RICHMOND, Va. - A federal appeals court is set to hear arguments in a lawsuit accusing a small Native American tribe in Michigan of running a predatory loan scheme.

At least five people from Virginia say they borrowed from BigPictureLoans.com after receiving an enticing loan pitch. The Richmond Times-Dispatch reports the lawsuit alleges that Big Picture violated Virginia's usury laws by charging annual percentage rates in some cases of more than 600 per cent.

The Richmond-based 4th U.S. Circuit Court of Appeals is being asked to decide whether the loan operation is an extension of the Lac Vieux Desert Band of Lake Superior Chippewa Indians, which has sovereign immunity from lawsuits, or whether the tribe is essentially a front for outsiders controlling and profiting from the business.

Arguments are scheduled for Tuesday.

Big Picture and other defendants are challenging a federal judge's 2018 ruling that the tribe's lending business was not protected by sovereign immunity and therefore was not immune from the class-action lawsuit.

The judge held that the primary purpose of the tribe's purchase of Bellicose Capital — which it rebranded as Ascension Technologies LLC — was to shield outsiders from liability.

A spokesman for the tribe said in a prepared statement that Big Picture and Ascension were formed under the tribe's laws and operated by the tribe. The spokesman said income from the business accounts for 40 per cent of the tribe's general budget fund and is used to pay for government services such as health care and education.

"It is a case about tribal sovereign immunity and two specific tribal entities: Big Picture and Ascension. As arms of the Tribe, they are immune from suit. ... This case must be dismissed," the tribe's lawyers argued in court documents.

The attorneys general of 14 states, including Virginia, and Washington, D.C., are asking the appeals court to uphold the judge's ruling.

They argue in court documents that enforcing consumer protection laws has become more difficult with the advent of "tribal payday lending schemes, in which non-tribal lenders affiliate with Indian tribes to attempt to benefit from their tribal immunity."

The attorneys general said the relationships that Big Picture Loans and Ascension Technologies claim to have with the tribe "are merely the most recent version of decades-old attempts to avoid coverage of District of Columbia and state laws."

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Information from: Richmond Times-Dispatch, http://www.richmond.com

News from © The Associated Press, 2019