Rick Moseley Sr., one of a few Kansas City payday lenders whose usurious business practices came under scrutiny by federal investigators, was sentenced on Tuesday by a federal judge in New York to 10 years in prison.
Moseley's prison sentence comes after a Nov. 15, 2017, conviction for wire fraud, racketeering, aggravated identity theft and other criminal charges arising from what prosecutors called an illegal $220 million payday lending ripoff scheme.
Federal prosecutors said that Moseley's lending enterprises bilked more than 620,000 customers with illegally high interest rates, or took money from people who had never received a loan.
Federal prosecutors asked the judge to sentence Moseley to more than 16 years; Moseley's attorneys argued that two years would be sufficient.
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Moseley, 73, who had been a real estate professional earlier in his career, is among several Kansas City-area residents who launched payday lending operations in either the late 1990s or early 2000s, attracted to the business by its immense financial rewards.
Earlier this year, Kansas City race car driver Scott Tucker and his Overland Park attorney, Tim Muir, were sentenced to more than 16 years and seven years in prison, respectively, for their roles in running a much larger illegal payday loan enterprise than Moseley's.
Even so, prosecutors in New York said Moseley ran an exploitative payday lending operation that preyed on financially vulnerable consumers seeking short-term loans.
"Charging usurious interest and exorbitant fees, and even signing people up for loans they didn’t authorize, Moseley put financially struggling people even further in debt," said Geoffrey Berman, U.S. Attorney for the Southern District of New York, in a statement. "Today Moseley has been rightly sentenced to prison for his predatory ways."
Moseley ran a group of lenders that collectively was referred to as the "Hydra Lenders," which sought out financially strapped consumers and offered them small-dollar loans ostensibly meant to be repaid by the borrower's next paycheck.
But prosecutors said Moseley's business model relied on deceptive loan terms and illegally high interest rates reaching 700 percent. Moseley's companies would only deduct interest payments from a borrower's bank account, leaving the principal balance untouched.
Moseley was also found guilty of taking personal and bank account information of consumers who had submitted information to explore the possibility of borrowing from his companies, and then withdrawing money from people who never went through with taking out the loan.
Moseley's lending businesses operated out of Kansas City, even though prosecutors said that Moseley created an appearance that the businesses were based in New Zealand or the Caribbean island of Nevis. The appearance of an offshore enterprise was meant to frustrate state investigations into Moseley's businesses, prosecutors said.
In a sentencing memorandum filed last month, Moseley's attorneys portrayed their client as a well-meaning businessman who followed bad advice from others on his path to ruin.
The memo said Moseley was drawn to payday lending by Joel Tucker, younger brother of Scott Tucker, who ran eData Solutions, a company that generated and sold consumer leads to payday lenders.
When regulators stepped up enforcement of payday lending around 2006, Moseley said he followed advice from attorneys who told him that by setting up his businesses offshore, the businesses would be legal. Investigators, however, maintained that Moseley misled his attorneys.
Moseley was first investigated by the Consumer Financial Protection Bureau, which then referred its findings to criminal investigators. The CFPB, now under the supervision of former South Carolina Congressman Mick Mulvaney, is relaxing its enforcement of payday lenders.