CRS 18-15-102 – Extortionate Extension of Credit (Loan Sharking) in Colorado

In Colorado, making an extortionate loan is a criminal offense. An extortionate extension of credit uses the threat of force or harm to enforce collection of the loan, also known as loan sharking. Using extortionate means to collect on a loan is a felony offense in Colorado, with penalties including 2 to 6 years in prison and a fine of up to $500,000.

The language of CRS 18-15-102 reads as follows:

Any person who makes any extension of credit in any amount regardless of the loan finance charge with respect to which it is the understanding of the creditor and the debtor at the time it is made that delay in making repayment or failure to make repayment will result in the use of extortionate means of collection is guilty of extortionate extension of credit, which is a class 4 felony.

In this article, our Denver Colorado criminal defense lawyers will address:

• 1. Definition of extortionate extension of credit
• 2. Penalties
• 3. How does the prosecutor prove the loan was extortionate?
• 4. Related Offenses

1. Definition of extortionate extension of credit

Any person who makes an extension of credit in any amount with the understanding that delay or failure to make payments will result in extortionate means of collection is guilty of a criminal offense.¹

An extortionate extension of credit is a loan, where failure to pay the loan on time could lead to threats, physical harm, damage to property, or other punishments. This is also called loan sharking. Borrowers may need access to money to fund gambling or pay for illegal products or services, and generally, cannot go to the bank to get a loan. Extortionate lending is often related to organized crime.

Extortionate means could include threats of violence to the borrower or their family, taking property without authority, or even imposing unreasonable fees that the borrower may never be able to repay. Extortionate means may also include blackmail, threatening to reveal compromising photos or socially damaging information.²

In some cases, people refer to someone who provides extortionate extensions of credit as a loan shark. Loan sharks may offer loans charging excessive or extremely high interest rates. The borrower may be threatened with violence or other extortionate means if they do not pay off the loan.

2. Penalties

The penalties for extortionate extensions of credit or providing money for extortionate loans is a class 4 felony in Colorado. The penalties for a conviction of criminal usury include 2 to 6 years in prison and a fine of up to $500,000. There is a mandatory parole period of 3 years for a class 4 felony conviction. You can find out more information on the differences between a felony and a misdemeanor here.

Extortionate loans may also be a federal offense. Under 18 U.S.C. 892, making extortionate extensions of credit is a federal crime, punishable by up to 20 years in prison and a fine.

3. How does the prosecutor prove the loan was extortionate?

A prosecutor may presume an extension of credit was extortionate, or loan sharking, depending on a number of factors. Extortionate loans may be presumed where:

• The loan was made with a finance charge in excess of 45% annually;
• At the time of the loan, the borrower reasonably believed that the loan had been collected or attempted to be collected by extortion or punishment for nonpayment; or
• The total of the credit extended by the creditor exceeded $100.³

If there is evidence of other similar loans, it may be used to establish the reasonable belief that the borrower believed the defendant may engage in extortionate means.⁴

4. Related Offenses

Extortionate extensions of credit may be related to other criminal offenses. These include white-collar crimes of money laundering, and organized crimes involving racketeering, extortion, and criminal usury.

Racketeering C.R.S. 18-17-104

Colorado law defines racketeering as a pattern of criminal activity generally committed by gangs or organized crime. This includes gambling, loan-sharking, fencing stolen property, or drug distribution. Racketeering is a felony, with penalties including up to 24 years in prison and a fine of up to $1 million.

Money Laundering C.R.S. 18-5-309

Money laundering involves moving money around to try and evade the government’s ability to track the source of the funds. Money laundering may be used to hide money that was embezzled from an employer. Money laundering is a class 3 felony in Colorado, and the penalties include 4 to 12 years in prison and fines of up to $750,000.

Extortion C.R.S. 18-3-207

Criminal extortion is threatening someone in order to get that person or another to do something or refrain from doing something, against their will. Extortion is commonly called “blackmail.” Extortion is a class 4 felony in Colorado. Penalties include 2 to 6 years in prison and a fine of up to $500,000.

Criminal Usury C.R.S. 18-15-104

In Colorado, excessive loan rates or using predatory loan practices may be criminal usury. Criminal usury is a class 6 felony in Colorado, with penalties including 12 to 18 months in prison and a fine of up to $100,000.

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