Payday loans, Gina Raimondo, and what they have in common

Jun 20, 2012

Although state treasurer Gina Raimondo has criticized payday loans as a “predatory product,” two of her political associates have links with a check-cashing business that has offered payday loans.

Warwick lawyer Joe Shekarchi managed Raimondo’s 2010 campaign, led her transition team, and remains a confidante of the treasurer. Shekarchi is listed in a state record as the business agent for Ocean State Check Express, on River Street in Providence, which has offered payday lending. State records show Ocean State Check Express is owned by the parents of Jackie Baginski, who recently signed on as a fundraiser for Raimondo.

Ocean State Check Express is a small player in the payday lending business in Rhode Island. According to records from the state Department of Business Regulation, it offered by far the fewest payday loans of five companies offering that service in 2009 and 2010, the most recent figures available.

Shekarchi says he wasn’t aware that Ocean State Check Express offered payday loans, and he calls the legal work he’s done for the company – on a zoning case, he says — a non-issue in terms of Raimondo’s criticism of payday lenders. “My private clients who I represent have no connection with the treasurer whatsoever,” Shekarchi says.

Baginski didn’t respond to a phone message and an e-mail seeking comment. (Before signing on as a fundraiser for Raimondo, Baginski worked for Engage RI, the pro-pension overhaul group that was created with Raimondo’s encouragement.)

Raimondo spokeswoman Joy Fox declined to directly comment on whether the links of two Raimondo associates with Ocean State Check Express raise any concerns for the treasurer. “The Treasurer believes that Rhode Island should not permit the sale of a financial predatory product such as payday lending that traps so many customers in a cycle of debt,” Fox said in a statement.

The connections are nonetheless noteworthy because of the treasurer’s sharp criticism of payday lending. She became a vocal member this year of the coalition that unsuccessfully sought to sharply lower the APR of up to 260 percent charged by payday lenders in Rhode Island.

DBR records show Ocean State Check Express offered 357 payday loans in 2009, and 173 in 2010, equaling $92.916 in loans in 2009 and $43,129 in 2010. That’s a drop in the bucket compared to Rhode Island’s top payday lender, Advance America, which made 80,146 payday loans in 2009 (good for more than $28 million in loans) and 92,769 in (more than $34 milion).

Margaux Morisseau, director of the, Rhode Island Payday Lending Reform Coalition, says she was surprised to learn that two of Raimondo’s political associates have connections with a company that has offered payday loans.

Morisseau adds: “Treasurer Raimondo has been nothing but helpful and was willing to be on the record over and over again,” in criticizing payday lending. “There was not at any point where I doubted her support.”

Although the bill to cap the ability of payday lenders in RI to charge the equivalent of triple-digit annual interest rates attracted support from many lawmakers, it died in the recently ended legislative session; the coalition of critics was unwilling to support a compromise they called unsatisfactory. Some observers suspect the outcome was related in part to the lobbying clout of Advance America, which employs former House Speaker William Murphy.

Meanwhile, the US Small Business Administration presented a 2011 award for entrepreneurial excellence to Joe and Brenda Baginski, the owners of Ocean State Check Express. The citation reads in part:

The Baginskis launched their journey into entrepreneurship in 1990 when they purchased a small factory and opened a costume jewelry company. That firm eventually employed 50 people before the jewelry businesses evaporated in the United States and drifted offshore, mainly to Asia. The factory closed in 1998. That same year Joe and Brenda opened a check-cashing business in a small office at the front of the factory.

That check-cashing business once handled about $15 million annually. Those were the days before electronic transfers and the direct deposit of payroll and government payments. Joe believes that the check-cashing business will go away, much like the jewelry industry in America.