Payday Lenders Must|Cough Up $1.3 Billion

LAS VEGAS (CN) — A federal judge ordered payday lenders that refused to settle with the Federal Trade Commission to pay $1.3 billion for defrauding consumers.
     U.S. District Judge Gloria Navarro on Friday granted the FTC motion for summary judgment against AMG Capital, Level 5, Black Creek, Broadmoor, and Scott Tucker, who “controlled, founded or was president” of the payday lenders, and ordered them to pay $1,301,897,652.
     Tucker and his companies challenged as hearsay much of the FTC evidence against them, including emails written by Tucker, and checks and bank records.
     Navarro rejected that, saying checks and bank records fall under the business records exception to the hearsay rule, and some of the emails were written by Tucker.
     Navarro did, however, exclude an investigative report, which she was not made in the regular course of business and did not meet requirements of the Federal Rule of Evidence.
     Navarro said the FTC satisfied the prongs for individual liability by showing Tucker controlled the lenders and provided the capital to fund all loan transactions approved by related tribal lenders, the Santee Sioux of Nebraska and the Miami and Modoc tribes in Oklahoma.
     The tribes needed only to designate a single employee to carry on the payday lending with the full support of Tucker’s loan servicing companies, Navarro found.
     Many payday lenders have set up nominal shops on Indian reservations, claiming that state lending laws do not apply there. Numerous lawsuits and enforcement actions have resulted.
     In this case, Navarro said the tribes and their lending entities were completely dependent upon Tucker’s lending entities to conduct business, and the Miami tribe gave Tucker power of attorney over its accounts. Tucker also was an authorized signatory on several defendant accounts.
     Navarro found that Tucker was at the very least “recklessly indifferent” to misrepresentations made by lenders, and reviewed loan disclosures and websites used for payday lending, and his actions satisfy the knowledge requirement for culpability.
     “No real distinction exists between the corporate defendants” and Tucker, and common enterprise liability also applies, Navarro wrote.
     She ordered $1,301,897,652 as equitable monetary relief for the FTC.
     Tucker’s wife, Kim Tucker, must pay $19,072,774, for payments she received from co-defendants, and Park 269 must pay $8 million within 14 days of the order.
     Navarro found that neither Tucker’s wife nor Park 269 has a legitimate claim to money received from Tucker’s lending entities, and ordered it be repaid. Park 269 is wholly owned by Kim Tucker, and “nominally owns” an $8 million home in Aspen, Colo.
     Navarro also permanently enjoined Tucker et al. from engaging in consumer lending, and granted most of the FTC’s request for $1,317,753,577 for consumer loss incurred from 2008 to 2012, minus amounts already paid by related defendants.

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