet had a chance to review the proposal but had heard it would cripple the industry.

Later that same day, Rosenberger confirmed to the Dayton Daily News that he had hired a personal criminal defense attorney because the FBI had been asking questions about him. Rosenberger resigned four days later.

Within two weeks, a House committee passed the original, more restrictive House Bill 123. The House cannot vote on the bill or any legislation until it chooses a new speaker.

“We spent 11 months of our life negotiating an appropriate compromise that eliminated two-week loans, went to 30-day loans and did other things that could have been a model for the country and it was all pulled away because Rosenberger freaked about a trip that none of us sanctioned and none of us went on,” Clark said in an interview.

“We would have knocked out all the bad players. All those excessive rates would have been gone.”

Mobile readers, click here to read this letter.

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