Scott Tucker nears trial for payday loan rent-a-tribe scheme

Native Finance September 6, 2017

followed by Oklahoma tribe agrees to pay $48 million to avoid prosecution in payday lending scheme

A New York federal district court is preparing to hear the trial of payday-lender-turned-race-car-driver Scott Tucker beginning September 11th. Last year, federal district attorneys brought a $2 billion action against Tucker and his business associate, Timothy Muir, for alleged violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and the Truth in Lending Act (TILA) stemming from the issuance of payday loans in violation of state usury caps. To skirt state loan interest caps, Tucker entered into agreements with three federally-recognized tribes- the Miami Tribe of Oklahoma, Santee Sioux of Nebraska, and Modoc Tribe of Oklahoma. In exchange for one percent of the profits from the payday lending operations, the tribes agreed to provide Tucker’s businesses with sovereign immunity.

In general, tribes are permitted to impute sovereign immunity on tribally-owned businesses and political subdivisions of the tribal government. Courts analyze these arrangements under “arm of the tribe” tests to ensure there is a sufficient connection between the tribal government and the entity to warrant transfer of immunity. Courts across the nation have consistently found the arrangement between Scott Tucker and his partner tribes to be lacking in the financial and operational considerations necessary to cloak Tucker’s lending operations in tribal sovereign immunity. This leaves Tucker exposed to potential allegations of state law violations and fraudulent business schemes under RICO. The fraudulent business scheme included Tucker preparing false statements for tribal officials to use during state court trials, opening bank accounts in the tribe’s name but controlled by Tucker, and employees falsely informing borrowers that the business was operating on tribal lands, even going so far as to provide weather reports to borrowers to better convince them of the location of operations.

The Miami Tribe of Oklahoma has already returned $48 million in profits and acceded to a non-prosecution agreement with the U.S. Department of Justice. In stark contrast to the current situation involving Tucker and his former tribal business partners, NAFSA members abide by a strict set of industry best practices that include a number of provisions allowing NAFSA member tribal lending entities (TLEs) to properly adhere to arm of the tribe analyses time and time again. Tucker’s trial has the potential to put to rest a business model that is far from sustainable and help tribes enter a new era of lending.

Oklahoma tribe agrees to pay $48 million to avoid prosecution in payday lending scheme

http://newsok.com/article/5478088

NEWSOK by Brianna Bailey   February 10, 2016

Two companies controlled by the Miami Tribe of Oklahoma have agreed to pay $48 million to avoid federal prosecution for their involvement in a lending scheme that charged borrowers interest rates as high as 700 percent. 

As part of the Miami tribe's agreement with the federal government, the tribe acknowledged that a tribal representative filed false factual declarations in multiple state court actions. 

Federal prosecutors unsealed a criminal indictment Wednesday charging Kansas City Race Car driver Scott Tucker and his lawyer, Timothy Muir, with racketeering charges and violating the Truth in Lending Act for their role in operating the online internet payday lending business.

Tucker and Muir were arrested Wednesday in Kansas City, according to the U.S. Department of Justice. 

Tucker, 53, of Leawood, Kan., and Muir, 44, of Overland Park, Kan., are each charged with conspiring to collect unlawful debts in violation of the Racketeer Influenced and Corrupt Organizations Act, which carries a maximum term of 20 years in prison, three counts of violating RICO's prohibition on collecting unlawful debts, each of which carries a maximum term of 20 years in prison, and five counts of violating the Truth in Lending Act, each of which carries a maximum term of one year in prison.

Tucker and Muir had claimed the $2 billion payday lending business was actually owned and operated by the Oklahoma-
based Miami and Modoc tribes to avoid liability. The payday lending companies used the tribes' sovereign status to skirt state and federal lending laws, the indictment claims.

In a statement, the Miami Tribe and two companies controlled by the tribe, AMG Services Inc. and MNE Services Inc., said they have cooperated with authorities in the investigation and stopped their involvement in the payday lending business in 2013.

"This result represents the best path forward for the Miami and its members as we continue to build a sustainable foundation for the future," the statement said. "We are proud of our many recent accomplishments, including the diversification of our economic business development to support the long term goal of securing the tribe's valuable programs and services."

Funding from the tribe's businesses goes toward benefits and services for tribal members including healthcare and scholarship funds, as well as the revitalization of the tribe's native language and preserving Miami culture, the statement said. 

Tucker and Muir's payday lending scheme preyed on more than 4.5 million borrowers, who entered into payday loans with deceptive terms and interest rates ranging from 400 to 700 percent, Diego Rodriguez, FBI assistant director-in-charge, said in a statement. 

“Not only did their business model violate the Truth-in Lending Act, established to protect consumers from such loans, but they also tried to hide from prosecution by creating a fraudulent association with Native American tribes to receive sovereign immunity,” he said. 

The $48 million the Miami Tribe has agreed to forfeit in Tucker and Muir's criminal case is on top of the $21 million the tribe's payday lending companies agreed to pay the Federal Trade Commission in January 2015 to settle charges they broke the law by charging consumers undisclosed and inflated fees.

The tribe also agreed to waive $285 million in charges that were assessed but not collected from payday loan customers as part of its 2015 agreement with the Federal Trade Commission. 

Beginning in 2003, Tucker entered into agreements with several Native American tribes, including the Miami Tribe of Oklahoma, according to the indictment. As part of the deal, the tribes claimed they owned and operated parts of Tucker's payday lending business, so that when states sought to enforce laws prohibiting the predatory loans, the business would be protected by the tribes' sovereign immunity, the indictment claims. In return, the Tribes received payments from Tucker — typically about 1 percent of the revenues, according to the indictment. 

To create the illusion that the tribes owned and controlled Tucker's payday lending business, Tucker and Muir engaged in a series of deceptions, including preparing false factual declarations from tribal representatives that were submitted to state courts and falsely claiming, among other things, that tribal corporations owned, controlled, and managed the portions of Tucker's business targeted by state enforcement actions, the indictment claims.

Tucker opened bank accounts to operate and receive the profits of the payday lending enterprise, which were nominally held by tribal-owned corporations, but which were, in fact, owned and controlled by Tucker, according to the indictment. 

The indictment seeks to forfeit proceeds and property derived from Tucker and Muir's alleged crimes, including numerous bank accounts, an Aspen, Colo., vacation home, six Ferrari race cars, four Porsche automobiles, and a Learjet.

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https://www.courthousenews.com/tribal-payday-lenders-cronies-reproved/

Tribal Payday Lenders & Cronies Reproved

Courthouse News March 19, 2015

 LAS VEGAS (CN) – Three men accused of helping tribal payday lenders defraud consumers settled federal charges Tuesday by agreeing to permanent injunctions and fines.
     The settlements are part of a continuing federal effort to crack down on payday lenders that claim they are not bound by FTC regulations because they have affiliations with Native American tribes.
     U.S. District Judge Gloria Navarro permanently enjoining Don E. Brady, attorney Troy L. LittleAxe Jr., and Robert D. Campbell from engaging in lending fraud. All three men’s cases involved AMG Services, of Oklahoma, and other lenders.
     Navarro also ordered Brady to pay $71,677 and LittleAxe $25,000 to the Federal Trade Commission.
      Brady was AMG Services’ chief executive and administrator of the payday lending websites ameriloan.com, unitedcashloans.com, and usfastcash.com.
     Campbell was an officer of co-defendant SFS, which is owned by the Santee Sioux Nation of Nebraska, and ran the lending website oneclickcash.com.
     LittleAxe was the registered agent of co-defendant Red Cedar Services and administrator of lending website 500fastcash.com, both of which are owned by the Modoc Tribe of Oklahoma.
     The three men and the FTC jointly filed motions to settle charges involving a national payday lending scheme the FTC says was run by AMG Services and MNE Services, which are owned and chartered by the Miami Tribe of Oklahoma, and other co-defendants.
     Without admitting or denying guilt, the two lenders on Jan. 15 agreed to pay $21 million to the FTC and waive $285 million in uncollected charges allegedly owed by consumers across the nation.
     The FTC said the $21 million recovery was the largest ever in a payday lending case.
     The FTC in April 2102 accused the tribal lenders and others of violating the Truth in Lending Act and Electronic Fund Transfer Act by charging undisclosed and inflated fees on payday loans.
     The lenders misrepresented the amount loans would cost, for instance, telling consumers a $300 loan would cost $390 to pay off, but charging them $975.
     Because the lenders are affiliated with the Miami Tribe, they claimed they were not subject to FTC regulation.
     But Judge Navarro ruled in March 2014 that they are subject to FTC oversight and enforcement.
     Navarro on Tuesday permanently enjoined Brady , LittleAxe , and Campbell from misrepresenting or helping others to misrepresent payment schedules, amounts owed, prepayment penalties, interest rates, finance charges and fees on loans.
     Navarro also permanently enjoined them from concealing finance charges, annual percentage rates, payments schedules and total payments when loaning money to consumers, and from violating any provision of the Truth in Lending Act.
     Navarro ordered them to submit compliance reports and cooperate with the FTC during its continued investigation into the case, which has other actions pending in other federal courts.
     She also granted an FTC motion to allow U.S. Attorney Thomas E. Kane to practice law in Nevada to participate in the ongoing payday lender case and other matters .

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