In-House Counsel

General Counsel And CEO Convicted Over Payday Lending Scheme

The jury didn't take long to return guilty verdicts.

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After a five-week trial, it took a jury less than a full day to return guilty verdicts on all counts against two former executives of a payday lending operation. Timothy Muir, former General Counsel, and Scott Tucker, ex-CEO, of AMG Services Inc. were found guilty on 14 counts, including money laundering, wire fraud, and violations of federal racketeering and lending laws.

According to the government, the pair operated a series of payday loan affiliates which charged as much as 700 percent interest on short-term loans to 4.5 million people and used bogus arrangements with Native American tribes to circumvent state laws limiting the interest due. In a press release, Acting Manhattan U.S. Attorney Joon H. Kim stated:

As a unanimous jury found today, Scott Tucker and Timothy Muir targeted and exploited millions of struggling, everyday Americans by charging them illegally high interest rates on payday loans, as much as 700 percent.  Tucker and Muir sought to get away with their crimes by claiming that this $3.5 billion business was actually owned and operated by Native American tribes.  But that was a lie.  The jury saw through Tucker and Muir’s lies and saw their business for what it was – an illegal and predatory scheme to take callous advantage of vulnerable workers living from paycheck to paycheck.

Witnesses at the trial included former employees who were instructed to lie to customers about the location of the operation, to maintain the illusion of being a Native American business. Customers victimized by their practices also testified, detailing loans that automatically renewed unless there was an affirmative opt-out, and auto deductions that only applied to the interest not the principle of the loan, with the details hidden in the loan paperwork.

According to a report from the Wall Street Journal, the penalties could be severe:

The racketeering charges of conspiring to collect unlawful debts each carry up to 20 years in prison, while violations of the Truth in Lending Act each carry a year in prison. Mr. Tucker, who has a successful side career as a race car driver, could also have to forfeit property the government alleges was derived from the schemes, including Ferrari race cars and Porsches, a Learjet airplane, and a vacation home in Aspen, according to court documents.

Lawyers for Muir have not commented on the verdict, while Tucker’s attorney told the Journal they “absolutely intend to appeal.”

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Former ‘Payday Lending’ GC Convicted at Trial [Corporate Counsel]

headshotKathryn Rubino is an editor at Above the Law. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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