Payday loan businessman Scott Tucker wants an appeals court to toss out a $1.26 billion fine against him last year from a case filed by the Federal Trade Commission that accused the Leawood resident of fraudulent lending practices.
Tucker, a professional race car driver who made his fortune in short-term consumer loans, argues that the FTC reached beyond its authority in its case against him, relied on lousy evidence in determining the amount of the $1.26 billion fine and failed to prove that his company’s loans were deceptive.
Tucker, through his attorneys, filed a 110-page brief late Friday before the 9th U.S. District Circuit Court of Appeals that also argues that a judge handling the case ignored evidence that favored Tucker in deciding that the FTC had built a persuasive case showing that his company extended and collected on illegal loans.
An FTC spokesman declined to comment on the claims made in Tucker’s appeal, citing ongoing litigation. The FTC had previously remarked that the $1.26 billion penalty against Tucker was the largest amount obtained through litigation in the federal agency’s history. The case ended in late September 2016 when a Nevada judge awarded summary judgment in favor of the FTC.
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Tucker, who attended Rockhurst High School and later Kansas State University, built a leading online payday lending operation through various corporate names, including AMG Capital Management, Black Creek Capital Corp. and Broadmoor Capital Partners. Tucker’s appeal brief said his companies extended more than 1 million loans in 2011 and 5 million between 2008 and 2012.
The lending and servicing companies operated out of Overland Park, where about 600 employees worked. The companies also claimed affiliations with American Indian tribes, relationships that the FTC alleged were nominal in nature and meant to evade state usury laws.
In 2012, the FTC sued Tucker and his companies, alleging that consumers took out loans on terms that were deceptive and misleading, piled on undisclosed fees and threatened borrowers when it tried to collect on the loans.
A grand jury in New York charged Tucker criminally in February 2016 on similar allegations; Tucker’s criminal trial is expected to start in September. He has pleaded not guilty and denies wrongdoing.
Tucker’s appeal said that the FTC relied solely on its in-house data analyst to support its claim to more than $1 billion in damages to consumers. The Tucker appeal said the analyst had no knowledge of the lending operation’s record keeping, was not an expert in statistics or economics and produced unreliable calculations with a database of loan information.
The appeal also pointed out that the FTC “handpicked” four customers of Tucker’s lending operations to testify in the case who, under questioning, acknowledged that they hadn’t read the loan disclosures and understood them once they did.
Tucker claims in the appeal that the judge overseeing the FTC case allowed the use of impermissible evidence by the FTC while leaving out evidence from the lending operations that contradicted the agency’s claims. Taken together, Tucker argued that the judge should not have been able to rule on summary judgment in the FTC’s favor.
The FTC has until Aug. 21 to respond.