Scott Tucker, a Leawood businessman, was convicted Friday of 14 criminal charges against him in connection to a $2 billion payday lending enterprise that authorities said exploited 4.5 million consumers with predatory interest rates and deceptive loan terms.
Also convicted was Timothy Muir, an Overland Park attorney who had served as legal counsel to Tucker’s payday lending businesses.
Both men stood trial for about a month in Manhattan, N.Y., where they were indicted in 2016. The case went to the jury after closing arguments on Thursday and a unanimous verdict on all counts, including racketeering charges, was returned late Friday.
Tucker and Muir both face lengthy prison terms when they are sentenced by U.S. District Court Judge Kevin Castel on Jan. 5. Castel ordered both men to home confinement with electronic monitoring until their sentencing.
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Joon Kim, the acting U.S. Attorney for the Southern District of New York, said Tucker and Muir had targeted “struggling, everyday Americans” with illegal loans that carried interest rates as high as 700 percent.
Such interest rates are illegal in states that regulate payday lending, but Tucker and Muir had been accused of setting up their operations nominally on American Indian tribal lands in Nebraska and Oklahoma in an attempt to sidestep limits on interest rates. American Indian tribes are generally not affected by state regulations, and there’s no federal usury statutes on payday lending interest rates.
“Tucker and Muir sought to get away with their crimes by claiming that this $2 billion business was actually owned and operated by Native American tribes,” Kim said in a written statement. “But that was a lie. The jury saw through Tucker and Muir’s lies and saw their business for what it was — an illegal and predatory scheme to take callous advantage of vulnerable workers living from paycheck to paycheck.”
Their online payday lending businesses operated under brand names including Ameriloan, Cash Advance, One Click Cash, United Cash Loans and 500 FastCash. In addition to steep interest rates, authorities said consumers were tricked by the terms of the loans through renewals and fees. Prosecutors said a $500 loan could result in a borrower owing $1,925.
James Roth, a New York attorney who represented Tucker, suggested his client may appeal.
“This was a novel prosecution and the trial record provides fertile ground for a successful appeal,” Roth said in an email to The Star.
Muir said he was disappointed by the jury’s verdict, but added that he must respect jury’s verdict.
“Right now, all I can think about is my wife and my girls and trying to determine how to talk with them about the verdict and what it means to their futures,” Muir said in an email to The Star. “It's too soon for me to think about an appeal. My sole concern right now is the impact of this upon my family.”
Tucker and Muir had claimed that the payday lending businesses were legitimate and that their American Indian tribal partners did, in fact, own the enterprises. They had also said that outside lawyers they hired had determined that their payday operation was legally sound and they ran their business in good faith, based on that advice.
Federal prosecutors, however, had evidence that showed the American Indian tribes had little to do with the payday lending business, and that it was largely run out of an office tower in Overland Park that at one point employed more than 600 workers.
As an example of the deception in Tucker’s business, prosecutors showed the jury evidence that workers in Overland Park were given daily weather reports from tribal lands in Nebraska and Oklahoma, so that the employees could make it seem to borrowers that they were, in fact, doing business from the tribal property.
They also presented evidence that the two men engaged in legal gymnastics in an attempt to keep regulators at bay. One such example was what prosecutors called a “sham lawsuit” that Tucker filed against one of his own businesses in Wyandotte County in 2010, previously reported on by The Star, that put the operation in a tribe’s name, at least on paper.
Tucker’s payday lending businesses amassed him a large fortune. Prosecutors highlighted Tucker’s lavish lifestyle, which included a $1.3 million Ferrari that he purchased with money he made from payday lending. He also bought an $8 million house in Aspen in addition to his 4,400-square-foot, $1.8 million house in Leawood that backs up to the Hallbrook Country Club.
Prosecutors said Tucker made $380 million from his illegal businesses.
When Tucker was indicted, federal prosecutors announced they would seek forfeiture of Tucker’s property, including the Aspen house, six Ferrari race cars, four Porsches and a Learjet private airplane.
Friday’s conviction could mean at least 20 years in prison for Tucker, who is 55.
Tucker’s conviction marks something of an end to his long-running enterprise in payday lending, which for at least 12 years had been scrutinized by federal and state authorities.
Tucker, who was born in Kansas City and attended both Rockhurst High School and later Kansas State University, spent a year in prison in Leavenworth after a 1991 conviction for fraud.
He started a consumer loan business in 1997 and would go on to become one of the pioneers in online payday lending. For years, Tucker’s involvement in payday lending remained hidden behind shell companies and tribal entities.
Tucker would instead become known for his exploits in professional car racing, which he funded with the fortune he made in payday lending. Tucker raced Ferraris and other high-end sports cars in competitions in North America, Europe and the Middle East.
Tucker’s legal problems started in at least 2005, when the Colorado Attorney General sought to subpoena records of one of his business entities. Tucker and Muir tried to fight off the investigation, but ultimately Colorado authorities prevailed.
Still, Tucker’s name would not be publicly tied to payday lending until published reports in 2011 by the Center for Public Integrity, The Star and others highlighted his involvement in the business.
A lawsuit by the Federal Trade Commission would follow in 2012. That case was ultimately ruled in the FTC’s favor in 2016 when a judge determined that Tucker and his related payday lending businesses owed $1.3 billion to the government. It was the largest penalty ever won by the FTC through litigation.
Tucker grew up with two brothers. One of them, Blaine Tucker, was involved in Tucker’s payday lending business. Blaine Tucker committed suicide in Leawood in 2014.
Tucker’s other brother, Joel Tucker, was recently hit with a $4 million penalty resulting from a case the Federal Trade Commission filed against him last year. The FTC claimed Joel Tucker was selling fake payday loan debt portfolios to debt collectors. That resulted in consumers receiving phone calls from debt collectors for debts they did not actually owe.
The FTC had accused Joel Tucker of invoking his brother Scott Tucker’s payday lending business brand names as a way to convince debt buyers that the portfolios were legitimate.
Another defendant in Tucker’s and Muir’s case, Crystal Grote, had pleaded guilty in August to a count of lying to federal regulators during a separate investigation. Grote, previously an employee with Tucker’s business, had admitted to giving misleading information during the FTC case.