South Dakota Dept. of Labor warns about unlicensed Free Lakota Bank
The South Dakota Department of Labor and Regulations is warning potential Free Lakota Bank customers that the bank is not licensed.
The Department of Labor and Regulation issued a news release Thursday stating Free Lakota Bank is not licensed, chartered or regulated by the Division of Banking. The bank also does not have FDIC insurance.
State Division of Banking Director Bret Afdahl says
According to its website www.freelakotabank.com, the customer converts his or her money to silver and deposits the silver bullion with the bank. The bank pays the customer an interest rate in silver, and the customer withdraws his deposit in silver.
If the customer agrees for his deposit to be used in the Free Lakota Bank General Development Fund, the bank will make loans with it. If the customer does not agree, the bank charges a service fee in silver.
State Division of Banking Director Bret Afdahl says the bank lists its address as a post office box in Pine Ridge, but the bank has no physical presence in Pine Ridge.
"We don't have any reason to believe that there's anything illegal or unethical going on here. It just raises some red flags that there's a chance of that and there's no way to verify that-- whether it's operating in a safe and sound matter or not," Afdahl said.
There is no publicly available information about the bank other than its website, so Afdahl says there is no other way to investigate the bank.
According to a news release from the Department of Labor and Regulation, the Division of Banking reached out to the Oglala Sioux Tribe and was told Free Lakota Bank is not licensed or connected to the tribe. The Division has also been unable to confirm Free Lakota Bank is a member of the Independent Community Bankers of America, as it claims on its website. A search of the Secretary of State's corporate database shows no results for Free Lakota Bank.
Afdahl says consumers need to do some additional investigating before making a deposit with a company that isn't regulated or insured. He says consumers should consider: who reconciles the account statements to the custodial statements and who is doing an independent audit of the institution.
"I encourage people to use caution and do their own due diligence before depositing anything with Free Lakota Bank," Afdahl said.