Scott Tucker, recently convicted payday loan businessman, faces new criminal charges

Leawood businessman Scott Tucker, already convicted of criminal charges of running an illegal payday loan business, faces a new indictment for not reporting millions in income.

Tucker, 55, was charged with one count of filing a false tax return, U.S. Attorney Tom Beall in Kansas announced Wednesday. He also faces a conspiracy charge along with his accountant.

W. Brett Chapin, 46, of Shawnee, prepared Tucker’s tax returns for 2008 through 2011, Beall’s announcement said. He faces charges of aiding and abetting the filing of a false tax return and the conspiracy charge.

According to an indictment unsealed Wednesday, Tucker signed a 2008 tax return prepared by Chapin that failed to report $42.5 million in income from payday lending businesses Tucker owned. A tax return from 2011 did not report $75 million in income, according to the grand jury indictment.

Tucker recently was convicted of racketeering and other charges related his $2 billion payday loan enterprise that federal prosecutors said exploited 4.5 million consumers. Tucker is due in New York City for sentencing Jan. 5.

Prior to that, a federal judge ruled that Tucker should repay $1.3 billion resulting from a Federal Trade Commission lawsuit against him and his businesses for his usurious payday loan enterprise.

Tucker’s latest legal troubles stem from tax returns that did not report millions of dollars of income from a company that Tucker claimed he no longer controlled. A grand jury, however, believed he did.

The omitted income was generated by a payday loan company called CLK Management, which Tucker claimed in 2008 he had sold to the Miami Tribe, an American Indian tribe in Oklahoma, for $120,000.

American Indian tribes were a key part of Tucker’s business model. Tucker set up his payday loan businesses on tribal lands as a way to evade state regulations on interest rates. Tucker acted as though the tribes ran the businesses, but regulators and prosecutors have said Tucker actually controlled the operations.

Following similar lines, Wednesday’s indictment says that Tucker, not the Miami tribe, continued to control CLK Management and a new payday loan entity that came out of that deal, AMG Services.

The indictment also said that Chapin knew CLK and AMG remained in Tucker’s control, despite the sham sale.

The indictment says Chapin received an email from an AMG employee asking how the CLK sale should be booked on AMG’s ledger. Chapin admonished the employee for emailing him about CLK. Chapin then forwarded the employee’s email to someone else, noting, “These guys are fricken idiots.”

Chapin also sent payments to the Kansas Department of Revenue on Tucker’s behalf for taxes, drawing on an AMG bank account.

The CLK Management deal with the Miami tribe became an issue during Tucker’s criminal trial in New York.

The Star first reported in April that federal prosecutors in New York wanted to access client records, ordinarily off limits to anyone outside of an attorney or a client, from Kansas City law firm, McDowell, Rice, Smith & Buchanan. That firm represented Tucker in a 2010 lawsuit in Wyandotte County District Court that involved CLK Management and AMG Services.

In that case, Tucker filed a lawsuit against AMG Services, which he claimed was owned by the Miami tribe, for failing to file paperwork with the Kansas Secretary of State to confirm CLK’s merger into AMG Services.

Prosecutors said the proceedings in Wyandotte County were a key part of the whole sham transaction and that Tucker and others played both sides of the lawsuit.

A judge later ruled that prosecutors showed probable cause that fraud had occurred, and ordered McDowell Rice to produce records from their dealings with Tucker.

Chapin is the second lawyer to run into legal issues due to his association with Tucker. Tim Muir, an Overland Park lawyer who was general counsel to AMG, was indicted alongside Tucker in 2016. And Muir was convicted alongside Tucker, too.

Chapin faces up to five years in prison and up to $250,000 the conspiracy charge and up to three years for helping file a false tax return.

Tucker faces the same penalties.

This story was originally published December 20, 2017 at 3:40 PM with the headline "Scott Tucker, recently convicted payday loan businessman, faces new criminal charges."