Usurer Caught

Once the sin of accepting any interest at all, usury is a lesser crime today. Most States have laws which permit licensed, bonded small-loan companies to charge interest rates as high as 3 1/2% a month (2 1/2-3% in New York). In the last five years New York State Attorney General John James Bennett Jr. has been going after loan sharks who aren't satisfied even with this. In almost 200 convictions and injunctions he has secured the return of $278,000 to victims. Last week he got another: the biggest modern loan shark he had ever heard of.

Huge, obscure Pacific Finance Corp., a Delaware corporation,* has made $17,250,000 of loans in 17 years. In the last two it collected $250,000 in extra-legal interest. Doing an installment-sales-financing business in Manhattan's used-car district. Pacific Finance itself kept well within the law. A corporate Fagin. it did most of its sharking through dummy agencies, sometimes as many as 35 at once. Typical dummy: Chase Discount Corp., whose president and other officers were $25-a-week girls in Pacific Finance's of fice. Furnishing the capital and collecting the profits, Pacific never set its name to its dummies' paper. The Attorney General spent three years nabbing Pacific puppets before he found their sponsor.

Not straight interest, but a "hazard charge" was the hook with which Pacific collected its usury. Supposed to protect the lender against theft or destruction of autos (which Pacific accepted as security), typical hazard charges were $30 on a $70, six-month loan (the equivalent of 133% simple interest), $88 on a $300, one-year loan (53%). Pacific would then reinsure cars with an insurance company at rates averaging one-tenth the hazard charges.

Crooked genius of Pacific Finance Corp. is its founder and president, sickly, old (68) Leo Ritter, who gave hundreds of thousands of dollars of his profits to Catholic, Jewish and Protestant charities, kept a mansion in Brooklyn surrounded by a garden. Last week Usurer Ritter pleaded guilty to ten counts of usury, will be sentenced for them after Pacific Fi nance has repaid $250,000 to its victims. Since Pacific has $900,000 in cash and securities, this it can well do.

* As is thoroughly reputable Pacific Finance Corp. of California.

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