CFPB Rebuts its Unconstitutionality
October 21, 2016
The CFPB does not agree with the D.C. Circuit’s ruling that its leadership structure is unconstitutional, according to a reply filed in a separate case in the District of North Dakota. Believing itself constitutionally exempt from oversight by the President of the United States and any checks on its power whatsoever, the CFPB argued that the D.C. Circuit “based its decision on (a) the lack of sufficient historical precedent for the Bureau’s structure, and (b) a policy judgment that multi-member commissions are superior to single agency heads.”
It also suggested that it will be appealing the decision to the U.S. Supreme Court.
Remarkably, the D.C. Circuit Court’s ruling did not even call for the CFPB to be dismantled or have its funding reassigned to Congress, but instead ordered that it fall into line with the structure of other executive agencies where a reasonable system of checks and balances be implemented at the top. As originally created, CFPB Director Cordray was granted unilateral power that neither his agency colleagues or the President of the United States could check. Now, the CFPB appears unwilling to cede such authority.
“The CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decision-making and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency,” the D.C. Circuit Court asserted.
Despite that, in CFPB v. Intercept Corporation, et al., the CFPB argued that “decision was wrongly decided and is not likely to withstand further review.”
Some Alternative Funders See Pot As Next Big Market Opportunity
October 17, 2016
For some funders, marijuana is not just about sewing their wild oats. Rather, they see the business potential of being early to what’s expected to be a highly profitable and long-lasting party.
Indeed, for the right type of funder, doling out money to marijuana-related businesses is a promising market—certainly in the short term because these companies are so capital-starved. Because marijuana is still classified by the feds as an illegal drug, many related businesses can’t even get a bank account much less access to bank loans or more traditional funding. Many alternative funders are also unwilling to lend to marijuana-related businesses, which has left a significant void that’s beginning to be filled by opportunistic private equity investors, venture capitalists and others.
Meanwhile, rapidly shifting public opinion and state-centered initiatives bode well for what many estimate is a multi-billion dollar market. Indeed, industry watchers say marijuana funding will eventually be an even stronger niche than lending to alcohol producers, tobacco companies or pharmaceuticals because of all the ancillary business opportunities related to medical marijuana use.
“I think it’s probably the biggest opportunity we’ve seen since the Internet,” says Steve Gormley, managing partner and chief executive at Seventh Point LLC, a Norwalk, Connecticut-based private equity firm that invests in the cannabis industry. “Consumption continues to grow and demand is there,” he notes.
Despite shifting public opinion, legalized marijuana use is still quite controversial. So, all things considered, it takes a particularly thick-skinned funding company—one that has no moral objectives to marijuana and is also willing to accept a significant amount of legal, business and reputational risk—to throw its hat in the ring.
One of the biggest challenges keeping banks and many mainstream funders at bay is that cannabis remains illegal under law. Despite numerous attempts by proponents to scrap marijuana’s outlaw status, the DEA recently dealt out a significant blow by opting to maintain the status quo. This means that for the foreseeable future marijuana remains a Schedule I drug, on par with LSD and heroin, and as a result many lenders will choose to remain on the sidelines for now.
It remains promising, however, that over the past several years, the federal government has taken a more laissez-faire approach, giving individual states the authority to decide how they will deal with legalizing marijuana use. Forty-two states, the District of Columbia, and the U.S. territories of Puerto Rico and Guam have adopted laws recognizing marijuana’s medical value, according to the Marijuana Policy Project, an advocacy group. Four states—Alaska, Washington, Oregon, and Colorado—as well as the District of Columbia have gone even further. They allow the recreational use of marijuana for adults, with certain restrictions. Meanwhile, marijuana initiatives are on the November ballot in numerous states.
As these changes have percolated, forward-thinking alternative funders have been dipping their toes in the market—getting an early start on a market that’s hungrily looking for growth capital. “The last couple years there have been fewer investors than capital needed, but we believe that tide is changing,” says Morgan Paxhia, managing director and chief investor of Poseidon Asset Management LLC in San Francisco, an investment management company founded in 2013 to invest exclusively in the cannabis industry.
Paxhia says he’s starting to see more venture capitalists, lease-finance companies and private equity investors willing to provide liquidity to marijuana-based companies that are seeking to grow. The short-term cash advance marketplace, however, is not there yet. The challenge is finding funders willing to do the business with them.
“The people that are building these businesses have to always be worried about their cash. It’s not a given that they’ll get new additional investment,” Paxhia says. “Most people are quick to brush it aside. They won’t give it a minute to take a serious look at it and understand that it is already a multi-billion dollar market growing at 30 percent annualized for the next several years,”
A QUIETLY GROWING INDUSTRY
There are a number of private investors and venture capitalists who have spent the last several years researching and ramping up to invest in what they see as a goldmine of business opportunities. Many of these companies aren’t shy about publicly expressing their support for change.
“We see this as an opportunity of a lifetime to witness a societal change and we want to be a part of it,” says Paxhia who together with his sister runs a $10 million investment fund.
At the same time, there are also some alternative funders who dabble in this space and won’t discuss it publicly—partly because of the perceived stigma and partly out of concern that their financial backers won’t approve. To cover themselves, some are only willing to deal with companies that have hard assets. Often times the rates they offer are much higher than businesses in other industries with comparable financials would pay.
Andrew Vanam, founder of Rx Capital Funding LLC, an ISO in Norwalk, Connecticut, who focuses on the healthcare and medical industry, has helped a handful of few marijuana-related businesses get funding in the past few years and would love to help facilitate more deals. But he says it’s extremely difficult to find lenders that are willing to fund cannabis-related businesses as well as offer reasonable rates. Many of the files he generates in the cannabis space have incredible financials, positive cash flow, and month-on-month growth. However, lenders still treat these businesses as high-risk and offer rates so high it’s not even worth bringing back to a client. Instead, “they are taking hard money loans from private investors that put these cash advance offers to shame,” he says.
ASSESSING THE RISKS
Certainly there are risks to funding marijuana businesses. In Colorado—one of the first states to legalize the recreational use of marijuana—values are getting lofty, and people are overpaying for properties that house marijuana-related businesses, notes Glen Weinberg, a partner in Fairview Commercial Lending, a hard-money lender with offices in Atlanta and Evergreen, Colorado.
Weinberg has financed between 75 and 100 commercial real estate loans where marijuana businesses were involved, but says recently he’s shied away. “I’m not comfortable with the valuations at a lot of these marijuana properties,” he says.
Even investors who are bullish on the space urge caution. “If you’re in a [nationwide] market that is growing at about 64 percent per year, that rising tide floats all boats, but there’s a lot of risk, so you have to be careful,” says Chet Billingsley, chief executive of Mentor Capital Inc., a public operating company in Ramona, California, which acquires and provides liquidity for medical and social use cannabis companies.
Billingsley says he has learned some hard lessons through his dealings with about nine marijuana-related companies. For example, he recently won a court judgment against a company that Mentor had supplied with millions of dollars in cash and stock. The company later balked at the terms of the deal and tried to renege, but Mentor ultimately prevailed in court. Still, Billingsley says Mentor went through many unnecessary hassles and racked up $300k in legal costs over the course of its two-and-a-half-year legal battle.
Many business owners in the marijuana space started out during a period when it w as completely illegal. Often these companies march to the beat of their own drum; to protect themselves, lenders need to do more than offer a standard funding contract and hope for the best, Billingsley says.
“The contract has to be solid and it has to be explained in detail to the marijuana operator who is often not sophisticated with regard to contracts.” If you leave things open to interpretation, you’re likely to end up in court, where anything can happen, he cautions.
Companies that fund cannabis businesses say they have very extensive vetting processes—so much so that they turn away a good portion of requests. Jeffrey Howard, managing partner of Salveo Capital in Chicago, says about two-thirds of the companies that come across his desk don’t make it past the company’s initial criteria. “We see a ton of companies and business plans from companies seeking capital to raise money,” he says. “We are going to be very selective about who we invest in and how much.”
Gormley, of Seventh Point, leverages all the same resources he would if he were buying any retail or production manufacturing outfit. He does extremely invasive vetting of the individuals involved and uses private detectives to help.
It many cases it comes down to the business’s management team, according to Paxhia of Poseidon Asset Management. “All the businesses are very early-stage and most companies have a very short track record, so you have to place a greater emphasis on the people,” he says.
OPPORTUNITIES ABOUND
Despite the risks, funders that work in the marijuana space say they are filling an important need by providing capital to marijuana-related businesses. For Gormley of Seventh Point, it’s a calculated risk in an area he’s been following for quite some time. “How often do you get to be part of history, and how often do you get to participate in a burgeoning market?” he says.
Industry participants stress the many funding opportunities aside from companies that cultivate and distribute the plant. Indeed, there are many ancillary businesses that provide products and services geared towards patients and cannabis users without having anything to do with the actual plant.
Howard of Salveo Capital, says his company is gearing up to provide private equity and venture capital to several marijuana-related businesses through its Salveo Fund I and will only make select investments into companies that “touch the plant.” The goal is to eventually have $25 million of committed capital to invest in multiple early-stage companies that offer ancillary products and services to the marijuana industry. “We think there’s more exciting opportunities than ‘touch the plant’ investments,” he says.
Crowdfunding platforms are another avenue for companies in the marijuana space. This type of funding hasn’t yet been utilized to its full potential, industry watchers say.
Eaze Solutions, a San Francisco-based provider of technology that optimizes medical marijuana delivery, is one example of a company that turned to crowdfunding. It raised part of a $1.5 million infusion to fund its expansion via the crowdfunding site AngelList in 2014. Loto Labs, in Redwood City, California, is another example. It raised more than $220k via Indiegogo to fund production of its Evoke vaporizer. There’s also CannaFundr, an online investment marketplace for companies in the cannabis industry to gain access to capital.
Seth Yakatan, co-founder of Katan Associates in Hermosa Beach, California, suggests that crowdfunding will become more of an option for certain types of cannabis based companies, specifically those that aren’t as closely tied to the actual production of the plant. “Until federal regulations change, it’s going to be hard to raise money for an entity where you are actively engaged in the cultivation, distribution or sales of a product that’s federally illegal,” says Yakatan, whose company invests in and advises cannabis-related companies that have a biotech or pharmaceutical orientation.
Because laws on legalized marijuana are still in limbo, industry watchers say the market is still many years away from being mainstream. “Public perception will be similar to alcohol in 10 years from now,” predicts Weinberg of Fairview Commercial Lending, adding that he expects banks to enter the funding arena in five to 10 years.
In the meantime, alternative funders who can stomach risk continue to pave the path for others. Howard of Salveo Capital expects private equity investors, venture capitalists and other alternative players to continue playing a big role in getting the nascent industry off the ground.
“I strongly believe that in the interim there’s a significant advantage for players like us to be funding and to be in on the ground floor of this industry before it changes,” Howard says.
Indeed, many alternative funders believe the potential upside significantly outweighs possible negative consequences. “The perceived risk at this point is far greater than the actual risk,” says Paxhia of Poseidon Asset Management.
Merchant Cash Advance Misinformation Abounds – What’s A Broker To Think?
October 10, 2016
Last week, at least two panelists at the major commercial loan broker conference critiqued merchant cash advances, even going so far as to assign an arbitrary cost to them. Craig McGrain, President of factoring company Durham Funding, said they cost about 75%. Bob Coleman, owner of The Coleman Report, an SBA loan journal, said that merchant cash advance contracts should stipulate that prices are basically equivalent to 100% APR. Neither accurately describes a merchant cash advance if for no other reason than because a merchant cash advance is merely a methodology or a mechanism, not a price. The term itself is derived from the process of making a merchant an advance on their future projected sales. With hundreds of companies employing that concept, some are able to do it at a low cost and others at a high cost.
And it’s obviously the high cost ones to which their disdain was directed. But even then, when MCAs are properly structured as a purchase of future sales, there is no calculable APR because there is no assigned time frame, predetermined payments, or interest rate. This doesn’t mean an MCA product can’t be expensive, because surely they can be, but assigning randomly high percentages to scare people only compounds the misinformation that has persisted for years.
On a panel I participated in with Bob Coleman, Coleman said that these purchases were really just loans. The New York Supreme Court, however, repeatedly disagrees with him. In Platinum Rapid Funding Group Ltd v. VIP Limousine Services, Inc. and Charles Cotton, the court affirmed a purchase of future receivables for an upfront payment, adding that the request for the Court to convert the Agreement to a loan and assign an interest rate to it would require unwarranted speculation, and would contradict the explicit terms of the sale of future receivables in accordance with the Merchant Agreement.
In Merchant Cash & Capital, LLC v G&E Asian Am. Enter., Inc., the court reached the same conclusion.
With regard to McGrain of Durham Funding, he said that 70%-80% of companies that apply for his company’s factoring services have already used an MCA. This kind of competitive pressure is probably a leading reason why a factor would mischaracterize MCAs. In fact, the factoring industry has felt so threatened by MCAs, that two years ago the International Factoring Association voted to ban all MCA companies from their organization.
This isn’t to suggest that factoring is an inferior product and that MCA is the newer better thing. On the contrary, factoring is an excellent loan alternative and to McGrain’s credit he said that he believed the free market would work everything out. To facilitate that, more MCA brokers need to be educated on factoring and SBA lending. And in return commercial finance brokers need to understand the true nuts and bolts of MCA. That process gets sullied when misinformation abounds. Merchants will get the best help when the brokers fully understand all of the market’s options.
My panel with SBA lending expert Bob Coleman and equipment leasing veteran Kit Menkin at the NACLB conference last week highlighted some differences of opinions across these closely related industries but also demonstrated areas in which we all agree. Small businesses have different needs and it’s up to the brokers to prescribe the most appropriate solution. Whether it’s short-term or long-term, cheap or expensive, proactive or reactive, there’s capital out there. Hopefully the kind of cooperative engagement the NACLB conference provided this year will continue to be fostered for years to come.
Dear Funders: Don’t Dial ‘M’ for Marketing
October 7, 2016
Imagine you own a small donut shop in Arizona and receive an email saying, “Hello, I have heard your chocolate donuts are amazing and the most popular item. I work for XX, and we provide small business loans, do reach out to us if you’re looking to take it a step further.”
Versus
Getting yet another envelope in a deluge of mails with a bank-check-like promotional ad for a preposterous amount that startles you for a hot second before it ends up in the paper shredder.
One of these methods is free, personalized and subtle. And no points for guessing which one.
Gone should be the days where funders indiscriminately send out email blasts or cold call merchants offering working capital. But are they?
A year ago, a Wall Street Journal article said,
“A big reason online lenders make heavy use of mail, they said, is that it is still more effective than other types of direct marketing. Across all industries, the overall response rate for direct-mail overtures is 3.7%, compared with 0.1% for both email and social-media marketing campaigns, according to a recent report from the Direct Marketing Association, an industry group.”
Mintel Comperemedia, a database which tracks advertising data highlighted the use of technology as being the paramount shift in marketing for the financial services industry. But is the transition from analog to digital underway?
For some companies, it is. New York-based SOS Capital does not have a sales team and does all of its marketing on social media. The company sends no direct mailers, limits email blasts and instead scouts for small businesses on Facebook, LinkedIn and Yelp.
With more small businesses ramping up their social media presence, discovering leads has not only become easier but also cheaper. “Small business presence on Facebook is growing every day and finding them there can save you a lot of money,” said David Obstfeld, CEO and co-founder of SOS Capital. “Facebook is not explored by most funders but we have had great success.” The company spent $6,500 marketing to SMBs on Facebook and had 120 conversions over a period of two months.
How does that compare with the conventional methods of direct mail campaigns, email blasts and phone calls?
According to Justin Benton, sales director at leads generation firm, Lenders Marketing, it could cost about $100,000 to send out a million emails to active, verified accounts and as much as a dollar for a nice direct mail, including printing and postage.
“Even though it’s cost prohibitive for some folks and some others think that it’s past its prime, direct mail still wins,” said Benton who urges his clients to consider social media marketing which he says can be “virtually free.”
Discovering companies on sites like LinkedIn and Yelp can offer insights into the business and target customers better. “Calling a lead once and saying the words, ‘business loans’ or ‘working capital loans’ does not work, you need to understand the business,” Benton added.
Digital marketing can also help one keep better track of leads and reinvest in the ones that work. “It’s important to have a leads scoring system,” Benton said. The opposite of that, to him, looks like “Making a gumbo from scratch but you have no idea how you did it and cannot recreate it.”
Competition among financial companies will eventually force them to get more creative with their marketing tactics. Like Partners Funding for example, an MCA funder that markets to ISOs, uses incentives as baits. “If the ISOs fund three deals over $50,000, we reward them with extra points or give them marketing dollars,” said Michael Jenssen, ISO sales manager at Partners Funding, which sticks to marketing through email blasts, calls and exhibiting at trade shows.
Ultimately, the road to a lasting relationship with clients is paved with effective marketing. And the line between pushing call to action and being pesky is quite fine. “Funders have been using the same marketing campaigns and it’s making the clients sick,” said Obstfeld. “There are only so many mailers one can receive. They have to be creative about marketing to people without annoying them.”
For Obstfeld, the value in pursuing businesses through channels like Facebook is having more control over deals and interacting with the merchants directly, without any interference from ISOs. “It’s not just about saving money but the control over the deal. When there is no ISO involved, there is no stacking involved.”
The transition to moving all marketing online might be slow but inevitable. Until then, using bank check imagery to promote big pre-approvals will be more than just gags.
Merchant Cash Advance’s Impact on Factoring
October 6, 2016
A little more than two years ago, the International Factoring Association voted to ban merchant cash advance companies from membership, citing loose underwriting standards and competitive pressure.
On Wednesday, at the NACLB conference in Las Vegas, Craig McGrain, President of factoring company Durham Funding, hinted on a panel at just how strong that competitive pressure has become. According to him, about 70-80% of their applicants today already have a merchant cash advance. Five years ago, it was only 5% of businesses, he said. He thinks a lot of that has to do with small businesses not knowing what all of their available options are.
The numbers may not be all that shocking considering that Funding Circle VP Michael Rabil also said at the conference that 30-40% of their applicants already have an MCA. Funding Circle provides small business term loans.
That’s a lot of merchants turning to MCA before finding their way to another product.
Entire Industries Still Unbankable Despite Big Data Boom
September 28, 2016
The use of data and technology for assessing risk shows promise for new borrowers, safer bets and fewer delinquencies. Big data has been credited for overhauling traditional lending models and ushering in a new crop of lenders that do not shy away from risky businesses and low credit scores. But has it been successful in narrowing the list of industries previously ineligible to even be considered? And perhaps there’s a bigger story, that some lenders still maintain a list of industries they cannot or will not lend to despite the boom in data. AltFinanceDaily checked the temperature on restricted lending practices today with three lenders and here’s what we found.
Jersey City-based World Business Lenders whose average loan size is $150,000 does not lend to startups. According to chief revenue officer, Alex Gemici, startups usually don’t have revenues to justify payments. “Startups fail the ‘ability to pay’ test,” he said.
The restricted industries for WBL are the usual-suspects that fall in the federal legality grey areas like Marijuana related businesses and adult entertainment websites and weapon manufacturers that the company takes a moral stance against. Gemici said that the company has never lent to these industries and will evaluate the policy only if the need arises.
Apart from these WBL also classifies certain establishments as ‘high risk,’ either prone to defaults or without a steady cash flow like car dealers, childcare services, gas stations, real estate speculators, stock brokers, insurance brokers etc. which the company lends to with increased scrutiny and tighter checks.
Often, the risk appetite of a company depends on how long it has been in business and its funding track record. For instance, San Diego-based National Funding is 17 years old but is gun shy when it comes to lending to auto dealerships, thanks to sustained losses. “We don’t lend to auto dealerships because they already have enough MCA plans out there,” said CEO Dave Gilbert. “It’s too risky to be in that environment without being tied to actual assets, we have had too many losses.”
Government agencies, membership organizations (usually, non profit), insurance brokers, online dating services, weapon manufacturers, credit repair services, gambling and ticket sales websites are also industries the company does not lend to.
However, construction companies, oil companies, transportation and industries with high subsidies like solar businesses are what National Funding considers high risk and will finance cautiously, by tightening the credit window, advancing smaller amounts, demanding higher FICO scores and increasing scrutiny on cash flows.
Irrespective of whether a company automates underwriting, few contest the need for rich and varied data for calculating risk and approving a loan. Kennesaw, Georgia-based IOU Financial, which recently started lending in Canada, has a proprietary ‘Risk Logic’ score for underwriting which includes credit data, financial and non-financial accounts, public records, transactional data and a business owner’s personal credit information.
Despite this, it restricts lending to businesses with seasonal cash flow like tax prep services, industries that invoice out for larger orders including manufacturing, and marijuana dispensaries. IOU also does not lend to industries where it has faced high delinquencies in the past, like oil refinery service related industries and supply chain service providers that are subject to fluctuations in commodity prices.
And if OnDeck, the touted leader in deploying big data for underwriting prohibits 60 industries in five different categories including blood and organ banks, payroll companies and its own kind — non-bank financial companies, has big data really changed underwriting?
Google Payday Loan Ad Ban Conspiracy Theory Gains Steam: It Was The CFPB
September 28, 2016
This past May, Google told the world that they were the good guys.
That’s when they banned payday lending ads from their search results to “protect [their] users from deceptive or harmful financial products” all the while brushing aside the fact they were significant investors in LendUp, a payday loan company.
But LendUp wasn’t just any payday company. They were disrupting the entire game, according to a 2013 story that appeared in TechCrunch that hyped up how they were all about helping borrowers with poor credit improve their credit scores so that they could move up the ladder.
Less than three years later, LendUp CEO Sasha Orloff was still preaching the same principles. “Everything has to be transparent. There is no fine print. No hidden fees. And everything has to get someone to a better place,” Orloff insisted.
But that wasn’t true, according to a Consent Order published by the CFPB and settlement agreement released by the California Department of Business Oversight, in which the company agreed to pay millions in refunds and penalties. LendUp miscalculated APR and for years did not even report the payment history of many eligible borrowers to credit agencies. In fact no loan information was even reported to any credit bureau at all up until February 2014. They also weren’t transparent about their fees.
“Many of the benefits Respondent advertised as available to consumers who moved up the LendUp Ladder were, in fact, not available,” the CFPB asserts in its September 26th order. “Although it advertised all of its loans nationwide, from 2012 until 2015, Respondent did not offer any loans at the Platinum or Prime levels outside of California. In many states Respondent still does not offer such loans.”
Not that they did any better in California, where the DBO charged them with violating basic state laws through expedited funding fees, extension fees, and the condition that they buy other goods or services in order to get a loan.
LendUp told the WSJ that the settlements “address legacy issues that mostly date back to our early days as a company, when we were a seed-stage startup with limited resources and as few as five employees.”
But LendUp may just be a pawn in a bigger game between the CFPB and Google.
I fingered the CFPB as being the likely culprit behind Google’s payday loan advertising ban back in May 2016, when it was very likely that a CFPB investigation of LendUp was currently taking place. That theory was even picked up by The New Yorker. Today it looks awfully likely.
The CFPB mentioned LendUp’s use of facebook advertising and Internet search results advertising in its Order against the company. “Respondent used online banner advertisements appearing on Facebook and with Internet search results (emphasis mine) that included statutory triggering terms, but Respondent failed to disclosed in those advertisements the APR and whether the rate could be increased after consummation.”
Internet search results were used to carry out the deceptive practices, they allege? Sounds like Google had a potential problem on their hands.
Let’s recap:
- November 2013 and January 2016: Google Ventures invested in LendUp which promoted itself as a disruptively transparent and educational short term lender whose mission was to help consumers move up the ladder
- May 2016: Google suddenly bans payday loan ads from their search results seemingly out of nowhere
- September 2016: The CFPB and California DBO announce settlement orders over LendUp’s deceptive practices, wherein it was alleged that LendUp did not exactly do what it advertised and their ads in Internet search results violated TILA and Regulation Z
Was a CFPB investigation the real reason that Google had a change of heart about its lucrative payday loan advertising revenues?
It’s hard to ignore the evidence.
Alternative Financing Group’s Owner Indicted
September 6, 2016
Investors who thought their money was being used to fund small business loans didn’t get what they wanted, according to the SunHerald. Thomas “Lenny” Lepre, whose company Alternative Financing Group offers business loans and merchant cash advances was indicted on five counts of wire fraud on August 23rd for spending money on himself that was supposed to be used to make loans.
According to the indictment filed in the Southern District of Mississippi, Lepre “made materially false and fraudulent representations and solicited significant sums of money from investors and clients purportedly for funding of commercial services to borrowing clients, and for investments, and converted his investors and client borrowers’ monies to his own use and possession, using the funds inconsistently with the representations he had made to the investors and clients.”
The prosecution seeks a criminal forfeiture of more than $500,000. His arraignment is set for September 22nd.
Lepre is presumed innocent until proven guilty. The case number is 1:16-cr-00061-HSO-JCG.
