by Megan O’Matz and Joel Jacobs

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In bankruptcy filings and consumer complaints, thousands of people across the country make pleas for relief from high-interest loans with punishing annual rates that often exceed 600%.

Although they borrowed small sums online from a slew of businesses with catchy names — such as Loan at Last or Sky Trail Cash — their loans stemmed from the same massive operation owned by a small Native American tribe in a remote part of Wisconsin.

Over the past decade, the Lac du Flambeau Band of Lake Superior Chippewa Indians has grown to become a prominent player in the tribal lending industry, generating far-reaching impact and leaving a legacy of economic despair. A ProPublica analysis found companies owned by the LDF tribe showed up as a creditor in roughly 1 out of every 100 bankruptcy cases sampled nationwide.

That’s the highest frequency associated with any of the tribes doing business in this sector of the payday loan industry. And it translates to an estimated 4,800 bankruptcy cases, on average, per year.

ProPublica also found that LDF’s various companies have racked up more than 2,200 consumer complaints that were routed to the Federal Trade Commission since 2019 — more than any other tribe in recent years.

“THIS IS THE TEXTBOOK DEFINITION ON LOANSHARKING,” one Californian with an LDF loan complained in all caps in June 2023 to federal regulators. The person, whose name is redacted, argued that “no one should be expected to pay over $11,000 for a $1,200 loan,” calling the 790% rate “beyond predatory.”

In a separate complaint, a Massachusetts customer wrote, “I thought this kind of predatory lending was against the law.”

Such confusion is understandable. Loans like these are illegal under most state statutes. But tribal-related businesses, including LDF, claim that their sovereign rights exempt them from state usury laws and licensing requirements aimed at protecting consumers. And so these businesses operate widely, facing little pushback from regulators and relying on the small print in their loan agreements.

As LDF climbed in the industry, it kept a low profile, garnering little publicity. For years it operated from a call center above a smoke shop in the community’s small downtown, before moving to a sprawling vocational training building, built in part with federal money, off a less visible, two-lane road.

But staying under the radar just got harder. Court filings show that LDF tribal leaders and some of their nontribal business partners have come to an agreement with consumers in a 2020 federal class-action lawsuit filed in Virginia. Nearly 1 million borrowers could finally get relief.

The deal calls for the cancellation of $1.4 billion in outstanding loans. Tribal officials and their associates would also pay $37.4 million to consumers and the lawyers who brought the suit. Although they settled, LDF leaders have denied wrongdoing in the case, and its president told ProPublica it adheres to high industry standards in its lending operations.

A final resolution of the case will take months. If approved, the total settlement would be the largest ever secured against participants in the tribal lending industry, lawyers told the court.

“This is a big one,” said Irv Ackelsberg, a Philadelphia attorney who has faced off in court against other tribal lenders and followed this suit closely. “Is it going to stop tribal lending? Probably not because it’s just a fraction of what’s out there.”

The LDF tribe is central to the suit but is not named. Nor is LDF Holdings, the corporate umbrella over the various lending subsidiaries.

Knowing that both those entities likely would have been entitled to sovereign immunity, lawyers for the borrowers chose a different approach. Instead, they brought the case against members of the tribe’s governing council; high-level employees of LDF’s lending operations; and a nontribal business partner, Skytrail Servicing Group, and its owner, William Cheney Pruett.

Pruett also denied wrongdoing in the case. He did not respond to requests for comment from ProPublica.

The proposed settlement notes that the tribal leaders and their partners understood that continuing to defend the case “would require them to expend significant time and money.” LDF, under the settlement, can continue its loan operations.

In emails to ProPublica, LDF President John Johnson Sr. defended the tribe’s lending business as legal and beneficial to both borrowers and the tribal members. He said the loans help people “without access to traditional financial services,” such........

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