Scott Tucker was arrested on Wednesday on criminal charges accusing him of living the high life on the backs of millions of people who used his payday lending operation.
An indictment unsealed in Manhattan federal court charged him with conspiracy, collection of unlawful debts and understatement of interest rates to consumers who found themselves deep in debt after sometimes paying Tucker and his companies 700% interest or more for their loans.
The indictment said Tucker spent over $100m on personal expenses such as luxury homes and cars, jewellery, a private air plane and the expenses of a professional racing team which, according to its website, races Ferraris in “marquee” events through the world, including France, Monaco and Abu Dhabi. He also competed in the 24 hours of Le Mans race on several occasions. The indictment sought $2bn in forfeiture, along with six Ferraris, four Porsches and one Learjet.
Tucker and his one-time top business lawyer Timothy Muir, who was also arrested on Wednesday, allegedly exploited over 4.5 million people in the United States who were struggling to pay basic living expenses. It said they were deceived by misleading communications and contracts.
“Tucker and Muir forced many of these individuals into cycles of debt in which they incurred new usurious payday loans ... in order to pay off their existing debt,” the indictment said.
Lawyers for Tucker and Muir did not immediately answer messages seeking comment.
Court papers said Tucker and Muir received complaints from thousands of consumers, state regulators and consumer protection groups even before states began suing in 2003 to stop the loan practices.
To defeat lawsuits and avoid civil and criminal liability, Tucker entered sham business relationships with three Native American tribes, claiming the payday lenders were protected by “tribal sovereign immunity,” the indictment said. It said some state lawsuits were dismissed on those grounds.
The lending scheme operated from 1997 through August 2013, generating over $2bn in revenues from 2003 to 2012 alone and providing Tucker with hundreds of millions of dollars in profits, authorities said.
Various states, including New York state and the District of Columbia, ban payday loans or have usury limits that effectively prohibit them, the court papers said.
In 2012, the Federal Trade Commission sued Tucker in Nevada over the payday lending operation. The agency has said in court papers that Tucker pocketed at least $420m unlawfully.
Tucker and other defendants said in a filing last year that their practices were industry-wide and that they received only 750 complaints on over five million loans issued from 2008 to 2012.