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Oklahoma tribe agrees to pay $48 million to avoid prosecution in payday lending scheme
NEWSOK by Brianna Bailey
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-
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.
Tribal Payday Lenders & Cronies Reproved
VEGAS (CN) – Three men accused of helping tribal payday lenders
defraud consumers settled federal charges Tuesday by agreeing to
permanent injunctions and fines.
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