Payday loan mogul Scott Tucker’s $1.3 billion judgment is a record for the FTC

The Federal Trade Commission, in its first public remarks since a federal judge last week entered a $1.3 billion judgment against Leawood payday loan businessman Scott Tucker, called the penalty the largest of its kind.

The judgment against Tucker, the estate of his deceased brother and corporate entities under his control by far eclipses the FTC’s previous record judgment from litigation. That was a $478 million judgment in 2012 ($501.4 million, when adjusted for inflation) against John Beck, the perpetrator of a deceptive real estate get-rich-quick scheme.

“This significant court judgment demonstrates the FTC’s determination to crack down on deceptive payday lenders and the people who run them,” FTC Chairwoman Edith Ramirez said in a written statement. “No consumer should be victimized by an unlawful scheme like this one, and it is especially detestable when those who can least afford to be charged undisclosed and inflated fees are the ones being targeted.”

The Star first reported on Saturday that U.S. District Court Judge Gloria Navarro entered a $1.3 billion judgment against Tucker and others to wrap up a case brought by the FTC in 2012.

The FTC tracked and sued Tucker, his brother Blaine Tucker and several corporations under their control on claims that they extended loans that deceived consumers about the true cost of their credit. For example, the FTC said that $300 loans extended by Tucker’s companies cost $390, at a 30 percent interest rate. In reality, through deceptive loan terms and automatic loan renewals, the FTC said many consumers ended up paying nearly $1,000.

The FTC also accused Tucker, also a professional race car driver, of nominally setting up corporations on American Indian reservations as a way to charge interest rates higher than those allowed in states that regulate payday loans.

States generally cannot regulate tribal lands, and there’s no federal law governing interest rates on short-term consumer loans. Tucker’s payday loan business primarily operated out of Overland Park, where at one point it had about 600 workers.

The FTC’s judgment orders Tucker and other co-defendants to pay $1.266 billion to the FTC. That’s the number owed to the agency after subtracting from the $1.3 billion judgment, earlier settlements for corporations that the FTC sued in 2012, and amounts owed by other defendants, including Tucker’s wife.

Navarro ordered Tucker and other defendants to make payments within 14 days of the Sept. 30 order.

The FTC may not recover the full amount of Navarro’s order. Navarro froze Tucker’s assets on March 31.

But FTC regulators who have tracked Tucker’s finances reported in a May 3 filing that Tucker had $212 million in liquid assets in March 2013, which then dropped to $125 million by the end of 2014.

A separate filing said that Tucker in 2015 wired $15.5 million to various law firms, purchased a $383,349 Ferrari, spent $540,000 on private jets and spent $63,669 on a private suite at the Sprint Center. That FTC filing calculated Tucker’s liquid assets at $106 million.

An attorney for Tucker was not immediately available for comment. Inquiries about whether he planned to appeal the judgment have not been answered.

Navarro’s order bars Tucker from participating in the payday loan industry for life.

Tucker also faces a criminal trial in New York, where federal prosecutors say Tucker’s $2 billion payday loan enterprise exploited 4.5 million consumers. That trial is scheduled for April 2017.

This story was originally published October 4, 2016 at 11:21 AM with the headline "Payday loan mogul Scott Tucker’s $1.3 billion judgment is a record for the FTC."