## Facts

- Alcides Perez made high-interest cash loans to a New York butcher shop owner and escalated repayment demands beyond the original terms.
- Perez enforced repayment through threats implying serious physical harm, causing the borrower to continue paying out of fear and ultimately to sell his business.
- Perez’s lending and collection conduct occurred entirely within New York, and no specific interstate transaction was shown in his dealings.
- Perez was charged and convicted by a jury of using extortionate means to collect or attempt to collect extensions of credit under Title II of the Consumer Credit Protection Act of 1968 (18 U.S.C. §§ 891–894).
- The Second Circuit affirmed the conviction with one dissent, and the Supreme Court granted review to address Congress’s Commerce Clause authority as applied to this intrastate conduct.

## Issues

1. Whether Congress may, under the Commerce Clause, regulate and criminalize purely intrastate “extortionate credit transactions” based on findings that such activity, in the aggregate, substantially affects interstate commerce.

## Decision

- The Supreme Court affirmed Perez’s conviction.
- The Court held that Title II is a valid exercise of Congress’s Commerce Clause power as applied to local loansharking.
- Congress had a rational basis to find that extortionate credit transactions, as a class, are substantially connected to organized crime and substantially affect interstate commerce.
- A dissent argued the statute impermissibly federalized a local crime and lacked a meaningful limiting principle for federal criminal jurisdiction.

## Legal Principles

- Congress may regulate intrastate activity that substantially affects interstate commerce when the activity is assessed as a class and in the aggregate.
- Once Congress validly regulates a class of activities within its commerce power, courts will not carve out individual local instances as exempt based solely on their intrastate character.
- The judicial inquiry is whether Congress had a rational basis for concluding the regulated class affects interstate commerce and whether the chosen means are reasonably related to a constitutionally permitted end.
- Broad congressional findings tying a category of criminal conduct to nationwide organized crime may support federal regulation even absent case-specific proof of an interstate nexus.

## Conclusion

The Court upheld federal regulation of local extortionate credit collection, reasoning that Congress could rationally treat loansharking as part of a class of activities that finances organized crime and, in the aggregate, substantially burdens interstate commerce.


Perez v. United States, 402 U.S. 146 (1971)