Tribes’ Payday Loan Operations Upheld


Although the courts and others may question tribes’ acceptance of their non-Native business operators’ activities, the skepticism may be a remnant of “paternalistic days” that are “happily behind us,” according to the Colorado District Court in a decision February 13.

The issues remanded to the District Court from the Colorado Supreme Court concerned online payday loan operations of tribal corporations of the Miami Tribe of Oklahoma and the Santee Sioux Nation, the former termed Miami Nations Enterprises Inc. (MNE) and the latter SFS Inc.

The corporations were charged in 2004 by the state attorney general with violations of state law governing payday loan businesses and were issued subpoenas requiring voluminous amounts of data from “Cash Advance” and “Preferred Cash Loans,” which were identified as subdivisions of the Miami and Santee nations, respectively, and said to be protected by tribal sovereign immunity.

After lengthy back-and-forth litigation, the state appeals court said an 11-part test should be used to determine whether the businesses are “arms” of their Indian nations and it also required the state to prove the tribal entities were not immune to administrative subpoenas. The Colorado Supreme Court concluded that a three-part test should be used instead and acknowledged that the state had the burden of proof about immunity.

District Court Judge Morris B. Hoffman agreed with tribal entities “that the state has not met its burden of proving that the tribal entities are not arms of their tribes” and found the tribal entities did not waive immunity. He granted MNE and SFS’ motions to dismiss the charges issued when they did not furnish material sought by the state and he vacated related citations and warrants.

The state went to great lengths to argue immunity should be denied to the tribal entities because, according to the state, “they are shams,” Hoffman said, noting the entities were operated by one person and his associates. But the state Supreme Court emphasized that “immunity depends on the relationship between the tribal entities and their tribes, not on the activities the tribal entities undertake,” he said.

“The Miami and Santee people are the ones we must trust, as long as Congress lets us trust them, to know what kinds of business relationships are in their best interests,” he said. “They do not need the guidance of the State of Colorado, through either its law enforcement officials or its courts.”