A federal agency created to protect consumers from financial scams agreed that a Kansas City businessman who ran an illegal $227 million payday loan scheme should pay a $1 civil penalty because he can’t pay a larger fine.
Richard Moseley Sr., his son and a maze of payday loan businesses he ran reached a settlement with the Bureau of Consumer Financial Protection on Friday, one in which he has 10 days to wire the $1 penalty to the agency to wrap up a lawsuit over an enterprise that made $69.6 million in profits.
Moseley, 73, a commercial real estate professional before following the lead of several others in Kansas City into the illegal payday loan racket, was convicted last year on criminal charges associated with his businesses.
A jury found him guilty of operating a payday loan business that charged illegal interest rates and, in some cases, took money out of the bank accounts of consumers who never authorized a loan, and disguising the enterprise as an off-shore operation when it actually ran in Kansas City. Moseley was sentenced to 10 years in prison.
Payday loans are marketed toward financially distressed consumers who can’t get access to money elsewhere and borrow money on terms that involve high interest rates and finance charges if the money is not repaid quickly. Critics of the industry say the loans trap the poor in long cycles of debt.
The Bureau of Consumer Financial Protection settlement indicated that both parties agreed to the $1 penalty, as opposed to one in excess of $69 million that would represent the profits from the business, because Moseley has a limited ability to pay the larger fine.
Moseley forfeited $14 million in previously frozen assets — mostly bank accounts — as part of the settlement. Moseley and his son, Richard Moseley Jr., are banned from the payday loan industry.