Professional Ferrari racing driver funded his high speed competitions by running a $ 2 billion payday loan business that victimized millions of needy borrowers across the country with interest rates of 700% or more , prosecutors accused Wednesday.
Scott Tucker, 53, and his lawyer, Timothy Muir, 44, are accused of racketeering for victimizing workers “who were struggling to pay for basic expenses, including food and accommodation,” according to one indictment delivered to New York.
Launching an intensified crackdown on the controversial short-term lending industry, prosecutors also announced similar claims against Richard Moseley, a Kansas-based businessman whose payday lending business was previously targeted by federal regulators.
“Tucker and Muir deceptively abused more than 4.5 million workers” by allegedly luring them “into taking out payday loans with interest rates ranging from 400% to 700%,” said FBI Deputy Director Diego Rodriguez. “This scheme, like so many others that defraud innocent victims, only ends with an arrest by the FBI.”
Lawyers for the three defendants could not be reached immediately to comment on the indictments.
Payday loans are short-term cash advances that borrowers typically seek to cover their expenses until they receive their next paycheck. While the industry says loans provide low-income workers with a needed financial service, government regulators and consumer advocates say some lenders deceptively charge sky-high interest rates.
From 1997 to August 2013, Ameriloan, One Click Cash, US Fast Cash, and other Kansas-based online businesses reportedly violated truth-lending laws that require borrowing terms to be accurately described. , accused prosecutors.
Although online disclosures from Tucker’s businesses suggested that a client who borrowed $ 500 would pay $ 150 in finance charges, prosecutors alleged the actual charges were $ 1,425, or $ 1,925 in total payments. . According to the indictment, borrowers complained that the charges “kept them from paying their bills.”
Tucker, who has competed in the Rolex Grand-Am Sports Car Series and other competitions, is said to have spent more than $ 100 million on a professional team whose website said its drivers were racing Ferraris in “flagship” events across the world, according to the indictment.
He and Muir allegedly tried to prevent regulators and other authorities from ending the loan operation by forming “fictitious business relationships” with Native American tribes and then falsely claiming “tribal sovereign immunity,” l indictment indicted.
Prosecutors are asking for the confiscation of the proceeds and property that Tucker and Muir allegedly derived from the alleged plot, including six Ferrari racing cars, four Porsche cars, a Learjet plane and numerous bank accounts.
Separately, Moseley, 68, was accused of exploiting more than 620,000 needy borrowers from 2004 to September 2014 by deceptively charging interest rates over 700% through a lending company. payday of $ 161 million.
Dubbed the “Hydra Lenders,” the companies automatically removed what was termed a “finance charge” payday after payday, applying none of the funds to repaying the principal, according to the indictment.
Additionally, victims nationwide who submitted personal and banking information in order to apply for the possibility of a payday loan would have faced similar repayments.
Moseley’s operation thwarted regulators’ shutdown efforts by falsely claiming the companies were based in Nevis or New Zealand, according to the indictment. In fact, the company was based in Kansas City, prosecutors said.
Moseley is said to have spent millions of dollars in profits on vacation homes in Colorado and Mexico, luxury cars and country club dues. The indictment against him seeks the confiscation of all proceeds generated by the alleged scam.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc.