Former race-car driver Scott Tucker was arrested by federal agents today on racketeering charges related to his online payday lending operations that court documents say generated more than $2 billion.
In an indictment unsealed today, a New York grand jury charges Tucker with bilking 4.5 million customers through illegal payday loans starting in 1997. In 2003, to elude state regulators, the indictment alleges, Tucker entered into “sham business relationships” with three Indian tribes to shield the operation with tribal sovereign immunity.
The Center for Public Integrity and CBS News exposed Tucker’s relationship to the payday lending business in a series of 2011 articles. At the time, Tucker was best known as a late-blooming and successful driver in the American Le Mans Series.
“Scott Tucker and Timothy Muir targeted and exploited millions of struggling, everyday people by charging illegally high interest rates – as much as 700 percent,” U.S. Attorney Preet Bharara said in a statement.
Bharara said agents of the FBI and Internal Revenue Service exposed Tucker’s relationship with Indian tribes as “a criminal scheme.”
The Center’s investigation revealed that Tucker’s deals with three tribes, the Miami and Modoc of Oklahoma, and the Santee Sioux of Nebraska, gave them only 1 percent of the revenues.
The indictment alleges that Tucker spent more than $100 million of the income on personal items, including luxury homes, automobiles, a private jet and expenses for his racing team, Level 5 Motorsports.
To create the illusion that the tribes owned the company, AMG Services, Tucker prepared false documents submitted to state courts, the indictment says. It also says he gave his workers in Overland Park, Kansas, daily weather reports to make customers on the phone believe the business was located on tribal lands in Oklahoma and Nebraska.
In 2012, the Federal Trade Commission sued Tucker and the tribes for violating federal lending laws. The tribes settled the case a year ago for $22 million. The FTC is currently seeking $1.3 billion from Tucker.
The indictment also charges Tucker’s lawyer and brother-in-law, Timothy Muir, with racketeering.