KC Payday Lenders Scott Tucker and Richard Moseley Sr. Charged With Federal Crackdown
Two Kansas City-area payday lenders long accused of charging outrageous interest charges are now facing federal charges – and demanding they give the government billions of dollars in business proceeds.
The indictments against Richard Moseley Sr., 68, and Scott Tucker, 53, a professional racing car driver, were released in New York on Wednesday after the two men were arrested in the Kansas area. City.
The men separately operated numerous payday loan companies that charged high interest rates and misled customers nationwide about how much they should repay on the loans, officials said.
Tucker alone would have been exploited over 4.5 million people while earning interest ranging from 400% to 700%, according to the indictment.
A New York grand jury has indicted the two men as well as Tucker’s business attorney Timothy Muir, 44, of Overland Park.
Muir and Tucker allegedly tried to shield Tucker’s businesses from lawsuits and lawsuits by falsely claiming they were from Native American tribes, according to the indictment. Meanwhile, Tucker was actually running the operation with a 600-employee company in Overland Park, prosecutors said.
Tucker, who lives in Leawood, used the loan company to fund his career as a professional runner around the world and to cover other expenses, including luxury homes, prosecutors said. They want Tucker to lose $ 2 billion, six Ferrari racing cars, four Porsche cars and a Learjet.
Two tribal companies controlled by the Miami Tribe of Oklahoma have agreed to confiscate $ 48 million from Tucker’s payday loan business, prosecutors said on Wednesday. These funds are held in tribal bank accounts.
In 2011, as Colorado and other states tried to end Tucker’s business practices, Muir told a Star reporter that Tucker “does not own these companies.”
“There are documents that were produced at the Colorado attorney general’s office that detail Mr. Tucker’s relationship with tribal online lending companies,” Muir said. “Very soon… I think this relationship will be clarified.”
Muir replied that Tucker was simply standing up against a tyrant.
“There are few people across the country who have the courage and the resources to confront the government,” Muir said at the time. “My client has them. “
Tucker and Muir made their first court appearance Wednesday afternoon in U.S. District Court in Kansas City, Kansas. They entered the courtroom together in chains. They were told they had the right to move their business from New York to Kansas if they intended to plead guilty. Both men refused.
Tucker was released on $ 2 million bond and Muir was released on $ 400,000 bond. The two men agreed to put their homes in Leawood and Overland Park respectively as security for the bonds.
They were each ordered not to communicate with any victim or witness in the case, or with each other. But the latest instruction was dropped by the government when Tucker’s lawyer Jeffrey Morris pointed out that Muir was Tucker’s general counsel.
“They have to talk,” Morris said, adding that the matter would be reconsidered by the New York court.
Their first New York court appearance is scheduled for Tuesday.
Moseley, who lives in Kansas City, faces charges including illegal debt collection and wire fraud.
He owned a group of payday loan companies called Hydra Lenders from around 2004 to late 2014, according to a statement from the United States Attorney’s Office for the Southern District of New York.
According to regulators, he has exploited more than 620,000 poor people by charging interest rates of over 700%.
“Worse yet, Moseley is also said to have given loans to many people who never even applied for them, taking out exorbitant financing fees from their bank accounts,” the statement said.
Moseley could not be reached for comment on Wednesday.
Hydra Lenders generated around $ 161 million in revenue over an eight-year period that ended in August 2014, prosecutors said. Moseley allegedly spent millions of dollars obtained from victims on things like vacation homes in Colorado and Mexico, luxury cars and country club dues, according to the indictment.
In September 2014, a federal judge froze the assets of Moseley’s payday loan business and set up an escrow to stop allegedly illegal activities at the business. These measures came at the request of the Federal Bureau of Financial Consumer Protection, which said the Hydra group was carrying out an “illegal cash scam”.
Moseley was arrested Wednesday morning in Kansas City. He appeared in Kansas City federal court and was also released on bail.
Tucker faces nine counts, including collecting illegal debts in violation of racketeering laws for activities that took place from 2003 to 2012.
According to the indictment against Tucker:
Customers were generally told that they would pay about $ 30 in interest on every $ 100 loaned. So, on a $ 500 loan, they expected to repay about $ 650. Customers provided the payday company with access to their bank accounts so that payments could be automatically withdrawn.
But Tucker’s companies structured the repayments in a way that allowed payday loan companies to continuously withdraw interest from customers’ bank accounts without touching the principal balance.
So a customer who borrowed $ 500 could end up paying back $ 1,925.
Thousands of customers have complained to Tucker’s businesses, their banks, consumer groups and regulators that the loans were “materially deceptive, deceptive and usurious,” according to the documents.
“Rather than take steps to comply with state laws or otherwise deal with” customer complaints, Tucker “has entered into a series of bogus business relationships to conceal his ownership and control” of companies, according to the act. accusation.
Tucker and Muir created the “fictitious appearance of tribal ownership and control” of payday lenders in 2003 and implicated three tribes in the deception. He asked members of two tribes to “press a computer key on hundreds or thousands of loans daily,” to make it appear that the tribes were involved in approving the loans, according to the deed. ‘charge.
Overland Park employees falsely told customers and others over the phone that they were in Oklahoma or Nebraska, where Indian tribes were located, “so that they could more effectively fool customers.” , indicates the indictment.
Bloomberg News contributed to this report.
This story was originally published February 10, 2016 11:30 a.m.