Chattanooga’s salary king justified illegal business by donating money to charity

Carey Brown, right, speaks to funders at the launch of the Covenant Values ​​Foundation.

Criminal convictions in a breakdown union

Carey Vaughn Brown – Criminal Wear, Crime

Joanna Temple – Criminal Usury Attempt, Misdemeanor

Ron Beaver – Criminal Usury Attempt, Misdemeanor

Credit payment services – criminal usury, crime – criminal usury, crime

Scenic City Legal Group – attempted criminal usury, misdemeanor

Source: Manhattan District Attorney

Court agreement

Brown has already lost $ 3 million

He must pay an additional $ 6 million in confiscation to victims

A compensation fund will be set up to compensate those who are “proven victims of Brown’s payday loan program.”

250 hours of community service

Three years of probation

Brown’s Payroll Empire

Carey Brown’s payday loan syndicate, taken together, would be considered one of the biggest companies in Chattanooga

In 2012 alone, the company recycled $ 500 million through its Chattanooga operation

Also in 2012, the company made gross profit of $ 150 million in fees and interest.

Brown in 2012 siphoned off between $ 5 million and $ 8 million from another company he personally controlled


Carey Brown Advocacy Agreement



Carey Brown indictment


Used car salesman turned tech entrepreneur who operated illegal payday loan syndicate in Chattanooga to pay $ 9 million in fines and restitution, plus 250 hours of community service and three years probation, after pleading guilty of criminal usury in New York.

Carey Vaughn Brown, 57, admitted to New York prosecutors that he broke the law from 2001 to 2013 by lending millions of dollars – $ 50 million to New Yorkers in 2012 alone – with rates interest well above the 25% annual state limit. .

A Times Free Press investigation in 2011 found that Brown made loans that sometimes carried an annual interest rate of over 1,000%. Such loans were also reportedly illegal in Tennessee, although officials from the Tennessee Department of Financial Institutions never took public action against Brown.

Brown’s admission of guilt came after years of denials, prosecution of whistleblowers, and attempts to cover up his profitable web-based payday lending business by disguising it as a network of independent shell companies in Chattanooga, which has closed in 2013 after banks refused to do business. with him more.

Brown declined to comment, citing the terms of his plea agreement.

Its companies had generic names such as Terenine, Area 203, ACH Federal, and Support Seven, and did legitimate marketing and technology work for well-known businesses and non-profit organizations such as the Region’s Chamber of Commerce. by Chattanooga, Focus on the Family and Precept Ministries.

But behind the scenes, the business network was operating as a single syndicate to generate short-term, high-interest loans through websites like,, and

“It’s a horrible brand on Chattanooga, and it never should have happened,” said Chris Christiansen, the former director of architecture and infrastructure design for Terenine, one of the now closed front companies. by Brown.

Brown, along with his senior associates Joanna Temple, 60, and Ron Beaver, 57, were indicted in 2014 for conspiracy to knowingly grant payday loans at interest rates well above those allowed by New York City, as well as over three dozen heads of wear.

According to former employees, Brown has set up servers in Bermuda and other international regions in order to evade state regulations, and has even partnered with Indian tribes, which are sovereign nations under US law and not subject to state rules, for the purpose of granting loans that would otherwise be illegal under the laws of many states.

The company developed a kit of redundant servers and switches that could be deployed anywhere in the world to create a mini data center where it was needed for legal reasons, Christiansen said.

“It wasn’t designed to process most of anything except to move 1s and 0s elsewhere,” he said.

There were lots of 1s and 0s. From 2008 to 2010, companies made nearly 1.5 million loans to about 1.1 million unique customers, according to the written testimony of former COO Casey Lomber. at the FTC.

And although much of the company’s money was earned illegally, Brown operated one of the largest businesses in Chattanooga.

In 2012 alone, Brown took out about $ 500 million in loans through his Chattanooga-based company, according to the New York indictment. According to the indictment, about $ 150 million of that amount was gross profit consisting of fees and interest, of which Brown embezzled about $ 5-8 million in a company he controlled and named. Millennium Financial Concepts.

Temple – Brown’s chief legal counsel – was indicted and pleaded guilty to usury, the same crime as his client.

Communication between lawyers and their clients is generally privileged and protected against such lawsuits. But prosecutors maintained that Temple was offering “bogus advice” in direct violation of New York law, and that she was so linked to and contributed to Brown’s illegal activities that her disclosure was likely to be. disclosed.

Beaver, the chief operating officer of Brown’s companies, managed the day-to-day troubleshooting activities and was involved in all of Brown’s major business decisions, prosecutors said.

Under the terms of his plea agreement, some of the money Brown earned will be returned to his victims in New York City, according to Manhattan District Attorney Cyrus Vance.

“The defendants in this case have admitted to engaging in a scheme to grant usurious loans to New Yorkers,” Vance said in a press release. “With these guilty pleas and the creation of a compensation fund, we have taken a step towards righting the wrongs caused by some members of this exploitation industry.”

Brown’s innovative approaches to dodging regulations through technical and geographic deception have been used with varying degrees of success by many other players in the payday lending industry.

Some, however, say Brown’s example shows that following the rules is generally a better business decision. Jabo Covert, senior vice president of government affairs at Check Into Cash, fears operators like Brown could give those who try to obey the law a bad name.

“Good riddance is all I can say,” Covert said. “There are legal ways to do it online, and he chose not to. It doesn’t make sense to us why he would take such a risk and think he wouldn’t get caught.”

Covert said that while it is expensive and difficult to keep up with the network of overlapping federal, state and local rules, those who flout the law give ammunition to lawmakers and regulators who wish to introduce new, more expensive rules.

In fact, the Consumer Financial Protection Bureau is expected to release a new set of rules this summer that will crack down on payday lending across the board, industry analysts say.

“There are people who need this type of service, but quite simply, they don’t need to be taken advantage of,” said Jim Winsett, president of the Chattanooga Better Business Bureau.

Former employees familiar with Brown’s philosophy have said he justified his illegal business practices in order to fund the work of missionaries and charities around the world. He has publicly pledged to donate $ 1 billion to charity through his Covenant Values ​​Foundation, and has supported several nonprofits including the Dawson McAllister Foundation, On Point, Precept Ministries, Teen Challenge of the Mid-South and Tennessee Temple University, where he served. to the board of directors.

The bulletin boards in the Amnicola Highway building that housed Terenine, ACH Federal, and Area 203 were filled with photos of smiling children who Brown’s profits had helped, and the walls were overflowing with postcards from overseas missionaries he supported with income from its payroll sites, former employees mentioned.

Today, the Covenant Values ​​Foundation website is no longer operational. Ex-administrator Steve Steele, former senior vice president of global strategy and research at the Maclellan Foundation, could not be reached for comment.

Brown, from New York, said he was inspired as a child by friends of his parents who ran an orphanage, by the generosity of the MS Hershey Foundation and by his businesswoman grandmother, who was devoted to missionary work.

Brown attended Tennessee Temple University in his teens while living in the Chattanooga housing estates, and then started Happy Motors, a successful used car business in Rossville.

Some in Chattanooga still remember his ad: “Hey! You need money ? You need money ? Come see me, my brother! We will make you happy at Happy Motors!

Brown sold the dealership in 2007.

“I’m sure in his head he rationalized everything he did,” Christiansen said. “He taught me a valuable lesson – trust, but verify.”

Contact editor Ellis Smith with advice and materials at [email protected] or 423-757-6315.

Leave A Reply

Your email address will not be published.