Attorneys for Scott Tucker want a federal judge to drop four criminal charges against the Leawood payday loan businessman, arguing that state laws regulating interest rates don’t apply to loans that Tucker’s businesses extended to consumers.
In a motion filed Tuesday, Tucker’s criminal defense attorneys asked a federal judge in New York to drop four of the nine criminal charges against the businessman and professional race car driver. Those four charges accuse Tucker of collecting on illegal debts through lending companies based on Native American reservations that charged higher interest rates than what many states allow.
A grand jury in New York indicted Tucker and his attorney, Timothy Muir, in February, saying both set up lending companies on tribal reservations to evade state limits on usury laws. The arrangement, federal prosecutors charge, resulted in a $2 billion business that exploited 4.5 million consumers.
Tucker and Muir pleaded not guilty.
The request to drop the unlawful debt collection charges against Tucker piggyback on a detailed argument filed earlier this year by Muir’s legal team, which includes Olathe criminal defense attorney Tom Bath.
In that filing, Muir argues that no federal law exists that compels tribal lending operations to follow state usury laws, and that federal prosecutors attempted to “criminalize tribal payday loans” through its charges against Muir and Tucker.
Muir’s attorneys compare modern controversy over tribal lending to the advent of casinos on American Indian reservations in the early 1980s. States were unable to regulate tribal casinos until Congress passed a law in 1988 allowing them to do so.
Congress, Muir and Tucker’s legal teams argue, has not regulated tribal lending operations.
Federal prosecutors have not responded to these motions. In the indictment, prosecutors say the lending operations weren’t really tribal businesses. Tucker, prosecutors say, set up lending businesses on reservations, but the tribes had almost nothing to do with the businesses. Instead, the businesses operated largely out of an office building in Overland Park.
Both men face an April trial. If the judge agrees to drop the four debt-collection charges, that would leave five counts of violating the Truth In Lending Act by extending loans with deceptive terms.