New York Penal Law § 190.40: Criminal Usury in the Second Degree

Section 190.40 of the New York Penal Law defines the crime of criminal usury in the second degree. This offense is a serious felony that involves charging an excessive rate of interest on a loan or other extension of credit. Under this section of the law, a person is guilty of criminal usury in the second degree when they charge an interest rate of more than 25% per year on a loan or other extension of credit. This rate is considered excessively high and is illegal under New York law.

The statute applies to a wide range of financial transactions, including loans, lines of credit, and other forms of credit agreements. It also covers transactions involving goods or services where payment is deferred, such as rent-to-own contracts.

To prove the crime of criminal usury in the second degree, the prosecutor must demonstrate that the accused knowingly charged an excessive interest rate, with the intent to evade New York's usury laws. This means that the accused must have been aware that their actions were illegal and that they intentionally disregarded the law.

It is important to note that the crime of criminal usury in the second degree is distinct from civil usury, which involves charging an excessively high interest rate on a loan, but is not considered a criminal offense. Civil usury is handled through the courts and typically results in the lender being required to repay the excess interest charged.

People v. Hackett, 155 A.D.3d 1331 (3d Dept. 2017). In People v. Hackett, the defendant was the owner and operator of a check-cashing business. He was charged with criminal usury in the second degree under New York Penal Law § 190.40 for charging customers interest rates that exceeded the legal limit of 25% per year. The prosecution presented evidence that the defendant had charged interest rates ranging from 30% to 35%, which exceeded the legal limit. The defendant argued that the fees charged were for check-cashing services and not interest. He also argued that he had relied on the advice of his attorney in setting the fees.

However, the court held that the fees charged by the defendant constituted interest under the statute, as they were a percentage of the amount of the check cashed. The court also found that the defendant had knowingly charged interest rates that exceeded the legal limit. The court rejected the defendant's argument that he had relied on the advice of his attorney and upheld his conviction for criminal usury in the second degree. The court noted that the defendant had engaged in a pattern of charging excessive interest rates, which had resulted in significant profits for his business. The court also noted that the defendant had previously been convicted of similar offenses in other states. The defendant was sentenced to 1 year in jail, with the sentence suspended, and 5 years of probation. He was also ordered to pay restitution to his customers.

1. Misconduct by corporate official: New York Penal Law section 190.35
2. Criminal usury in the first degree: New York Penal Law section 190.42

As a class E felony, the maximum sentence for criminal usury in the second degree is up to 4 years in prison. In addition to imprisonment, a person convicted of criminal usury in the second degree may also be ordered to pay fines and restitution to victims of the offense. The amount of the fine may be up to $5,000 or double the amount of the interest charged, whichever is greater. Restitution may include the return of any property or assets obtained through the commission of the offense.

A person is guilty of criminal usury in the second degree when, not being authorized or permitted by law to do so, he knowingly charges, takes or receives any money or other property as interest on the loan or forbearance of any money or other property, at a rate exceeding twenty-five per centum per annum or the equivalent rate for a longer or shorter period. Criminal usury in the second degree is a class E felony.

If you are charged with criminal usury in the second degree, the first thing you should do is seek the assistance of an experienced New York criminal lawyer. It is essential to remember that criminal usury charges are serious offenses that carry severe penalties if convicted. Your attorney will help you understand the charges against you and the potential consequences of a conviction. They will also guide you on how to proceed, including how to respond to any questions from law enforcement or other authorities. Contact Stephen Bilkis & Associates at 800.696.9529 to schedule a free, no obligation consultation regarding your case. We represent clients in the following locations: Nassau County, Queens, Bronx, Brooklyn, Long Island, Manhattan, Staten Island, Suffolk County, and Westchester County.