Federal prosecutors are plotting sweeping criminal charges against a car-racing mogul whose online payday lending empire uses American Indian tribal lands as a base of operations to evade state law, Bloomberg reports. Predatory payday loans with triple-digit interest rates remain legal in most states, and even the jurisdictions that have banned or heavily regulated the industry have to contend with internet-based versions of the business model that are far more difficult to police. But the Federal Bureau of Investigation (FBI) and the Manhattan U.S. Attorney’s office are readying an unprecedented crackdown against one such online lender that may even include racketeering charges under a law initially created to fight the mob, Bloomberg’s sources say. Scott Tucker’s AMG Services Inc. operates in affiliation with various tribes, who act as official owners of the business so that the company’s conduct is immune from state law. A judge recently upheld AMG’s legal immunity in Colorado, derailing the state attorney general’s attempt to pursue Tucker for violating the state’s restrictions on high-interest short-term lending. But a separate outstanding suit against Tucker’s firm’s advertising practices has been allowed to proceed. A judge in that case ruled in favor of the Federal Trade Commission (FTC), finding that the company lead borrowers to believe that it would cost $650 to repay a $500 loan while using the fine print of loan agreements to dramatically increase the actual cost. That same $500 loan “could actually cost the borrower $1,925” as a result, the Center for Public Integrity reported.
Posted on: Wed, 17 Dec 2014 13:58:14 +0000
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