Payday-lending executives found guilty on all counts in New York court
The Wall Street Journal
By Rebecca Davis O’Brien
13 October 2017
leaves a federal court in New York last year. A jury convicted Mr.
Tucker of all charges in a case involving his $2 billion payday-lending
business. Photo: Brendan McDermid/Reuters
A federal jury in Manhattan found Kansas City businessman Scott Tucker
guilty on all counts in a racketeering case centered on his $2 billion
payday-lending business, which prosecutors had argued was built on
illegal partnerships and predatory loans.
The jury also convicted Timothy Muir, a former lawyer for Mr. Tucker’s
company who was Mr. Tucker’s co-defendant. Both men were convicted on
14 counts, including money laundering, wire fraud, and violations of
federal racketeering and lending laws. The verdicts followed less than
a full day of deliberations.
During the four-week trial, prosecutors from the Manhattan U.S.
attorney’s office argued that Mr. Tucker’s company illegally charged as
much as 700% interest on short-term loans to more than 4.5 million
people, hiding the terms of the loans in deceptive paperwork and using
sham partnerships with Native American tribes to evade state laws
capping interest rates.
Mr. Tucker’s lawyers argued the business arrangements with the tribes
were legal, and said the terms of the loans were laid out in documents
provided to customers. Mr. Muir took the witness stand in his own
defense, saying the tribes had significant control over the business.
Prosecutors and their witnesses disputed that.
A lawyer for Mr. Tucker said in a voice mail message Friday that they
“absolutely intend to appeal.” A lawyer for Mr. Muir didn’t immediately
respond to a request for comment.
In a statement Friday, Acting Manhattan U.S. Attorney Joon H. Kim said:
“The jury saw through Tucker and Muir’s lies and saw their business for
what it was—an illegal and predatory scheme to take callous advantage
of vulnerable workers living from paycheck to paycheck.”
The trial shed light on the payday lending industry, a controversial
area of finance whose defenders say provides a vital lifeline to people
who don’t have access to other lines of credit. Critics say payday
lending businesses prey on the very people they purport to serve,
trapping them in a cycle of fees that drain their paychecks.
Witnesses at the trial included former employees of Mr. Tucker’s
company, AMG Services Inc., who described how the company grew from a
storefront family shop to a massive enterprise based in an office
complex outside Kansas City. Call-center workers there were instructed
to tell callers that they were working out of tribal lands in Nevada or
Oklahoma, to preserve the illusion that AMG’s lending subsidiaries were
Native American businesses, according to evidence and testimony at
Jurors also listened, with fixed attention, to the testimony of several
people who had taken out loans from AMG affiliates, such as
500FastCash, and discovered months later that the fees had been slowly
draining their bank accounts.
Prosecutors said AMG customers ended up on the hook for huge interest
payments in part because the loans automatically renewed unless the
customer opted out—terms they said were hidden in the loan paperwork.
Further, the company lied about the true cost of the loans, prosecutors
alleged, applying automatic payday deductions from borrowers’ accounts
only to the interest and not the principal, trapping them in a cycle of
Lawyers for the two men had argued at trial that the loans’ terms were
laid out in documents and emails, but that customers didn’t choose to
The racketeering charges of conspiring to collect unlawful debts each
carry up to 20 years in prison, while violations of the Truth in
Lending Act each carry a year in prison. Mr. Tucker, who has a
successful side career as a race car driver, could also have to forfeit
property the government alleges was derived from the schemes, including
Ferrari race cars and Porsches, a Learjet airplane, and a vacation home
in Aspen, according to court documents.