CALIFORNIA : First Alliance Agrees to Settle Fraud Complaint

First Alliance Corp. has agreed to pay up to $550,000 to settle a consumer fraud complaint filed last year by the Minnesota attorney general’s office, settling one of several pending lawsuits and investigations regarding the company’s lending practices, officials said Tuesday.

Irvine-based First Alliance will offer refunds to about 100 Minnesota borrowers, who were allegedly misled about what kind of loans they were receiving and how much they would pay in fees.

Under terms of the settlement, which is subject to court approval, the company admitted no wrongdoing. Executives blamed the problem on a single loan officer in Minnesota who is no longer employed by the company.

“We feel very good about this,” said Francisco Nebot, chief financial officer at First Alliance. “This is an important first step.”

Nebot said the company also hopes to settle other actions regarding its lending practices in Massachusetts and Illinois and continues to cooperate with a federal probe led by the Justice Department.

A spokeswoman for the Minnesota attorney general’s office had no comment on the settlement.

As part of the agreement, certain borrowers in Minnesota will be offered refunds of about $4,000 each, plus an extra $2,000 for loan fees in the event that the borrowers wish to move their loan to another company, said Harry Hager, general counsel at First Alliance.

First Alliance also agreed to pay about $48,000 in investigation expenses incurred by the attorney general’s office.

The lender also vowed to begin using a special disclosure form for its Minnesota customers that highlights information about loan fees.