Perez v. U.S.

Facts

Plaintiff was convicted of loan sharking, which violated the Consumer Credit Protection Act.  He argued that the law regulating loan sharking was unconstitutional because Congress has exceeded its interstate commerce clause authority.  He argued at trial that there was no true “interstate activity” occurring in the act of loan sharking.

Issue

Is the regulation of loan sharking a violation of the interstate commerce clause?

Holding

Yes, affirmed.  Congress provided a “rational basis” for believing that the activity they sought to regulate impacted interstate commerce.  The court held that “loan sharks who use extortionate means to collect payments on loans are in a class largely controlled by organized crime with a substantially adverse effect on interstate commerce.”   Congress was provided with reports which stated that these intrastate loan sharking activities were related to national organized crime efforts.  It was a way for the national organization to finance its interstate activities at the national level.

In regulating interstate commerce, Congress may regulate those activities which obstruct the flow of interstate commerce, such as the destruction of aircrafts; activities that impact interstate commerce, such as loan sharking; and the utilization of “channels” of commerce, such as with stolen goods.

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