Joan Loughnane an acting deputy attorney said that Scott Tucker was to be behind bars for 16 years 8 months in prison as per the sentence for carrying out a national payday lending enterprise online illegally.
The attorney indicated that Scott had methodically evaded laws of the state for more the past decade and charged illegal interest as high as 1000% on loans.Scott’s co-defendant Timothy Muir an attorney was also slapped with a sentence of 84 months in prison for participating in the scheme in addition to their knowledgeable violation of usury laws of the states across the country.
Muir and Tucker misled millions of customers
Regarding the total cost of these online payday loans and defrauded them out of millions of dollars. In addition to this the multiyear effort to evade law enforcement by forming sham relationships with Native American tribes to launder their millions of dollars they took from the customers to hide Tucker’s ownership.
After a month of trial, Muir and Tucker were found guilty on 13 October 2017 on all the fourteen counts against the two. These include wire fraud, racketeering, truth in lending act, money laundering offenses.
The U.S. Judge P. Kevin Castel who was presiding over the trial imposed the sentences on the two. Joan said ‘for more than fifteen years Timothy and Scott made billions of dollars by exploiting working, struggling Americans through payday loans with high-interest rates reaching 1000%.
The two tried to hide their criminal scheme by claiming that their business is operated and owned by Native American tribes. However, Muir and Tucker’s predatory business has been closed, and they have been sentenced to a significant time in prison for their misleading practices’
According to reports the evidence presented at the trial included the following:
Racketeering Influenced Corrupt Organization Crimes or RICO crimes
From the year 1997 until 2003, Tucker participated in the business of making short-term, small, unsecured, high-interest loans and this was commonly called payday loans via the internet. Tucker lending enterprise has up to 1500 employees who were based in Overland Park, Kansas.
The team conducted business as Ameriloan, Cash Advance, cash loans. OneClickCash, United Cash Loans, US Fast Cash, 500 Fast Cash, Advantage Cash services And Star Cash Processing. Tucker and Muir who was his counsel since 2006 routinely charged interests of 600% to 700% and in some cases as high as 1000%.
These loans were issued to more than four and half a million working Americans in all the 50 states and it included 250,000 in New York. In the state of New York payday lending is highly prohibited and Tucker was lending money at exorbitant interest rates. Evidence presented at the trial established that Muir and Tucker were aware of the illegal nature of the loans and they continue issuing the loans.
Fraudulent Loan Disclosures
TILA is a federal statute intended to make sure that the consumers know the credit terms in clear and meaningful manner, both to protect consumers against unfair credit practices and inaccurate credit practices.
This is aimed to help the consumers compare credit terms knowledgeably and readily. TILA and other implementing regulations require the lenders to disclose clearly, accurately and conspicuously before any credit is extended to the consumer.
The annual percentage rate, finance charge, and total payments should reflect legal obligation between both parties of the loan.
The Tucker payday lenders alleged to have informed the prospective borrowers in simple and clear terms on the cost of the loan at the TILA Box.
In such a case, for example, you want a loan for $500 the TILA box gave a finance charge meaning the amount that the credit will cost the consumer would be $150. In essence, the total cost of the loan would be $650, Tucker Payday lenders TILA box indicated that the consumers would pay $30 for every $100 they borrowed.
In fact, documents indicated that in 2012 Muir and Tucker structured their repayment schedule that on borrower’s payday they would automatically withdraw the entire interest on the loan and they did not touch the principal balance. Again on the next payday, they could automatically withdraw an amount which was equal to the interest payment due which is already paid.
With Tucker and Muir approval the company proceeded to withdraw automatically the finance charges each payday and applied none of the money towards repayment of the principal. When they began to withdraw $50 to apply to the principal balance on loan every fifth of the month this did not reflect in the total loan.
Accordingly, Muir and Tucker knew that Tucker Payday Lenders’ TILA box understated the amount that the loan would cost including the total amount to be repaid. A customer who borrowed $500 ended up paying $1,925.
Sham Tribal Ownership of the Business
In response to the complaints that the company was extending cruel loans in violation of usury laws, several states started to investigate Tucker Payday Lenders. Tucker realizing that they are under investigation devised a scheme to move his millions to American tribes.
The American communities are protected by sovereign immunity among other doctrines. It is through the signing of contracts with the communities that Tucker lived to avoid the hand of the law.
They went to a great extent to provide and falsified documents to show that the tribes owned Tucker’s company. They gave scripts to their employees to indicate that they are operating from tribal areas yet they were still in their Kansas location. In addition to the terms, Tucker, 55 and Muir, 46 were sentenced to 3 years of supervised release.
The prosecution praised the outstanding work of the Southern District of New York and Kansas court officials and jury.
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