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Tucker et al hit with $1.3 B penalty for payday loan scheme

Kansas City, MO
10/04/2016
Fine Amount: 
$1.3 Billion
Penalty Type: 
Issued by: 

The Federal Trade Commission has announced that a federal court has found that racecar driver Scott A. Tucker and several corporate defendants in a Kansas City-based payday lending scheme violated Section 5 of the FTC Act and has ordered them to pay $1.3 billion for deceiving consumers across the country and illegally charging them undisclosed and inflated fees. The $1.3 billion order handed down by the U.S. District Court for the District of Nevada stems from a complaint filed in 2012 by the agency, which alleged that the operators of AMG Services Inc. falsely claimed they would charge borrowers the loan amount plus a one-time finance fee. Instead, the defendants made multiple withdrawals from consumers’ bank accounts and assessed a new finance fee each time, without disclosing the true costs of the loan. The judgment represents the difference between what consumers actually paid on the loans and what they were told they would have to pay.

In granting summary judgment for the Commission, Chief Judge Gloria M. Navarro found that Scott Tucker ran the operation and was individually responsible for the unlawful conduct. The order announced today bans Tucker and his companies, including AMG Capital Management LLC, Level 5 Motorsports LLC, Black Creek Capital Corporation, and Broadmoor Capital Partners, from any aspect of consumer lending, and prohibits them from conditioning the extension of credit on preauthorized electronic fund transfers, misrepresenting material facts about any good or service, and engaging in illegal debt collection practices. The operation had claimed in state legal proceedings that it was affiliated with Native American tribes, and therefore immune from legal action, but, in an earlier decision, the district judge found otherwise.

A judgment of $1.302 billion was entered in favor of the FTC against the defendants as equitable monetary relief. Judgment was also entered against Relief Defendants Kim Tucker ($19.07 million) and Park 269, LLC ($8 million).

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