1. Investigations

Customers say Marlin Financial’s auto loans are deceptive. Now the state is investigating

A controversial add-on to auto loans is the focus of consumer complaints across the state.

Isaiah Burgman needed $10,000, and he didn’t have much time to get it. The quickest way, the Temple Terrace resident figured, was to take out a loan against his car, and an online company helped him do just that — it even wired the cash within a few hours.

What Burgman didn’t know was that something he’d felt forced to agree to as part of the loan cost $25,000, making his debt more than $35,000. He defaulted on the loan when his monthly payments ballooned because of the extra charge, and his Jaguar was repossessed within a few weeks.

Burgman’s case isn’t unique. Marlin Financial has saddled desperate consumers with much more debt than expected, apparently breaking the law in the process, a Tampa Bay Times investigation has found.

The Times spoke with 20 Marlin customers, interviewed former employees and reviewed hundreds of pages of documents, from the company and public records from three states.

Marlin has approved loans that are larger than it is licensed to make. Its debt cancellation policy — what Burgman tried to avoid — can push its interest rates over state limits. It has failed to give customers an opportunity to take belongings from repossessed cars, and in Burgman’s case, Burgman said a company hired by Marlin hid his repossessed car from him.

For more than a year, the company has largely slipped the notice of state regulators. But after Times inquiries, Marlin is now the subject of a consumer protection investigation by the Florida Attorney General’s office.

* * *

Marlin Financial offers loans against vehicles and boats. Pictured is a screenshot of their website in 2017. (Screenshot of Marlin website, 2017)

Based on customer accounts, according to experts who reviewed the Times’ findings, Marlin would be in clear violation of state law. Lenders are required to tell people where their cars are being held and give them an opportunity to take their belongings.

Marlin’s site does not list fees for loans as annual percentage rates. Federal law requires this to help consumers avoid confusion and compare apples to apples.

But the biggest violation could center on the policy that Burgman and others purchased.

Contacted through its lawyer, Marlin declined to answer questions about its business practices and would only address questions about specific cases. As of Friday morning, it had not responded to questions about Burgman’s case.

Burgman said he paid attention to the fine print in his agreement with Marlin, and one section required him to either “elect to purchase the debt cancellation product” or decline it.

He didn’t immediately understand what was being offered and sought clarification from a Marlin representative. Apparently, the policy would cover any remaining debt should his car be totalled while he was paying off the loan.

Burgman, whose car was already insured, told the representative that he didn’t want to purchase the agreement and selected “I decline” on the online form. The online contract immediately shut down. He opened it again, redid the form and again declined debt cancellation. It shut down again. Despite the form stating that debt cancellation “is not required to obtain credit” from Marlin, Burgman literally couldn’t complete the loan process.

After several attempts, he agreed to debt cancellation because he was pressed for time.

Isaiah Burgman's debt cancellation policy cost $25,000. Pictured are the terms of the product in Burgman's contract, filed as an exhibit in his lawsuit against Marlin. (Excerpt from Isaiah Burgman's lawsuit)

This is the crux of at least a dozen lawsuits across the state against Marlin. While the Miami lender says debt cancellation is optional, in practice, customers say it is required.

Burgman hired St. Petersburg lawyer Michael Brundage to help get his repossessed car back. Brundage said four other clients he is working with also were required to sign up for debt cancellation if they wanted a loan. Two more Marlin customers told the Times the same thing happened to them.

“This isn’t right,” St. Petersburg resident Amy Friedman said about her experience with Marlin. Friedman’s daughter, who was in college at the time, had taken out a loan with Marlin for about $2,000, which ballooned to nearly $10,000 with the debt cancellation. Friedman didn’t know about the loan until her daughter’s car was repossessed following a missed payment.

Amy Friedman's (left) daughter, Lia Friedman (right), took out a loan with Marlin Financial for much more than her daughter anticipated. Pictured are the two posing for the younger Friedman's graduation in 2018. (Courtesy of Amy Friedman, 2018)

If debt cancellation is truly not optional, experts said, Marlin’s interest rates are greater than the state allows. With the type of lending license that Marlin has — a consumer finance license — the maximum interest rate it can charge involves a calculation: 30 percent on the first $3,000 of the loan, 24 percent on the next $1,000 and 18 percent on everything after that up to $25,000.

For Burgman’s $10,000 loan, that means his interest rate should be capped at 22 percent, within the legal limits. Instead, when adjusted to include debt cancellation, Burgman’s interest rate balloons to just over 66 percent.

On average, Marlin customers whose contracts the Times reviewed have debt cancellation that costs 125 percent of their loan, effectively doubling their original borrowed balance. At least three of those loans totalled above the maximum of $25,000 Marlin’s license allows.

“All the debt cancellation products (I’ve seen) have been very low-value and are usually a waste of the customer’s money,” said Christopher Peterson, a law professor at the University of Utah and former senior counsel for enforcement policy and strategy at the Consumer Financial Protection Bureau.

The way customers should measure the value of such a product, he said, is by its “payout ratio” — the money a customer pays in premiums compared to what the company would pay out in claims. Life insurance, for example, has a particularly high payout ratio. That’s not the case for debt cancellation.

The average amount for Marlin’s debt cancellation also sets it apart. According to Lynn Drysdale, a lawyer at Jacksonville Legal Aid, debt cancellation is generally priced much lower, in the hundreds of dollars.

And, typically, add-on products like this are offered by a different company than the firm handling the loan, Drysdale said. When a customer buys in, the lender gets a cut of the money and the rest goes to the company offering the add-on.

But Marlin’s is an in-house offering, which means customers are effectively paying the same company twice.

Peterson said the company’s practices would have triggered an investigation at the Consumer Financial Protection Bureau during his tenure.

* * *

Marlin first came to Florida in 2015. Its website says it serves the state’s biggest metro areas with “convenient branches” in Tampa, Orlando and Miami and employees who have “spent years in the lending industry.” The only officer listed for the company is Jeremy Tolan, who, business records show, has been associated with various Miami addresses.

But the picture of friendly looking staff on Marlin’s “about us” page is an iStock photo. Its president, Tolan, appears to own no property nor has any voting record in the state. One of the addresses listed on Marlin contracts for Tolan is the old residence of the company’s former chief operating officer.

Marlin Financial's "about" section mentions its staff, but the accompanying picture is an iStock photo. (Screenshot of Marlin Financial's website, 2018)

The website shows an Orlando office and previously listed a Tampa office, but neither is maintained by Marlin anymore. The Tampa building’s owner, Fred Lay, remembers seeing Marlin’s name on a lease before he bought the building in April 2016, but he said the company had moved out by the time he took over.

Marlin’s only physical presence in Florida is a small suite in a high-rise office building in downtown Miami. It still occupies that location as of this month. In late December 2017, when the Times visited, a painting of a purplish-blue Marlin fish was propped up on a table against the wall, the sole decoration in the white tiled space. It had just two desks and a table in a meeting space separated by a glass wall on the far side of the room.

Marlin Financial's Florida office is a suite in a downtown Miami building. Pictured is the outside of that suite in December 2017. (Malena Carollo | Times, 2018)

Geronima Medina, who identified herself as the office manager, was the only employee there that day. She described Marlin as an “online company” with its headquarters in the Miami office and a location in Chicago that handled “back-end work,” she said.

She said she didn’t know how many customers the company had and would not disclose the names of the owners. But she did say her days were fast-paced.

“It’s very busy,” she said. “We’re growing significantly.”

* * *

Much of that business happens in Northbrook, Ill., at 1500 Skokie Blvd.

Jeremy Tolan is listed as an officer or registered agent for two companies in the building. Two more companies list the building as the address for their registered agent — Joshua Tolan, Jeremy’s brother. An early incarnation of Marlin listed Peter Pocrnich as a contact; he, too, lists the Illinois building as his address for a company at which he is an officer. Richard Tolan, the Tolan brothers’ father, lists the building as his officer address for another company.

Pocrnich and Richard Tolan’s business relationship dates to at least 2010, court records show, when Tolan was president of EZ Loan Lookup Inc., a company Pocrnich started. EZ Loan Lookup, while dissolved by the state of Illinois in 2012, has an active website that requires potential borrowers to agree to receive information on other products and services from “Ez Solutions.” That company, too, is headquartered at 1500 Skokie Blvd., and Joshua Tolan is listed as an officer. His address on the company’s business forms is a home owned by his father, property records show.

At least two Marlin customers told the Times they were referred to the company by, and it is referenced in at least one lawsuit filed against Marlin. was ordered to stop doing business in California in 2011 by the state’s Business Transportation and Housing Agency because it was not properly licensed for the type of auto loans it was making.

* * *

Complaints against Marlin aren’t the first consumer credit business issue for a member of the Tolan family. In the early 2000s, Richard Tolan and his business partner, Fallean Mintz, operated a business that regional telecom BellSouth said defrauded it of millions of dollars.

Here’s how BellSouth said it worked: Tolan and Mintz bought companies that resold phone service from the regional Bell telecom and got service on credit from the local Bell, several lawsuits show. Then, they sold pre-paid services for cash to low-income people with bad credit and didn’t pay back the Bell company. They operated across eight states, collecting about $25 million, according to Ronald Peterson, bankruptcy trustee in the cases that had been filed by Tolan and Mintz.

In an August 2007 permanent injunction, a federal court in Georgia found that Tolan and Mintz had engaged in a scheme to defraud BellSouth. They failed to respond on time to defend the case.

During the process, a bankruptcy court denied them relief from their debt, an instance that Peterson said is “extraordinary.”

“It’s as rare as a blue moon on a leap year,” he said.

The bankruptcy trustee’s investigation found Tolan had ordered an employee to hide assets and wipe the company’s hard drives in anticipation of the bankruptcy trustee coming to assess the business.

“We came in there on a raid, and you could tell from the patterns on the carpeting that they had removed furniture,” Peterson said. “When we got to the computers, all the computers had been purged.”

In a three-page opinion, Judge A. Benjamin Goldgar did not mince words:

“The evidence in this case as a whole showed that for these men, truth is a fluid concept, one that ebbs and flows to suit the needs of the moment,” the judge wrote. “Continually they quibble, split hairs and play games until at last they’re cornered. Then they either plead ignorance or, blaming others, complain they are being mistreated or misunderstood.”

* * *

As for Marlin, the Florida Office of Financial Regulation, which licenses lenders, said it received 12 complaints against the company in the past four years. The Florida Attorney General’s office received 19.

The Better Business Bureau recorded 32 complaints against Marlin’s Florida operation. On the bureau’s website, there is a warning on its page for Marlin about an identified pattern of complaints, specifically that consumers who took out loans with Marlin discovered their debt “had significantly increased,” sometimes doubling the initial loan amount. Marlin responded to the warning in May saying it offers a pro-rated amount for the debt cancellation in the case of default, and the company also insisted that the debt cancellation is optional.

The Florida Attorney General told the Times in late July that there is an active investigation into Marlin that opened in November 2017. Beyond confirming an active investigation into the company, spokeswoman Kylie Mason said the agency does not comment on current cases.

Of the dozen known cases filed against Marlin by its customers, none have gone to trial.

All have been forced into arbitration by a clause in Marlin’s contract, which also limits the choice of arbitrators to two pre-selected organizations.

In Isaiah Burgman’s case, his lawyer said, they are waiting on Marlin.

Times senior news researcher John Martin contributed to this report.