Indian tribe 'employee' thrives on payday loans
Barb ShellyWhile Missouri’s many brick-and-mortar payday loan shops have been the focus of public ire and reform efforts over the last few years, an even more insidious operation has thrived across the state line in Overland Park.
According to a class-action suit, Johnson County businessman Scott Tucker for years has presided over a vast web of Internet payday loan operations. A separate lawsuit brought by the Federal Trade Commission alleges that those operations seek to deceive and entrap consumers.
Tucker, 50, seeks glory on the auto racing circuit and flies between his home in Leawood’s pricey Hallbrook neighborhood to his $8 million vacation home in Aspen, Colo., on a private Learjet.
According to the FTC lawsuit, Tucker and affiliated businesses and individuals make short-term loans. But instead of claiming a one-time finance charge on an agreed-upon date, the companies gain access to consumers’ bank accounts and make multiple withdrawals, assessing a new finance charge every time.
In a typical example, a consumer borrowed $300 and received a loan disclosure stating she would pay a $90 finance charge. So the loan should have cost $390. By the time the woman closed down her account, it had been drained of $735.
Various authorities have been on to Tucker since at least 2003, when the Kansas Bank Commission brought an enforcement action against one of his companies. Regulators in at least five states have tried to shut down his businesses.
Tucker eluded authorities by forming partnerships with small American Indian tribes. By claiming to be a mere employee of tribal-owned businesses, Tucker could claim sovereign immunity from government regulators.
If all this sounds outrageous, fantastical even, it is.
“Some companies locate off shore to try to hide from authorities. … Tucker was able to hide (his business) at an office park in suburban Kansas City,” wrote reporter David Heath for iWatch News, a service of the Center for Public Integrity.
Jeffrey D. Morris, a Kansas City lawyer representing Tucker, said his client would vigorously contest the premise of the class-action lawsuit — that Tucker, not the Indian tribes, owns the businesses and has violated multiple laws.
Another attorney, Timothy Muir, said the business practices of the tribes are “fully compliant with federal law.” Muir himself is a defendant in the FTC lawsuit, as are Tucker and 17 other parties.
The iWatch investigation and class-action lawsuit, however, have produced material to suggest that Tucker, not the tribes, is running the show.
Bank accounts for a business ostensibly owned by an Indian tribe are used to maintain Tucker’s $13 million jet, for example.
If allegations are valid, Tucker and associates have made a fortune by cleaning out the bank accounts of people desperate enough to seek short-term loans over the Internet. All the while Tucker has traveled in polite society in Kansas City and elsewhere, even gathering adoring reviews for his racing exploits.
The message of all this is that people will always seek ways to part people from their money — and the less money folks have, the more vulnerable they are to exploitation.
A proposed Missouri ballot initiative capping annual interest rates on payday loans at 36 percent would do a lot to curb the abuses that go on in the state. But acts of usury will continue as long as they are tolerated and even abetted by people who think their own hands are clean.
Apart from the Missouri legislature, mainstream banks are chief enablers of payday lending. They issue credit and maintain accounts for short-term lending businesses.
“If consumer banks decide not to lend money to companies in our industry or to us, our ability to borrow at competitive interest rates (or at all), our ability to operate our business and our cash availability would likely be adversely affected,” QC Holdings, one of the nation’s payday loan giants, wrote in a Securities and Exchange Commission filing.
Like Tucker’s business network, QC Holdings has its headquarters in Overland Park. That’s a coincidence; there is no business relationship. But area banks and other services have forged a mutually beneficial relationship with one of the nation’s largest payday lenders, and also with a controversial Internet payday loan operation.
The FTC action seeks to shut down the Internet network and force Tucker and others to compensate people allegedly harmed by their activities. The class-action suit also seeks compensation. In the meantime, business continues full tilt at 10895 Lowell Ave. in Overland Park, where Tucker’s business employs hundreds of people.
Consumers beware.
To reach Barb Shelly, call 816-234-4594 or send email to bshelly@kcstar.com.
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