By Jeremy Roebuck
WWR Article Summary (tl;dr) High School teacher Dawn Schmitt’s struggle to pay back an initial $200 loan she took from a company called MyNextPaycheck is just one of the witness accounts federal prosecutors in Philadelphia have presented in their racketeering conspiracy case against Main Line entrepreneur Charles Hallinan.
With bills piling up, her credit shot, and a choice looming each morning of whether to spend her last dollars on food or on gas to get to work, high school science teacher Dawn Schmitt went online in search of financial hope.
A search engine led her to the website of a company called MyNextPaycheck. And within minutes, $200 was deposited into her bank account — a short-term loan to cushion her until her next payday.
It seemed too good to be true, she told a federal jury last month.
It was. Within months, she was bankrupt.
Schmitt’s struggle to pay back that initial $200 loan, with an annual interest rate of more than 350 percent, is just one of the witness accounts federal prosecutors in Philadelphia have presented in their racketeering conspiracy case against Main Line entrepreneur Charles Hallinan, a payday lending pioneer who counted MyNextPaycheck as one of more than 25 loan companies he owned.
Throughout the trial, which entered its third week Tuesday, government lawyers have sought to draw a clear contrast between Hallinan — who lives in a $2.3 million Villanova home with a Bentley in the driveway — and borrowers like Schmitt, whose inability to pay her $200 debt quickly pushed her closer to financial ruin.
“I couldn’t seem to get ahead of this loan,” Schmitt, 48, of LaMoure, N.D., told jurors Sept. 29. “I ended up in more trouble than before I ever asked for a loan.”
Hallinan, 76, and his longtime legal counsel, Wheeler K. Neff, a codefendant in the case, are credited with developing many widely copied business strategies that turned payday lending into a multibillion-dollar industry.