Sara Routhier, Managing Editor of Features and Outreach, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming worl...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 16, 2012

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A Poway woman who was arrested for loan sharking last May has finally pled guilty to criminal charges.

Lirio Lee Ramos, 56, is charged with one misdemeanor count of loan sharking. Since loan sharking is a misdemeanor crime, she is forced to be on probation for three years and must also pay a $1,000 fine. Ramos will also be forced to serve 100 hours of community service along with compensating her victims $23,953 in restitution.

As previously covered, Ramos had lent personal loans to her co-workers at usurious interest rates in excess of 480 percent. Financing carrying this much interest violates California law.

Ramos and her criminal operation were investigated by the Consumer and Environmental Protection Unit when it was revealed that Ramos was attempting to enforce payment on personal loans she had lent.

The City Attorney’s Office discovered Ramos was charging 20 to 30 percent interest every two weeks on personal loans lent to her co-workers who were in financially desperate situations. While 20 to 30 percent interest may not seem like a large amount, over time it compounds and when calculated as an annual percentage rate (APR), the interest totals a whopping 480 percent.

Often times, these types of personal loans like these are called “5/6 loans,” since they are commonly lent in an amount of $500 under the stipulation that the borrower must pay back the lender $600.

“Taking advantage of someone for illegal financial gain needs to be stopped. We will prosecute those involved in loan sharking and charging a high rate of interest on a loan,” said City Attorney Jan Goldsmith in a press release.

Despite Ramos’ criminal abuse of lending at usurious rates, the act of lending to coworkers, friends, and family is not illegal within the state of California. Only the act of charging excessive interest rates is illegal. In California, interest rates are capped at 7 to 10 percent. While many critics argue that payday lenders offer money at higher interest rates, state law does not afford the same level of regulation between financial businesses and individual lenders.

Ramos, and sharks like her, succeed in their illicit business operations by preying upon people with low credit scores. Since many people have had trouble maintaining their credit scores, they are ineligible for conventional personal loans from banks and credit unions. As a result, they are forced to borrow from loan sharks. Fortunately for Ramos’ victims, she was a lone woman, rather than a member of organized crime.