Two area businessmen and a lawyer who became very rich very quickly by tricking low-income consumers with sky-high fees and interest rates on online loans finally face criminal charges.
About the time Scott Tucker, Richard Moseley and lawyer Timothy Muir were making court appearances in this area on Wednesday, officials in New York unsealed indictments describing elaborate usury schemes that took place openly and in polite society in Kansas City.
“The Tucker Payday Lending Organization was an organized criminal group with leadership based in Overland Park, Kan., and that operated throughout the United States,” one indictment stated.
About Moseley, FBI official Diego Rodriguez said in a press statement, “This case is an example of predatory lending at its finest.”
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At its worst, actually. The federal indictments detail huge enterprises that for years got away with making loans to people in desperate circumstances, then claiming much more than the value of the loans in interest and fees.
And they aren’t the only ones. Tucker’s early success in Internet lending spurred a host of copycat businesses in this area.
The boom years saw a number of newly rich lenders purchasing Johnson County mansions and luxury vehicles. The ill-gotten riches even flowed into Catholic parish and school projects.
In August 2013, U.S. Reps. Kevin Yoder of Kansas and Blaine Luetkemeyer of Missouri were lead signers of a letter to then-U.S. Attorney General Eric Holder, protesting his efforts to stop banks from processing online payday loans. Not surprisingly, both GOP congressmen, as well as Republican U.S. Rep. Lynn Jenkins of Kansas, are among the top House recipients of payday loan donations.
But nobody around Kansas City is flashing the largess of predatory lending these days. At least eight area businessmen, apart from Tucker and Moseley, are under investigation by federal agencies.
The noxious operations, which once employed hundreds of persons in the area, closed so quickly and quietly it was as though they evaporated.
The support structure that provided investment capital and technical expertise to the online lenders reportedly is seeking more legitimate opportunities in area start-up businesses.
The indictments of Tucker, Moseley and Muir, Tucker’s lawyer, shed light on the scale of the enterprises and why it took so long to hold people accountable.
Tucker and Muir ran a $2 billion business that Tucker started as early as 1997, authorities allege. It preyed on more than 4.5 million people. The business operated under a dizzying array of names. Tucker’s great scam was to convince Indian tribes to shield him by allowing him to represent himself as one of their “employees.” That enabled him to elude enforcement efforts of attorneys general in multiple states.
Moseley deceived about 600,000 persons with high-interest loans, the indictment against him alleges. He, too, operated his business under multiple names and he falsely claimed, even to his attorneys, that the loans were being made by employees stationed in Nevis, a Caribbean island, and New Zealand. The business was run from Kansas City.
A shocking allegation in the indictment is that many of the people Moseley is accused of defrauding never even asked for a loan. They provided some crucial information to a “lead generator” website, enabling the operation to get into their bank accounts and withdraw money.
Moseley, Tucker and Muir are accused of violating federal racketeering laws as well as the U.S. Truth in Lending Act. But they also broke usury laws in multiple states, officials allege.
One reason the indictments came out of the U.S. Attorney’s office in New York City is that New York has a criminal law setting a lending limit at 25 percent annual interest. With that stringent cap, authorities had no difficulty establishing that the online payday loan businesses were violating consumer protections.
Enforcement is more difficult in Kansas and especially Missouri, where the average annual interest rate on payday loans is an outrageous 455 percent.
Attorney General Chris Koster took action a year ago against an online loan operator who broke Missouri law by charging excessive fees and denying due legal process for collecting overdue costs. In general, though, payday lending is an open field in Missouri.
Federal authorities are now swooping in to seize what they claim are proceeds of the alleged crimes of Kansas City’s audacious online lenders. They are looking to clean out numerous bank accounts controlled by Tucker, as well as acquire his Colorado vacation home, six Ferrari race cars, four Porsche automobiles and a Learjet.
The collapse of Kansas City’s payday loan bubble under the squeeze of federal enforcement has broken up families and caused rifts in churches, country clubs and executive suites.
Too many people and institutions here were too quick to embrace the new “entrepreneurs” when they showed up with fancy cars and quick cash. Too many people didn’t want to think about the misery at the other end, as consumers were harassed to pay interest and fees they couldn’t possibly afford.
Now it’s payday, all right. And it should serve as a cautionary tale.