On the day he was sworn in as lieutenant governor, Brian Benjamin recused himself from any state business that could raise conflict-of-interest questions following THE CITY’s report detailing his hefty stock holdings in a high-interest lending company.
The revelations about the stock earned Benjamin a burst of criticism on his big day from two Albany legislators — including one who called for the former state senator to sell off his shares immediately.
“He needs to divest,” Assemblymember Yuh-Line Niou (D-Manhattan) told THE CITY Thursday, following Benjamin’s inauguration. “He could be the hero here and divest and say this is not a product that he supports and say it out loud. That these kinds of products are dangerous.
“He hasn’t done that and I’m worried about that,” she added.
Niou questioned Benjamin’s ownership of shares in NextPoint, an investors group that recently acquired LoanMe, a firm that arranges small personal loans with sky-high interest rates of up to 500% and has been sued repeatedly by borrowers and consumers.
THE CITY estimates his initial investment of $4,100 last year is now worth nearly $85,000. Critics accused Benjamin, who was tapped by Gov. Kathy Hochul for her old job, of trying to profit off an industry that has left vulnerable borrowers with crushing debt.
This is predatory lending. Nobody should be ok with predatory lending that bleeds our communities.— Yuh-Line Niou (@yuhline) September 9, 2021
“LoanMe borrowers are then on the hook for interest rates of 98% to 500%, plus fees…”
In New York our usury laws consider rates higher than 25% criminal. https://t.co/9Isv0s11zi
On Thursday, Benjamin told THE CITY that he’d “signed a recusal” — but refused to release the document or discuss its terms.
In response to questions from a New York Times reporter about the stock at his swearing in Thursday, Benjamin declined to discuss his role as a NextPoint board member in approving the acquisition of LoanMe or comment on that company’s tactics.
Instead, he issued a broadly worded statement: “My record speaks for itself. I wholeheartedly support cracking down on extremely high interest rates — especially because many of the people taking out these loans are using them for mortgages, rental assistance, and other housing costs. I have worked hard to fix our affordable housing problem in New York.”
Lots of Lawsuits
As THE CITY reported Tuesday, Benjamin and his colleagues on NextPoint’s board got stock in the firm last year with an estimated $4,100 investment at pennies per share.
He resigned from the board March 15, while running for city comptroller, but retained his stock. When the company went public July 7, it opened at $11.12 per share and closed Wednesday at $8.50. That would mean Benjamin’s shares are now worth about $84,000.
Benjamin has yet to spell out his role as a board member in Nextpoint’s decision to acquire LoanMe. NextPoint announced it had “entered into definitive agreements” to buy LoanMe and another firm, Liberty Tax, on Feb. 22, when Benjamin was still on the board.
The Daily News reported that he told the paper’s editorial board in early May that he was “not affiliated going forward” with LoanMe and Liberty Tax — but he didn’t mention his stock holdings.
Benjamin’s spokesperson, Jordan Bennett, wrote in email to THE CITY that the new lieutenant governor “does not have any leadership role with NextPoint or its subsidiaries — he owns stock but he is not a majority shareholder, not a director, and has no substantive control over the company or its subsidiaries.”
He noted that LoanMe does no business in New York, which caps interest rates on most consumer loans at 16% and considers rates of 25% or higher as criminal.
“Even though it is difficult to imagine a scenario where the senator might be able to impact this particular business from his role as lieutenant governor, to avoid even the appearance of a conflict, he will be completely recusing from any decision that might have such an impact,” Bennett said.
The other firm NextPoint acquired, Liberty Tax, “has limited business operations in New York State consisting of a few franchised locations. These locations are not owned by NextPoint, but rather are set up as franchises with private owners,” Bennett said.
By the time NextPoint had reached its “definitive agreement” to purchase LoanMe earlier this year, the firm had been sued repeatedly by borrowers and consumers accusing the outfit of a wide variety of deceptive and harassing behavior. THE CITY found 33 federal lawsuits filed against LoanMe since 2015 in seven states.
Borrowers charged LoanMe barraged them with texts and robo-calls if they were late with their payment, while consumers accused the firm of the same type of harassing calls to solicit their business. Some borrowers said LoanMe provided erroneous information that ruined their credit.
As of last week, LoanMe had settled all but two of the lawsuits. The terms of the settlements remain sealed.