OLYMPIA, Wash. - Two payday lending companies have been hit with a record $1.2 million in penalties by a Washington state agency which also plans to revoke their business licenses.

The moves against Advance Til Payday, owned by Loren C. Gill and Daniel Van Gasken, and Zippy Cash, owned by Van Gasken, were announced Thursday by the Department of Financial Institutions.

Advance Til Payday, which has 27 stores in the state, was fined $557,800. Zippy Cash, with six stores in Washington, was fined $471,600. Both were also assessed investigative costs.

Investigators wrote that as part of the probe they also learned that Gill, who operates under the name of WCS Loans. was banned from the small loan business in Virginia in 1993, was convicted of assault in July 2005 in Pierce County and failed to disclose either action to the state as required.

The companies can request a hearing on the charges.

Efforts by The Seattle Times to reach Bill and Van Gasken were not successful, the newspaper reported Friday.

The case highlights longstanding concern over paycheck lending nationwide, especially around military bases. Pentagon officials have supported congressional efforts to limit the interest on payday loans to troops at 36 percent nationwide, and a number of states have moved to rein in the short-term, high interest loan businesses.

A Defense Department report in August estimated that 225,000 service members, 17 percent of the military, use payday loans. The Center for Responsible Lending, a nonprofit group seeking stricter controls, says that one in five service members took out such a loan in 2004 and that someone who borrows $325 pays an average of $800 in charges.

Washington state law sets the maximum amount of such loans to $700 per borrower, a limit that investigators found the two companies had violated 400 times since the probe began Oct. 16, according to a news release from the state agency.

In the department's statement of charges, the companies were accused of granting borrowers loans at different branches, often on the same day - in one case, for example, a customer borrowed $2,100 in one day by taking out $700 loans from three Advance stores.

In other cases, according to the state agency, borrowers took out several loans on the same day they paid off others, turning short-term loans into long-term debt with triple-digit interest. State law allows payday lenders to charge as much as $95 in interest fees for each $700 loan.

"The larger the amount of the loan, the more it becomes a long-term loan and a more expensive loan for the borrower," said Deb Bortner, the department's acting director of consumer services.

According to the agency, action will be taken to revoke the licenses of both businesses and to bar Van Gasken and Gill from the industry for five years.

In most payday loans, typically obtained by people of limited means who lack access to banks or credit unions, the borrower writes a postdated personal check for the loan and the lender either cashes the check or collects cash from the customer when the loan is due.

The state investigation covered the two companies' outlets in focused on company locations in Tacoma, Puyallup, Olympia, Lacey and Shelton. Borrowers whose loans violated state restrictions are entitled to at least $39,000 in refunds, according to the state.