U.S. returns $505 million to victims of giant payday lending scheme

[September 28, 2018]    By Jonathan Stempel

(Reuters) - U.S. authorities said on Thursday they were mailing more than $505 million of refund checks to nearly 1.18 million people who were victimized in a massive payday lending scheme run by former race car driver and convicted racketeer Scott Tucker.

 Scott Tucker exits the Manhattan Federal Court in New York February 23, 2016. REUTERS/Brendan McDermid

The payout announced by the Federal Trade Commission, which is working with the Department of Justice, stemmed from a $1.27 billion civil judgment that the FTC won in September 2016 against Tucker, who ran AMG Services Inc, and some of his companies.

The money will go to consumers who obtained loans from seven portfolios once serviced by AMG: Advantage Cash Services, Ameriloan, 500FastCash, OneClickCash, Star Cash Processing, UnitedCashLoans and USFastCash.

Tucker, 56, of Overland Park, Kansas, is appealing his October 2017 conviction on racketeering and other charges, and his 16-year, eight-month prison sentence.

His case arose from a federal crackdown on people who exploit cash-strapped consumers by charging exorbitant interest rates and fees on short-term loans, some of which could tide over borrowers from paycheck to paycheck.

Prosecutors said Tucker's companies routinely charged interest rates as high as 700 percent, and took advantage of more than 4 million consumers from 1997 to 2013.

Tucker is arguing in his appeal that the trial judge gave flawed jury instructions, and wrongly prevented him from offering proof to support his view that state interest rate caps did not apply to his loans.

The $1.27 billion judgment is the largest litigated judgment won by the FTC.

A lawyer who defended AMG in the early stages of that case, Andrew Smith, is now director of the FTC consumer protection bureau.

US Bancorp <USB.N>, where Tucker was a longtime customer, agreed in February to a $528 million penalty for violations of the federal Bank Secrecy Act, including for failing to report Tucker's suspicious activities in a timely manner.

(Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum)

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