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MEMO

From: boconnor@detroitnews.com

Sent: Monday, Feb. 22, 2016

To: The Moral Universe

Subject: What got into YOU all of a sudden?

Let me get this straight: Kanye is broke, pharma-bro Martin Shkreli is busted and Scott Tucker is facing prison?

Keep this up and I might start thinking that what goes around actually comes around, that just desserts do indeed get served, and that paybacks really are … you know.

Sincerely,

Brian

You’re likely familiar with nearly every aggravating person on the list above of those receiving some timely humiliation, such as the boorish rapper who announced he was broke to the tune of $53 million one day after losing in the Grammys. You also may be familiar with the pharmaceuticals investor and congressional smirker who hiked the price on a vital AIDS drug by 5,556 percent only to be subsequently busted by the FBI for fraud.

But you probably don’t know that last guy, so let’s all meet Mr. Scott Tucker.

Tucker, 53, of Leawood, Kansas, is a winning American Le Mans race car driver who ran AMG, a nationwide payday lending outfit with 600 people headquartered in Overland Park, Kansas. He’s also a convicted felon who spent a year in Leavenworth after being convicted of mail fraud. I hope he hung on to his shower sandals, because it looks like he could soon be making a return trip.

That orange jumpsuit is so YOU!

That’s because the federal government is breaking with its long tradition of settling accusations of sleazy scams by fining the culprits for a few million bucks of their ill-gotten gains, then allowing them to admit no guilt. It’s a model that’s served several agencies (but not consumers) well for years, including the Federal Trade Commission, the Securities and Exchange Commission and the U.S. Department of Justice.

But not this time. According to the Manhattan U.S. Attorney, the IRS and the FBI, Tucker has been running a systematic $2 billion payday rip-off that violated all kinds of laws to trap more than 4.5 million victims in abusive loans with interest rates that started at 400 percent and went as high as 700 percent. And in this case, the feds aren’t out for money.

On Feb. 10, Manhattan U.S. Attorney Preet Bharara charged Tucker as if he was a mobster, under the Racketeer Influenced and Corrupt Organizations Act. Among other charges, Tucker and his attorney, Timothy Muir, were each hit with three counts of violating RICO’s prohibition against collecting unlawful debts. Each count carries a maximum term of 20 years in prison.

That, notes Charlene Crowell, communications manager at the Center for Responsible Lending, is stunning. “I don’t know of any RICO charges ever being filed in connection with payday lending,” she says.

RICO: Don’t lose that number

While payday loans are legal in many states, the interest rate is capped way before 400 percent, and are plenty profitable for payday lenders who run legal (if unconscionable) operations. Instead, Tucker and his cohorts would take a two-week loan and continue to roll it over, charging a new loan fee each time but never collecting any of the principal. By the time borrowers figured out that those charges weren’t being applied to the balance, a loan of $500 that was promoted with a $150 finance charge would balloon from a total payment of $650 (which would be bad enough) up to $1,925.

Tucker shielded himself from enforcement actions brought by several states by creating a sham corporation with a Native American tribe, Bharara said. In exchange for not being charged, the Miami Tribe of Oklahoma agreed to forfeit $48 million it received for fronting the scheme.

Tucker operated under the names Ameriloan, Cash Advance, One Click Cash, Preferred Cash Loans, United Cash Loans, US FastCash, 500 FastCash, Advantage Cash Services and Star Cash Processing. If you had one of these hideous loans you might be able to get restitution, so contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York at (866) 874-8900 or at www.usdoj.gov/usao/nys/victimwitness.html.

Of course, Tucker and Muir have only been indicted and arrested, not convicted, and while I blanch at the idea of considering any payday lender innocent until proven guilty, we will need to see how things play out in court or in a plea deal. In the meantime, I’m hoping federal attorneys will continue to roll out the RICO act instead of letting crooked lenders pay a fine and walk away.

In the meantime, I hope this turns in a trend and, if it does, hey, thanks, Moral Universe. And let me just add a small postscript to my letter above:

P.S.

Still waiting on you to deal with Justin Bieber, the anti-vaccine crowd, Putin and that guy from accounting who keeps scorching codfish in the office microwave. Maybe get some help from karma?

B

boconnor@detroitnews.com

Twitter: @BrianOCTweet

Brian O’Connor is author of “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”

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