Under § 18-15-104 CRS, predatory loan practices such as excessive interest rates (higher than an annual rate of 45%) are considered usury and therefore prohibited in Colorado. A conviction is a felony punishable by 12 to 18 months in prison and a fine of up to $100,000.
The full language of the statute in § 18-15-104 CRS states that:
(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.
In this article, our Denver Colorado criminal defense lawyers will address:
- 1. What is usury?
- 2. What kinds of loans are illegal in Colorado?
- 3. What are the penalties for violating CRS 18-15-104?
- 4. What are the defenses?
- 5. Related Offenses
1. What is usury?
Usury involves lending money at excessive or unreasonably high rates of interest. Charging excessive consumer loan terms can be criminal usury in Colorado. This practice may also be known as
- “loan-sharking” or
- “predatory lending.”
“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 45% or the equivalent for a longer or shorter period commits the crime of criminal usury.“1
Providing the source of usurious money is also a criminal offense. Any person who provides money or property to a person with the understanding that the money may be used for engaging in this practice is also guilty of the crime.2
2. What kinds of loans are illegal in Colorado?
Some individuals may find it difficult to qualify for a personal or small business loan. Banks or lenders may be unwilling to lend money to borrowers for a variety of reasons, including
- poor credit,
- no collateral,
- a criminal history, or
- the money is going to be used for an unlawful purpose.
They may have to take out a loan with unreasonably high-interest rates in order to get the money.
Some reasons individuals resort to unreasonably high-interest loans include
- covering gambling losses,
- buying contraband, or
- paying bills to prevent losing their house or car.
In some cases, illegal loans may be taken out to pay for expensive medical bills. If those loans are taken at an extremely high-interest usury rate, the lender may be engaging in criminal usury. Usury often involves loans provided by organized crime.
Possession of records of criminal usury is also a criminal offense. Any person who possesses or hides records of criminally usurious transactions commits possession or concealment of records of criminal usury.3
3. What are the penalties for violating CRS 18-15-104?
Criminal usury and providing money for such loans is a class 6 felony in Colorado. The penalties for a conviction include 12 to 18 months in prison and a fine of up to $100,000. There is a mandatory parole period of 1 year for a class 6 felony conviction.4
4. What are the defenses?
Not all high-interest loan agreements are usurious. There are a number of affirmative defenses to criminal usury. It is an affirmative defense for a person who charges a loan finance charge in excess of 45% annually, with the terms in a signed written agreement, in the following circumstances:
- 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 the maximum rate of 45% per annum; or
- The loan finance charge was not in excess of the usury limit 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.5
Criminal usury also may not apply to
- reverse mortgages
- credit card charges not exceeding those permitted, and
- other charges or fees permitted by Colorado law.6
As long as the Colorado Attorney General cannot prove guilt beyond a reasonable doubt, the charges should be dismissed.
5. Related Offenses
Criminal usury may be related to other criminal offenses. These include white-collar crimes of money laundering, and organized crimes involving racketeering, extortion, and bribery.
5.1. Racketeering C.R.S. 18-17-104
Racketeering under the Colorado Organized Crime Act is a pattern of criminal activity generally committed by gangs or organized crime. This includes
- 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.
5.2. 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.
5.3. Extortion C.R.S. 18-3-207
Criminal extortion in Colorado 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. Penalties include
- 2 to 6 years in prison and
- a fine of up to $500,000.
5.4. Bribery C.R.S. 18-8-302
In Colorado, offering money or other benefits to a public official to influence their actions is bribery. Offering a bribe or asking for a bribe is a felony. The penalties for bribery of a public official include
- up to 12 years in prison and
- a fine of up to $750,000.
Call us for help…
If you have been accused of loan sharking or violating criminal state usury laws, please contact us at Colorado Legal Defense Group.
Also see our related article on real estate fraud.
- C.R.S. 18-15-104(1) of the Consumer Protection Code. 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)
- C.R.S. 18-1.3-401.
- C.R.S. 18-15-104(2).
- C.R.S. 18-15-104(4).