September 26, 2011

"Rent-a-tribe" payday loan companies

Payday lending bankrolls auto racer's fortune

A joint investigation of iWatch News and CBS News
By David Heath
Scott Tucker used stealth to become a millionaire. Now the mysterious businessman from Kansas is spending his fortune to become a famous auto racer.

Though Tucker has not won any premier races outright, his publicity machine already compares him to NASCAR superstar Jimmie Johnson. It produced a slick documentary of his team’s third-place finish at a Daytona race which played at film festivals and aired on the Discovery Channel. A glowing Wall Street Journal profile last year dubbed Tucker as "Racing’s One-in-a-Million Story."
But:What Tucker doesn’t publicize: he is an ex-convict who runs a controversial business that regulators in at least five states have tried to shut down for violating their laws. Hiding behind a labyrinth of shell companies and operating from the ether of the Internet, Tucker’s businesses make payday loans over the Web even in states where they are outlawed. He offers quick cash to people desperate enough to borrow money from a faceless Web site, even signing over access to their bank account to total strangers. And he charges nearly 800 percent interest on loans that take months to pay off.

iWatch News found that some of Tucker’s tactics are common among businesses operating on the fringes of the law. By setting up a confusing array of shell companies and selling over the Internet, businesses are often able to frustrate state investigators trying to figure out simply who’s who.

But Tucker’s most innovative tactic has given businesses a new, powerful tool for eluding state authorities. The tactic has survived major court challenges, but the practice is so questionable that even storefront payday lenders–hardly known as paragons of business probity­–denounce it as unethical.

Tucker has partnered with a number of small Indian tribes to provide his payday lending business with the cloak of tribal sovereign immunity. Under federal law, tribes are equal to states as sovereign powers. So they are immune from being sued in state court.

Tucker says his payday lending businesses are now owned by the Miami and Modoc tribes of Oklahoma as well as the Santee Sioux of Nebraska. However, iWatch News found evidence in court and public records showing that Tucker secretly runs the payday lending business from his offices in Overland Park, Kan.

Lawyers in the Colorado attorney general’s office described Tucker’s tactics as a “web of deceit.” Others refer to it as “rent-a-tribe.”
Below:  "Payday lender turned racecar rookie, Scott Tucker." (Level 5 Motorsports/Flickr)



Complaints Filed Against Miami-Area Tribal Payday Loan Companies

By Lori FullbrightAn investigation of tribal-owned payday loan companies operating in Oklahoma finds that 30 percent of all the payday loan complaints filed at the Better Business Bureau are against seven companies, all located east of Tulsa in Miami.

Why are these companies exempt from state and federal guidelines?

These seven payday loan companies operate almost entirely on the Internet. The Better Business Bureau has received more than 2,000 complaints against them. Companies MTE Financial Services, 500 FastCash, Instant Cash USA and Cash Advance Network all have the same address, and the BBB traced that address to a Casino and Smoke Shop owned by the Modoc Indian Tribe.

Ameriloan, United Cash loans, and USFastCash all have the same address and the BBB found it is the offices for the Miami Nation Indian Tribe.

"The fact the tribe supposedly owns the company is not the problem. It's the business practices," said Rick Brinkley of the Better Business Bureau.

"A tribe can own a company and never generate a complaint, but what makes this unique is because the tribe does own it, state and federal laws do not apply."
Comment:  I wouldn't support any violations of the tribes' sovereign rights. But I wish tribes would police these payday loan businesses or, better yet, shut them down.

For more on the subject, see Native Coalition Defends Payday Loans and Payday Loans Violate Native Values.

Below:  "The exterior of Miami Nation Enterprises, which has an online payday lending business that has sovereign status beyond the reach of state regulators." (David Heath/iWatch News)

2 comments:

Rob said...

For more on the subject, see:

http://www.sacbee.com/2011/10/18/3986907/kansas-businessman-at-center-of.html

Kansas businessman at center of court fight on payday loan companies

As a successful driver on the international sports car circuit, Scott Tucker is used to checking his rear-view mirror to see who's behind him.

But for the last seven years, Tucker, of Leawood, Kan., also has been fighting to stay ahead of Colorado authorities who want to take a deep look at his finances and business affairs.

The case involves payday loans, poor borrowers and American Indian tribes, according to court records.

The Colorado authorities, including the state's attorney general and its top credit regulator, have taken the fight to a Kansas court, which they hope will finally grant them access to some of the wealthy businessman's records.

Rob said...

For the latest on the controversy, see:

http://www.cbsnews.com/8301-31727_162-57346743-10391695/federal-trade-commission-investigating-online-payday-lender-profiled-by-cbs-news/

Federal Trade Commission investigating online payday lender profiled by CBS News

An online payday lending business, the subject of a CBS News/Center for Public Integrity investigation in September, is now under investigation by the Federal Trade Commission (FTC) according to information revealed at a recent Colorado state court hearing.

The online payday lenders are operated by a parent company called AMG Services and they lend money under the names 500fastcash, United Cash Loans, US Fast Cash and Ameriloan.

The Colorado Attorney General argued at a November hearing that while a small Native American tribe owns the businesses, Level 5 Motorsports race car driver and convicted felon Scott Tucker actually runs the payday lending operations. AMG Services employs Scott Tucker.

Numerous attorneys general, including Colorado, are pursuing the payday lending companies affiliated with Tucker for breaking state laws.