Business

Federal regulators take action against Kansas City payday lender Hydra Group

The Consumer Financial Protection Bureau said the payday lender used phony documents to claim that a person had applied for a loan. It then deposited unauthorized funds in the person’s bank account and began withdrawing unauthorized fees. A loan would typically be $200 to $300, with $60 to $90 in fees withdrawn every two weeks.
The Consumer Financial Protection Bureau said the payday lender used phony documents to claim that a person had applied for a loan. It then deposited unauthorized funds in the person’s bank account and began withdrawing unauthorized fees. A loan would typically be $200 to $300, with $60 to $90 in fees withdrawn every two weeks. Aaron Eisenhauer/Correspondent

A federal judge Wednesday froze the assets of a Kansas City payday lender and installed a receiver to stop allegedly illegal activity at the business.

The moves came at the request of the federal Consumer Financial Protection Bureau, which said the Hydra Group was running an illegal “cash-grab scam.”

The federal agency said the payday lender used phony documents to claim that a person had applied for a loan. It then deposited unauthorized funds in the person’s bank account and began withdrawing unauthorized fees. A loan would typically be $200 to $300, with $60 to $90 in fees withdrawn every two weeks.

“The utter disregard for the law shown by the Hydra Group and the men controlling it is shocking, and we are taking decisive action to prevent any more consumers from being harmed,” said Richard Cordray, director of the Consumer Financial Protection Bureau.

The business generated $97.3 million in loans and collected $115.4 million in fees over a 15-month period, according to the agency.

The Hydra Group did not respond to a request for comment. John Aisenbrey, an attorney at Stinson Leonard Street in Kansas City who represents the Hydra Group, declined to comment.

The consumer protection bureau filed a lawsuit in U.S. District Court in Kansas City to permanently halt operations at Hydra Group and return money that consumers lost. The federal agency also requested that the payday lender’s assets remain frozen until the case is decided.

The lawsuit says Richard F. Moseley Sr., Richard F. Moseley Jr. and Christopher J. Randazzo control the Hydra Group. The business operates under several names, including SSM Group, Hydra Financial Limited Funds, PCMO Services and Piggycash Online Holdings, according to the federal agency.

The businesses are based in Kansas City, with many incorporated overseas in New Zealand or the Commonwealth of St. Kitts and Nevis.

Problems for consumers began after they supplied personal financial information to so-called online lead generators who sell the information to payday lenders. The Hydra Group allegedly used the information to access consumer bank accounts.

The Federal Trade Commission earlier this week asked a U.S. district judge for an injunction to freeze assets of another network of payday lenders purportedly controlled by two Johnson County men, Timothy Coppinger and Frampton T. Rowland III.

To reach Steve Everly, call 816-234-4455 or send email to severly@kcstar.com.

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