Racing driver arrested in massive online payday loan scheme

An online payday loan transaction has been accused of exploiting more than 4.5 million Americans, according to Manhattan U.S. Attorney Preet Bharara.

The payday lender has systematically evaded state laws in order to be able to charge illegal interest rates of up to 700% on loans, according to a criminal indictment, which was unsealed in federal court on Wednesday.

Authorities say professional racing driver Scott Tucker was arrested for leading the operation, which allegedly circumvented state laws by claiming to be owned and operated by Native American tribes. These tribes are generally immune to state usury laws that impose caps on interest rates.

Professional racing driver Scott Tucker, pictured here racing in 2010. (Photo by Rick Dole / Getty Images)

The transaction also violated the Truth in Lending Act, which requires clear disclosure of interest rates and other conditions, and the Racketeer Influenced and Corrupt Organizations Act, which prohibits the collection of illegal debts.

Tucker’s attorney, Timothy Muir, was also arrested Wednesday in Kansas City, KS. Requests for comment from their lawyers did not receive an immediate response.

“As alleged, Scott Tucker and Timothy Muir have targeted and exploited millions of ordinary people in difficulty by charging illegally high interest rates,” Bharara said in a statement. “This deceptive and predatory ploy to take advantage of the most financially vulnerable in our communities has been exposed for what it is – a criminal ploy.”

Payday loans, which are often aimed at low-income Americans who are desperate for cash, are known for their exorbitant interest rates, short repayment periods, and predatory practices.

The operation, which generated more than $ 2 billion in revenue over nearly a decade, relied on the cooperation of several Native American tribes in Oklahoma and Nebraska. These tribes agreed to help from 2003, according to the indictment. They would have received reduced income from payday loans in exchange for claiming to own and operate parts of the payday loan business.

While the lender employed around 600 people based in Overland Park, Kansas, employees often claimed they were in Oklahoma or Nebraska where the tribes were located. They were supposed to receive daily weather reports for tribal reserves, so that when speaking with borrowers on the phone, they could be convincing.

The operation did business under many names including Ameriloan, One Click Cash, United Cash Loans, US FastCash, 500 FastCash, Advantage Cash Services and Star Cash Processing.

Two Oklahoma Native American tribal corporations have agreed to forgo $ 48 million in payday lender proceeds, which are currently in tribal bank accounts. Prosecutors are also asking Tucker and Muir for the confiscation of a vacation home in Aspen, CO, six Ferrari racing cars, four Porsches and a Learjet plane.

Separately, on Wednesday, prosecutors said Richard Moseley was arrested in connection with a $ 161 million online payday loan program that granted loans to more than 600,000 Americans.

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