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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: Aug 3, 2021

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A 56-year-old Poway woman named Lirio Lee Ramos has been charged with 14 counts of loan sharking. This type of predatory lending is similar to payday loans in that it provides immediate gratification with extremely high interest rates. Unlike a legal short-term loan, though, loan sharking is often associated with violence, threats, and other illegal activities, and loan sharks generally don’t run a credit check.

Ramos, 56, pleaded not guilty to the misdemeanor charges. The criminal complaint states that Ramos gave personal loans to 14 people between May 2009 and December 2010. Each of the loans were issued with a loan agreement and an interest rate that was in excess of 10 percent, which is the maximum allowed by California law.

Certain businesses are permitted to set their own interest rates above 10 percent, as credit card holders know all too well. The practice of loan sharking occurs when an unlicensed individual lends money for personal, family or household purposes over an established legal rate. Despite the stereotypical movie associations, this does not always involve violence or more illegal activities.

“In these tough economic times, individuals may seek out friends or colleagues to extend loans to them,” said Jan Goldsmith, San Diego City Attorney, in a news release. “In some communities, people may be accustomed to paying high interest on personal loans. They may not be aware that it is illegal in California to charge these high rates of interest.” Interestingly, those doing the loan sharking are not always aware that they are breaking these specific laws by charging an excessive interest rate.

Banks are typically the preferred source for personal loans, which are commonly used for debt consolidation and the purchase of expensive household items. However, individuals are also allowed to lend to others with the stipulation of being limited to lending money at a maximum of 10 percent interest.

While a personal loan set at a usurious interest rate may be lucrative for the lender, it is in violation of California state law and carries a potential one-year jail sentence. If the borrower were to default on this kind of loan, it would also not be collectable in the way that conforming quick cash loans would.

Each one of Ramos’ misdemeanor charges will be tried, and each carries that potential one-year jail sentence.

Reports have not mentioned Ramos being associated with any form of violence, but Goldsmith is still urging anybody who may have been a victim of Ramos’ high interest personal loans to contact the City Attorney’s Consumer Help Line at (619) 533-5600.

What Should You Know before Entering a Loan Agreement?

The average consumer doesn’t necessarily know the full financial laws and regulations in their state, and this is okay. If you have any questions about popular services in your area, though, never be afraid to look it up. You can save yourself a lot in repayment amounts and hassle if you ask the right questions.

Unfortunately, those who are most desperate for financial assistance often fall victim to the worst scams. Financial fraud is not always associated with unsecured, short-term loan, but it’s often more talked about.