CHARLESTON, W.Va. -- State Attorney General Darrell McGraw announced Wednesday that his office will be doling out $135,000 to West Virginia borrowers who were reportedly victimized by a South Dakota-based payday lender.

On Oct. 10, one day before a contempt hearing before Kanawha County Circuit Judge Duke Bloom, Payday Financial owner Martin A. Webb signed an agreement with the attorney general's office in which he will pay back $135,000 to 120 West Virginians and never do business in the state again.

Webb also agreed to pay a $5,000 penalty to the attorney general, which McGraw said will go toward "general consumer protection and other educational purposes," according to a press release issued Wednesday afternoon.

McGraw's office has been targeting the payday lender, which also does business under the name Lakota Cash, since 2005. State investigators have found that company was charging customers interest rates as high as 780 percent. State laws cap the maximum interest rate lenders can charge at 18 percent.

Webb, a member of the Cheyenne River Sioux Tribe, was accused of using his tribal status as a loophole to circumvent state lending laws. The U.S. government considers Native American tribes sovereign entities, meaning that they generally can't be sued.

Last year, Bloom found that Webb's company was organized under the laws of South Dakota and not a tribal entity. Webb could not prove that Lakota Cash operated for the profit of his Sioux tribe, as opposed to his own individual profit, the judge found.

Based on his findings, Bloom ordered Webb to comply with the AG's investigative subpoena.

Reach Zac Taylor at Zachary.Tay...@wvgazette.com or 304-348-5189.