Colorado Revised Statute § 18-15-104 C.R.S. makes it a crime to commit usury, which is predatory loan practices at excessive interest rates of higher than a 45% annual rate. A conviction is a class 6 felony punishable by:
- 12 to 18 months in prison (plus 1 year of mandatory parole) and
- A fine of $1,000 to $100,000.
In this article, our Denver criminal defense lawyers will address the following key issues regarding Colorado usury laws:
- 1. Elements of C.R.S. 18-15-104
- 2. Why Usury Happens
- 3. Defenses
- 4. Related Offenses
- Frequently Asked Questions
- Additional Reading
1. Elements of C.R.S. 18-15-104
For you to be convicted of criminal usury in Colorado, the state attorney general must prove beyond a reasonable doubt that you knowingly charged, took, or received any money or other property as a loan finance charge where the charge exceeded an annual percentage rate of 45%.1
This practice of lending money at unreasonably high rates of interest may also be known as:
- “loan-sharking” or
- “predatory lending.”
Note that it is also a Colorado crime to provide money or property to a person with the understanding that the funds may be used for engaging in usury.2 Even possessing or hiding records of criminally usurious transactions is a crime.3
2. Why Usury Happens
Some people struggle to qualify for a personal or small business loan due to:
- poor credit,
- no collateral, and/or
- a criminal history.
These people may have to take out a loan with unreasonably high-interest rates in order to get the money. Often the purpose of taking these loans is to:
- cover gambling losses,
- buy contraband,
- pay expensive medical bills, and/or
- pay bills to prevent losing their house or car.
Usury often involves loans provided by organized criminal syndicates.
There are several affirmative defenses to criminal usury.
3. Defenses
Here at Colorado Legal Defense Group, we have represented countless people charged with white-collar crimes such as usury. In our experience, if you have a signed written contract, your C.R.S. 18-15-104 charge should be dismissed if the court finds that either:
- At the time of making the loan finance charge, it could not have been determined that the annual percentage rate would exceed 45% a year; or
- The loan finance charge was not in excess of 45% a year when the rate of the finance charge was calculated on the unpaid balance of the debt on the assumption that the debt is to be paid according to its terms and is not paid before the end of the agreed term.4
Criminal usury charges should also be dropped in cases involving:
- reverse mortgages,
- credit card charges not exceeding those permitted, and
- other charges or fees permitted by Colorado law.5
4. Related Offenses
- Racketeering under the Colorado Organized Crime Act (C.R.S. 18-17-104) – A pattern of criminal activity generally committed by gangs or organized crime. This includes gambling, loan-sharking, fencing stolen property, or drug distribution.
- Money laundering (C.R.S. 18-5-309) – Moving money around to try to 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.
- Extortion (C.R.S. 18-3-207) – 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.”
- Bribery (C.R.S. 18-3-302) – Offering money or other benefits to a public official to influence their actions.
Not all high-interest loan agreements are usurious under C.R.S. 18-15-104.
Frequently Asked Questions
What interest rate makes a loan illegal in Colorado?
In Colorado, charging more than 45% annual interest rate on a loan is considered criminal usury, which is a class 6 felony. This law is designed to protect borrowers from predatory lending practices.
What are the penalties if I am convicted of criminal usury in Colorado?
Criminal usury is a class 6 felony in Colorado. If convicted, you face 12 to 18 months in prison plus one year of mandatory parole, and fines ranging from $1,000 to $100,000.
Can I be charged with usury even if I did not directly make the loan?
Yes, Colorado law makes it illegal to provide money to someone knowing they will use it for usury, and even possessing or hiding records of criminally usurious transactions is a crime.
What defenses are available if I am charged with criminal usury?
Key defenses include showing that at the time of the loan, it couldn’t be determined the rate would exceed 45%, or that when calculated properly on the unpaid balance, the rate didn’t exceed 45%. These defenses require a signed written contract submitted to the court at least 10 days before trial.
Additional Reading
For more in-depth information, refer to the following scholarly articles:
- The International Crime Of Usury: The Third World’s Usurious Foreign Debt – Crime and Social Justice.
- Usury – California Law Review.
- Interest Rates and the Law: A History of Usury – Arizona State Law Journal.
- Cryptocurrency or usury? Crime and alternative money laundering techniques – European Journal of Law and Economics.
- A Study on the Regulation of the Crime of Usury in the View of the Current Criminal Code – Review of Law and Social Studies.
Legal References
- C.R.S. 18-15-104 – Engaging in criminal usury:
(1) Any person who knowingly charges, takes, or receives any money or other property as a loan finance charge where the charge exceeds an annual percentage rate of forty-five percent or the equivalent for a longer or shorter period commits the crime of criminal usury, which is a class 6 felony.
(2) It is an affirmative defense to criminal usury for a person, or his agent or assignee, who charges, takes, or receives money or property as a loan finance charge in excess of an annual percentage rate of forty-five percent in either of the following circumstances:
(a) That at the time of making the loan finance charge it could not have been determined by a mathematical computation that the annual percentage rate would exceed an annual percentage rate of forty-five percent;
(b) That the loan finance charge was not in excess of an annual percentage rate of forty-five percent when the rate of the finance charge was calculated on the unpaid balance of the debt on the assumption that the debt is to be paid according to its terms and is not paid before the end of the agreed term.
(3) The affirmative defenses referred to in subsection (2) of this section shall only apply when the provisions relating to the loan finance charge are set forth in a written agreement signed by all the parties and such written agreement is submitted to the court and the district attorney at least ten days prior to trial.
(4) This section shall not apply to:
(a) Charges and fees permitted by articles 1 to 6 of title 5, C.R.S., or charges and fees that are similar to such charges and fees and are specifically authorized by law;
(b) Credit card charges and fees not exceeding those permitted for consumer transactions under articles 1 to 6 of title 5, C.R.S., when imposed upon or collected from a person or in a transaction not subject to said provisions;
(c) A reverse mortgage as defined in section 11-38-102, C.R.S.; and
(d) Additional interest charges permitted by section 5-12-107 (3), C.R.S.See, for example, Haugen v. Western Fed. Sav. & Loan Ass’n (Colo. App. 1981) 633 P.2d 497. - C.R.S. 18-15-106. See, for comparison: David Lazarus, Column: California’s usury law caps loan rates. Bizarrely, most lenders are exempt, Los Angeles Times (July 30, 2021): Department of Banking & Insurance, New Jersey; Department of Financial Institutions – state interest rates, Utah; N.Y. Penal Law § 190.4.
- C.R.S. 18-15-108. See also: 12 U.S.C. 85/National Bank Act (federal law). See also Smiley v. Citibank (U.S. Supreme Court, 1996) 517 U.S. 735. See also the OCC. See also Colorado Uniform Consumer Credit Code. See also Meade v. Marlette Funding, LLC (District Court of Colorado, Denver, 2018) Civil Action No. 17-cv-00575-PAB-MJW (re. valid-when-made doctrine).
- C.R.S. 18-15-104.
- C.R.S. 18-15-104.