Department of Justice

U.S. Attorney’s Office

Southern District of New York

FOR IMMEDIATE RELEASE

Friday, January 5, 2018

Scott Tucker Sentenced To More Than 16 Years In Prison For Running $3.5 Billion Unlawful Internet Payday Lending Enterprise

Joan Loughnane, the Acting Deputy United States Attorney for the Southern District of New York, announced today that SCOTT TUCKER was sentenced to 200 months in prison for operating a nationwide internet payday lending enterprise that systematically evaded state laws for more than 15 years in order to charge illegal interest rates as high as 1,000 percent on loans.  TUCKER’s co-defendant, TIMOTHY MUIR, an attorney, was also sentenced, to 84 months in prison, for his participation in the scheme.  In addition to their willful violation of state usury laws across the country, TUCKER and MUIR lied to millions of customers regarding the true cost of their loans to defraud them out of hundreds, and in some cases, thousands of dollars.  Further, as part of their multi-year effort to evade law enforcement, the defendants formed sham relationships with Native American tribes and laundered the billions of dollars they took from their customers through nominally tribal bank accounts to hide Tucker’s ownership and control of the business.

After a five-week jury trial, TUCKER and MUIR were found guilty on October 13, 2017, on all 14 counts against them, including racketeering, wire fraud, money laundering, and Truth-In-Lending Act (“TILA”) offenses.  U.S. District Judge P. Kevin Castel presided over the trial and imposed today’s sentences.

Acting Deputy U.S. Attorney Joan Loughnane said:  “For more than 15 years, Scott Tucker and Timothy Muir made billions of dollars exploiting struggling, everyday Americans through payday loans carrying interest rates as high as 1,000 percent.  And to hide their criminal scheme, they tried to claim their business was owned and operated by Native American tribes.  But now Tucker and Muir’s predatory business is closed and they have been sentenced to significant time in prison for their deceptive practices.”

According to the allegations contained in the Superseding Indictment, and evidence presented at trial:

The Racketeering Influenced Corrupt Organizations (“RICO”) Crimes

From at least 1997 until 2013, TUCKER engaged in the business of making small, short-term, high-interest, unsecured loans, commonly referred to as “payday loans,” through the Internet.  TUCKER’s lending enterprise, which had up to 1,500 employees based in Overland Park, Kansas, did business as Ameriloan, f/k/a Cash Advance; OneClickCash, f/k/a Preferred Cash Loans; United Cash Loans; US FastCash; 500 FastCash; Advantage Cash Services; and Star Cash Processing (the “Tucker Payday Lenders”).  TUCKER, working with MUIR, the general counsel for TUCKER’s payday lending businesses since 2006, routinely charged interest rates of 600 percent or 700 percent, and sometimes higher than 1,000 percent.  These loans were issued to more than 4.5 million working people in all 50 states, including more than 250,000 people in New York, many of whom were struggling to pay basic living expenses.  Many of these loans were issued in states, including New York, with laws that expressly forbid lending at the exorbitant interest rates TUCKER charged.  Evidence at trial established that TUCKER and MUIR were fully aware of the illegal nature of the loans charged and, in fact, prepared scripts to be used by call center employees to deal with complaints by customers that their loans were illegal.

Fraudulent Loan Disclosures

TILA is a federal statute intended to ensure that credit terms are disclosed to consumers in a clear and meaningful way, both to protect customers against inaccurate and unfair credit practices, and to enable them to compare credit terms readily and knowledgeably.  Among other things, TILA and its implementing regulations require lenders, including payday lenders like the Tucker Payday Lenders, to disclose accurately, clearly, and conspicuously, before any credit is extended, the finance charge, the annual percentage rate, and the total of payments that reflect the legal obligation between the parties to the loan.

The Tucker Payday Lenders purported to inform prospective borrowers, in clear and simple terms, as required by TILA, of the cost of the loan (the “TILA Box”).  For example, for a loan of $500, the TILA Box provided that the “finance charge – meaning the ‘dollar amount the credit will cost you’” – would be $150, and that the “total of payments” would be $650.  Thus, in substance, the TILA Box stated that a $500 loan to the customer would cost $650 to repay.  While the amounts set forth in the Tucker Payday Lenders’ TILA Box varied according to the terms of particular customers’ loans, they reflected, in substance, that the borrower would pay $30 in interest for every $100 borrowed.

In fact, through at least 2012, TUCKER and MUIR structured the repayment schedule of the loans such that, on the borrower’s payday, the Tucker Payday Lenders automatically withdrew the entire interest payment due on the loan, but left the principal balance untouched so that, on the borrower’s next payday, the Tucker Payday Lenders could again automatically withdraw an amount equaling the entire interest payment due (and already paid) on the loan.  With TUCKER and MUIR’s approval, the Tucker Payday Lenders proceeded automatically to withdraw such “finance charges” payday after payday (typically every two weeks), applying none of the money toward repayment of principal, until at least the fifth payday, when they began to withdraw an additional $50 per payday to apply to the principal balance of the loan.  Even then, the Tucker Payday Lenders continued to assess and automatically withdraw the entire interest payment calculated on the remaining principal balance until the entire principal amount was repaid.  Accordingly, as TUCKER and MUIR well knew, the Tucker Payday Lenders’ TILA box materially understated the amount the loan would cost, including the total of payments that would be taken from the borrower’s bank account.  Specifically, for a customer who borrowed $500, contrary to the TILA Box disclosure stating that the total payment by the borrower would be $650, in fact, and as TUCKER and MUIR well knew, the finance charge was $1,425, for a total payment of $1,925 by the borrower.

The Sham Tribal Ownership of the Business

In response to complaints that the Tucker Payday Lenders were extending abusive loans in violation of their usury laws, several states began to investigate the Tucker Payday Lenders.  To thwart these state actions, TUCKER devised a scheme to claim that his lending businesses were protected by sovereign immunity, a legal doctrine that, among other things, generally prevents states from enforcing their laws against Native American tribes.  Beginning in 2003, TUCKER entered into agreements with several Native American tribes (the “Tribes”), including the Santee Sioux Tribe of Nebraska, the Miami Tribe of Oklahoma, and the Modoc Tribe of Oklahoma.  The purpose of these agreements was to cause the Tribes to claim they owned and operated parts of TUCKER’s payday lending enterprise, so that when states sought to enforce laws prohibiting TUCKER’s loans, TUCKER’s lending businesses would claim to be protected by sovereign immunity.  In return, the Tribes received payments from TUCKER, typically one percent of the revenues from the portion of TUCKER’s payday lending business that the Tribes purported to own.

In order to create the illusion that the Tribes owned and controlled TUCKER’s payday lending business, TUCKER and MUIR engaged in a series of lies and deceptions.  Among other things:

- MUIR and other counsel for TUCKER prepared false factual declarations from tribal representatives that were submitted to state courts, falsely claiming, among other things, that tribal corporations substantively owned, controlled, and managed the portions of TUCKER’s business targeted by state enforcement actions.

- TUCKER opened bank accounts to operate and receive the profits of the payday lending enterprise, which were nominally held by tribally owned corporations, but which were, in fact, owned and controlled by TUCKER.  TUCKER received over $380 million from these accounts on lavish personal expenses, some of which was spent on a fleet of Ferraris and Porsches, the expenses of a professional auto racing team, a private jet, a luxury home in Aspen, Colorado, and his personal taxes.

- In order to deceive borrowers into believing that they were dealing with Native American tribes, employees of TUCKER making payday loans over the phone told borrowers, using scripts directed and approved by TUCKER and MUIR, that they were operating in Oklahoma and Nebraska, where the Tribes were located, when in fact they were operating at TUCKER’s corporate headquarters in Kansas.

These deceptions succeeded for a time, and several state courts dismissed enforcement actions against TUCKER’s payday lending businesses based on claims that they were protected by sovereign immunity.  In reality, the Tribes neither owned nor operated any part of TUCKER’s payday lending business.  The Tribes made no payment to TUCKER to acquire the portions of the business they purported to own.  TUCKER continued to operate his lending business from a corporate headquarters in Kansas, and TUCKER continued to reap the profits of the payday lending businesses, which generated over $3.5 billion in revenue from just 2008 to June 2013 – in substantial part by charging struggling borrowers high interest rates expressly forbidden by state laws.

*                      *                     *

In addition to their prison terms, TUCKER, 55, of Leawood, Kansas, and MUIR, 46, of Overland Park, Kansas, were each sentenced to three years of supervised release.  Judge Castel ordered the defendants to forfeit the proceeds of their crimes.  TUCKER was remanded into custody.

In pronouncing sentence, Judge Castel described the crimes as “a scheme to extract money from people in desperate circumstances” that “created heartbreak and sorrow . . . not just a financial loss.”

Mrs. Loughnane praised the outstanding investigative work of the St. Louis Field Office of the IRS-CI.  Mrs. Loughnane also thanked the Criminal Investigators at the United States Attorney’s Office, the Federal Bureau of Investigation, and the Federal Trade Commission for their assistance with the case.

The prosecution is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Niketh Velamoor, Hagan Scotten, and Sagar Ravi are in charge of the prosecution.

Topic(s):

Financial Fraud

Component(s):

USAO - New York, Southern

Scott Tucker (businessman)

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From Wikipedia, the free encyclopedia

Scott Tucker

ScottTuckerRaceCarDriver.jpg

Tucker in 2010

Born

May 5, 1962 (age 60)

Kansas City, Missouri, U.S.

Nationality

American

Criminal status

In prison

Conviction(s)

mail fraud, making false statements to a bank (1991); racketeering, wire fraud, money laundering, Truth In Lending Act violation (2017)

Criminal penalty

1 year (1991); 16 years, 8 months (2017)

Imprisoned at

Leavenworth 1991–1992, 2018–

Scott Tucker

Years active

2006–2014

Car number

055, 95

Former teams

Kolles, Kelly Moss Motorsports, Hope Financial Racing, Level 5 Motorsports

Championships

2010 ALMS LMPC 2011-2013 ALMS LMP2

Wins

101

Previous series

United SportsCar Championship, IMSA Lites, GT3 Cup, SCCA, American Le Mans Series, Intercontinental Le Mans Cup, KONI Challenge Series,

24 Hours of Le Mans career

2010 – 2013

Teams

Kolles

Level 5 Motorsports

Best finish

10th (2011)

Class wins

0

Scott Tucker (born May 5, 1962 in Kansas City, Missouri) is an American convicted racketeer, loan shark, former businessman and amateur racing driver.

In 2001, Tucker founded an online business, AMG Services, that made payday loans even in states where these high-interest, low-principal loans were restricted or illegal. The business, which generated over $3.5 billion in revenue from just 2008 to June 2013,[1] ultimately made loans to at least 4.5 million Americans.[1] When state regulators tried to shut down his operations, Tucker made deals with Native American tribes to claim ownership of his business and invoke sovereign immunity from state courts.[2] In February 2016, Tucker was arrested and indicted on federal criminal charges filed in the United States District Court for the Southern District of New York in relation to his ownership and controlling role in various payday lending operations that were found to have charged illegal interest rates in violation of RICO and TILA statutes.[3][4] Tucker was convicted of making illegal payday loans and of racketeering in October 2017; he is currently serving a sentence of 16 years and 8 months in federal prison.[1]

Tucker began his racing career in 2006, most notably competing in the American Le Mans Series and United SportsCar Championship for his Level 5 Motorsports.[5][6]

The story of Tucker's fall from grace is chronicled in the second episode of the first season of the Netflix series Dirty Money titled "Payday".[7]

Racketeering, business and payday loans[edit]

In 1991, Tucker was convicted of three felony charges, including mail fraud and making false statements to a bank. One of the charges stemmed from a bogus lending company Tucker ran called Chase, Morgan, Stearns & Lloyd that charged businesses advanced fees for loans that were never delivered. He was imprisoned for a year at Leavenworth federal prison.[8]

Tucker was CEO of AMG Services, a payday loan company that was found to charge undisclosed and inflated fees and used tribal entities in an attempt to violate state lending laws.[9][10]

In April 2012, the Federal Trade Commission filed a civil suit against AMG Services, Scott Tucker and others alleging that AMG engaged in illegal business tactics.[11] In May 2014, a U.S. grand jury subpoenaed AMG Services as part of a criminal probe conducted by the office of Manhattan U.S. Attorney Preet Bharara, reportedly looking at possible violations of statutes covering wire fraud, money laundering and racketeering.[12]

In September 2016, a federal district judge ordered Tucker and other defendants to pay a record judgment of $1.266 billion for "deceiving consumers across the country and illegally charging them undisclosed and inflated fees".[10] Tucker was also banned from the consumer-lending business. In January 2015, AMG Services and MNE Services Inc. agreed to settle charges with the Federal Trade Commission by paying a $21 million fine as well as waiving an additional $285 million in charges that were assessed but not collected.[13][14]

In February 2016, Tucker was indicted and arrested for various criminal violations under RICO and TILA statutes for acts related to his involvement in a number of payday lending operations.[15] On October 13, 2017, Tucker was convicted of 14 counts, including making illegal payday loans and racketeering.[16]

Tucker was indicted in December 2017 for filing a false tax return. The US Attorney for Kansas alleges that Tucker created a sham sale of his payday loan business to the Miami Indian tribe of Oklahoma for $120,000 while he continued to control the business. The indictment alleges Tucker failed to report more than $117.5 million in income in 2009 and 2010. Tucker's tax accountant was also indicted.[17]

Tucker is estimated to have earned $380 million from his payday loan organization, which exploited Native American sovereign immunity laws as a loophole through which to offer payday loans in states in which they are illegal. Operating under names including Ameriloan, Cash Advance, One Click Cash, United Cash Loans, and 500 FastCash, Tucker's organization employed approximately 600 people and made loans with terms that included renewals and fees, as well as interest rates as high as 700% per year. The majority of these loans were issued to low-income individuals.[18]

Blaine and Joel Tucker, his brothers, were also involved in payday lending and faced criminal charges for their activities. Blaine Tucker committed suicide in 2014, while Joel Tucker received a $4 million civil penalty from the Federal Trade Commission for selling fake payday loan portfolios to debt collectors.[18][19] In July 2020, Joel agreed to plead guilty to interstate transportation of stolen money, bankruptcy fraud and tax evasion. He faced possible sentences of five, five and ten years on the three charges after the agreement.[20]

Scott Tucker's organizations ceased operation after he and his lawyer Timothy Muir were indicted in federal court in Manhattan. They were convicted on 14 counts of racketeering, wire fraud, money laundering, and Truth In Lending Act offenses on October 13, 2017.[18][19][1]

In September 2018 the Federal Trade Commission began issuing almost 1.2 million checks totaling more than $505 million to victims of Tucker's payday lending scheme. The money comes from a $1.3 billion civil court judgment the FTC obtained against Tucker and his AMG Services Inc.[21] However, on petition to the United States Supreme Court in AMG Capital Management, LLC v. FTC, the Court ruled unanimously in April 2021 that the FTC did not have the authority under Congress to seek equitable relief, and reversed the Ninth Circuit's decision.[22]

Tucker is serving a sentence of 16 years 8 months, and his lawyer Tim Muir is serving a sentence of 7 years.[1] Tucker's inmate number is 06133-045 and he is scheduled for release from prison on March 4, 2032.[23]

Racing career[edit]

Tucker used money from his payday lending business to fund his exploits as an amateur race car driver and team owner.[24][25]

Rolex Sports Car Series[edit]

Scott Tucker in a Ferrari Crawford GT

Scott Tucker began competing in the Grand-Am Rolex Sports Car Series in a partial season during the year 2007. In 2008, Scott Tucker debuted in the Rolex 24 at Daytona driving a TRG Grand-Am GT Porsche in the Rolex Series driving with Ed Zabinski, Jack Baldwin, Martin Ragginger and Claudio Burton. The team finished 28th in class due to an engine failure in the 20th hour of the event. After the Rolex 24, Tucker entered Level 5 Motorsports in 3 additional races with Ed Zabinski in the Rolex Series.[26]

In 2009, he teamed up with French sports car driver Christophe Bouchut and earned a career best finish of third at Watkins Glen International.

Tucker with co-drivers Richard Westbrook, Ryan Hunter-Reay, and Lucas Luhr at Daytona

Tucker drove both cars at Homestead-Miami Speedway, teaming up with Bouchut in the No. 55 car. In 2010, Tucker added four-time Champ Car World Series champion Sébastien Bourdais, Richard Westbrook, Sascha Maassen, Lucas Luhr, Ryan Hunter-Reay, and Emmanuel Collard to his team for the 48th running of the Rolex 24 At Daytona. Tucker and Level 5's progress through the race was part of a documentary entitled Daytona Dream.[27] The documentary was produced by Drive Digital Media, a venture Scott Tucker was an investor in.[28]

American Le Mans Series[edit]

Tucker competed in the American Le Mans Series in 2010 alongside his campaign in the Rolex Sports Car Series, this time entered in the spec racing Le Mans Prototype Challenge (LMPC) class. As in Rolex, Tucker divides driving duties between both Level 5 cars. Tucker, along with Bouchut and new teammate Mark Wilkins, won the 12 Hours of Sebring in the LMPC category. The trio went on to win three further races during the season, at Laguna Seca, Miller, and Mid-Ohio. Tucker won the LMPC class championship and was named the American Le Mans Series Rookie of the Year.

Moving into the LMP2 category for 2011, Tucker and his Level 5 Motorsports obtained a new Lola-Honda prototypes. Tucker was part of the winning team in the 12 Hours of Sebring. Due to a lack of competitors in LMP2 class of the American Le Mans Series, Level 5 concentrated on the Intercontinental Le Mans Cup rounds in Europe.

Tucker and Level 5 returned Stateside and won three end-of-season American Le Mans Series races, including the Petit Le Mans with its new HPD ARX-01g.

In 2012, Tucker and Level 5 embarked on a full-season campaign in the ALMS P2 category with two new HPD ARX-03bs. Tucker scored 8 class wins to claim the 2012 P2 championship.

In 2013, Tucker went on to claim his fourth ALMS drivers' championship after scoring eight class wins in ten races.[29]

United SportsCar Championship[edit]

Tucker won the 2014 Daytona 24 Hours in the GT Daytona class in the No. 555 Level 5 Motorsports Ferrari 458 Italia GT3 with co-drivers Jeff Segal, Townsend Bell, Bill Sweedler and Alessandro Pier Guidi, despite the car having initially been handed a penalty for deemed late-race avoidable contact. IMSA reversed the call more than four hours after the race, declaring the No. 555 car the winners in GTD.[30] The Daytona win came on the 60th anniversary of Ferrari racing in America.[31]

24 Hours of Le Mans[edit]

Tucker and Level 5 teammate Christophe Bouchut were able to join the driver line-up of the German Kolles team for the 2010 24 Hours of Le Mans, driving one of two diesel-powered Audi R10 TDIs. The two, joined by Frenchman Manuel Rodrigues, failed to finish the race.

In 2011, Tucker scored his first career Le Mans podium result, combining with co-drivers Christophe Bouchut and João Barbosa in Level 5 Motorsports' Lola B11/80 Honda Coupe for a third-place finish in LMP2. The result came in Level 5's debut race as an entrant in the race.[32]

In 2012, Tucker competed in LMP2 and finished 14. His team finished 13th in LMP2 during the 2013 24 Hours of Le Mans.

SCCA[edit]

In 2012, Tucker was the national title holder in the D Sports Racing category driving a West chassis car purpose-built for the task, claiming the SCCA record lap at Road America with a time of 1:58.997.[33] West Race Cars was purchased by Level 5 in 2011, and significant resources and money were expended by Level 5 to build the record-breaking car.[34]

Racing record[edit]

24 Hours of Le Mans results[edit]

Year

Team

Co-Drivers

Car

Class

Laps

Pos.

Class

Pos.

2010

Germany Kolles

United States Level 5 Motorsports

France Manuel Rodrigues

France Christophe Bouchut

Audi R10 TDI

LMP1

182

DNF

DNF

2011

United States Level 5 Motorsports

France Christophe Bouchut

Portugal João Barbosa

Lola B11/80-HPD

LMP2

319

10th

3rd

2012

United States Level 5 Motorsports

France Christophe Bouchut

Mexico Luis Díaz

HPD ARX-03b

LMP2

240

DNF

DNF

2013

United States Level 5 Motorsports

Australia Ryan Briscoe

United Kingdom Marino Franchitti

HPD ARX-03b

LMP2

242

NC

NC

Personal life[edit]

Tucker grew up in Kansas City, Missouri, and went to Rockhurst High School.[35] He studied business administration at Kansas State University. Tucker is married to his wife Kim and has two daughters.[9]

Popular culture[edit]

Tucker's story is told in the documentary series Dirty Money on Netflix (Season 1, Episode 2). In the episode, Tucker sat for lengthy interviews with director Jesse Moss, portraying himself as a victim of overzealous government lawyers.[36]

Tucker's payday loan scheme was profiled in the American Greed episode titled "The Fast and the Fraudulent" (Season 13, Episode 9).