NCJ Number
51183
Date Published
1978
Length
308 pages
Annotation
CONTEMPORARY LOANSHARKING IS DISCUSSED IN TERMS OF ITS ORIGINS, EFFECT, METHODS OF OPERATION, AND LAWS. PROBLEMS INVOLVING THE PROTECTION OF WITNESSES, WITNESS FEAR, AND OBTAINING LOANSHARK RECORDS ARE ALSO DISCUSSED.
Abstract
DUE TO ITS INHERENT PROFITABILITY AND ITS POTENTIAL FOR SUPPORTING OR FACILITATING OTHER ILLICIT ACTIVITIES, LOANSHARKING IS DOMINATED BY ORGANIZED CRIME. LOANSHARKING EXISTS BECAUSE THERE IS A DEMAND FOR SUCH SERVICES DUE PARTLY TO LEGALLY IMPOSED INTEREST-RATE CEILINGS THAT PRECLUDE LEGAL LENDERS FROM SATISFYING THE DEMAND OF HIGH RISK BORROWERS. THREATS OF VIOLENCE, RATHER THAN ACTUAL VIOLENCE, PROTECT THE FINANCIAL INTERESTS OF THE LOANSHARK SINCE BORROWERS CAN REPAY THEIR LOANS ONLY IF THEY REMAIN ALIVE AND WORKING. LOANSHARKS OFTEN INFILTRATE BUSINESSES IN SATISFACTION OF A BUSINESSMAN'S DEBT FOR THE FOLLOWING FOUR REASONS: TO OPERATE IT AS A FRONT, TO OBTAIN SERVICES AND CONCESSIONS THROUGH OPERATING A LEGITIMATE BUSINESS, TO SEND THE COMPANY INTO BANKRUPTCY THUS DEFRAUDING THE COMPANY'S CREDITORS, AND TO SKIM THE COMPANY'S PROFITS. THERE IS A SMALL BUT GROWING BODY OF STATE AND FEDERAL SUBSTANTIVE LAW ADDRESSING THE PROBLEM OF LOANSHARKING; SOME LAWS PROHIBIT EXTORTIONATE LOANS AND COLLECTION PRACTICES, WHILE OTHER PROVISIONS ARE AIMED AT THE CRIMINAL HIERARCHY THAT FINANCES AND PROFITS FROM ILLEGAL CREDIT TRANSACTIONS. EXTORTIONATE LAWS FORBID THE EXTENSION OF CREDIT THAT IS BASED ON AN UNDERSTANDING BETWEEN THE CREDITOR AND THE DEBTOR THAT NONPAYMENT COULD RESULT IN THE USE OF VIOLENCE. ALTHOUGH WITNESSES IN ALL TYPES OF CASES COMMONLY EXPERIENCE FEAR, THIS FACTOR IS MAGNIFIED IN CASES INVOLVING VIOLENCE-RELATED CRIMES SUCH AS LOANSHARKING AND EXTORTION. COURTS HAVE RESPONDED TO THE PROBLEM OF WITNESS AND INFORMANT FEAR THROUGH A CLUSTER OF INTERRELATED RULES AND LAWS, AND TORT LAW IMPOSES A DUTY ON THE GOVERNMENT TO PROVIDE REASONABLE PROTECTION FOR INFORMANTS AND WITNESSES. HOWEVER, THE PROBLEMS OF ATTEMPTING TO OBTAIN PROOF FROM FRIGHTENED WITNESSES PERSIST AND SANCTIONS FOR CONTEMPT AND PERJURY OFTEN RESULT IN PUNISHING THE WRONG PARTY WHILE THE PRIMARY DEFENDANT GOES FREE. LOANSHARK RECORDS CAN ESTABLISH THE EXISTENCE OF CREDIT TRANSACTIONS, REVEAL THE LEVEL OF INTEREST CHARGED, AND IDENTIFY CUSTOMERS WHO MAY ACT AS WITNESSES FOR THE PROSECUTION. LOANSHARKS, HOWEVER, OFTEN ENTER TRANSACTIONS ON ONLY A FEW SHEETS OF PAPER ALLOWING FOR EASY DISPOSAL IN CASE OF POLICE CONTACT. THE LEGISLATIVE HISTORY OF THE VARIOUS FACTORS INVOLVING LOANSHARKING IS PRESENTED. APPENDIXES CONTAIN CHARTS OF STATE LOANSHARKING AND EXTORTION STATUTES, AND A BIBLIOGRAPHY IS PRESENTED. (KJM)