A federal court of appeal has confirmed criminal convictions Kansas City-area payday loan mogul Scott Tucker and his lawyer Tim Muir.
The United States Court of Appeals for the Second District issued its long-awaited opinion on Tuesday, dismissing Tucker and Muir’s arguments that a New York jury was improperly instructed before sentencing the two men and that the government had not proven that they knew their business loan was illegal.
Tucker and Muir were convicted in 2017 of 14 counts of racketeering, conspiracy and fraud related to their payday lending business at Overland Park, which has grown to employ 1,500 workers and generated billions in revenue on what federal prosecutors said was the exploitation of 4.5 million borrowers with illegal interest rates and deceptive loan terms.
A New York federal judge sentenced Tucker, a resident of Leawood, to 16 years and eight months in prison while ordering Muir to serve seven years. Tucker was also ordered to forfeit $ 3.5 billion in ill-gotten gains from his lending empire.
Tucker, who first rose to prominence in the public eye as a professional racing driver backed by the fortunes of his less visible business activities, started a payday loan business in Kansas City in 1997. The Loans payday are advertised as small dollars, short term. term loans intended to delay a borrower until their next payday.
In practice, loans are often criticized for trapping borrowers in endless debt cycles due to confusing loan terms, automatic renewals, and aggressive collection tactics.
In Tucker’s case, the loans were structured in such a way that renewal fees, interest, and service charges could force a borrower to pay $ 975 to settle a $ 300 loan.
On appeal, lawyers for Tucker and Muir argued that the trial court judge gave jurors an incorrect and prejudicial instruction to the jury before beginning deliberations. The instruction was that federal prosecutors could show that Tucker and Muir willfully broke the law by collecting illegal debts if they “acted willfully, knowing the actual interest rates on the loan.”
Tucker and Muir argued that the instruction was inconsistent with how will is generally understood in criminal law, namely that defendants know the illegal nature of what they are doing.
At trial, the defendants said they knew the interest rates on their loans but had a good faith belief that they were legal.
This argument did not convince the appeals court judges, who concluded that it had no bearing on the verdict, as the evidence was overwhelming that Tucker and Muir knew what they were doing and indulged in. to a deception to try to hide it.
The appeal judges said the efforts of the two men to cover up their involvement in the loan operation, particularly the way they set up shell businesses on Native American tribal lands as fronts of the business that mainly existed in Overland Park, betrayed Tucker and Muir’s knowledge that the loans were illegal.
The business entities behind Tucker’s payday lending business were established on tribal lands in Oklahoma and Nebraska because states cannot regulate payday loans on American Indian sovereign property. Little or no loan work has been done on these tribal lands, prosecutors told jurors at the trial.
And the defendants attempted various ploys to hide the true nature of the loan transaction.
“This deception was taken to theatrical lengths: Kansas office workers regularly received weather reports for tribal reservation locations, so they could chat with borrowers about the weather in Oklahoma or Nebraska,” said the decision of the court of appeal.
Tucker, 58, is serving a sentence at Leavenworth Federal Penitentiary where he awaits the outcome of an ongoing criminal case against him and another tax evasion attorney in the U.S. District of Kansas.
In this case, Tucker is accused of filing a false income tax return in 2008 that left out $ 42.5 million in salary-related income and an additional $ 75 million in 2011.
The Kansas criminal case was largely on hold while Tucker’s New York conviction was on appeal.
Muir is serving his sentence in a federal prison in Pennsylvania.