Manhattan U.S. Attorney Announces Settlements With Two Native American Tribes Involved In Scott Tucker’s Payday Lending Scheme; Also Announces That More Than $500 Million In Forfeited Funds Will Be Returned To Victims Of The Scheme

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced non-prosecution agreements (the “Agreements”) with tribal corporations controlled by two Native American tribes: the Modoc Tribe of Oklahoma and the Santee Sioux Tribe of Nebraska.  As part of the Agreements, the tribal corporations agreed to forfeit, collectively, $3 million in proceeds from the illegal payday lending enterprise owned and operated by Scott Tucker.  As part of the Agreements, the tribal corporations acknowledged, among other things, that Tucker used his agreements with the tribal corporations to evade state usury laws and that representatives of the tribes filed affidavits containing false statements in state enforcement actions against parts of Tucker’s payday lending enterprise.

Mr. Berman also announced that monies forfeited to the Office in connection with its investigation of Tucker’s scheme, including monies recovered as part of the Agreements, will be remitted to the Federal Trade Commission (“FTC”) for distribution to victims of the payday lending scheme.  In total, the U.S. Attorney’s Office expects to remit in excess of $500 million to the FTC for victims.

U.S. Attorney Geoffrey S. Berman stated:  “To hide their criminal payday lending scheme, Scott Tucker and Timothy Muir tried to claim their business was owned and operated by Native American tribes.  Today’s settlements with two of those tribes will add $3 million to the hundreds of millions already recovered – from Tucker, from U.S. Bancorp, and from a non-prosecution agreement with a third native American tribe – to compensate Tucker’s millions of victims.”           

Tucker’s Payday Lending Scheme

On January 5, 2018, Tucker was sentenced to 200 months in prison for operating a nationwide internet payday lending enterprise that systematically evaded state laws for more than 15 years in order to charge illegal interest rates as high as 1,000 percent on loans.  Tucker’s co-defendant, Timothy Muir, an attorney, was sentenced to 84 months in prison for his participation in the scheme.  In addition to their willful violation of state usury laws across the country, Tucker and Muir lied to millions of customers regarding the true cost of their loans to defraud them out of hundreds, and in some cases, thousands of dollars.  In furtherance of their multi-year effort to evade law enforcement, Tucker and Muir formed sham relationships with Native American tribes and laundered billions of dollars obtained from customers through bank accounts nominally held by the tribes in order to hide Tucker’s ownership and control of the business.  Tucker and Muir were sentenced following their convictions on all 14 counts against them after a five-week jury trial that concluded on October 13, 2017.

The Sham Tribal Ownership of Tucker’s Businesses

In response to complaints that Tucker’s payday lending enterprise was extending abusive loans in violation of their usury laws, several states filed actions to enjoin the enterprise from operating in their states.  To thwart these state actions, Tucker devised a scheme to claim that his lending businesses were protected by sovereign immunity, a legal doctrine that, among other things, generally prevents states from enforcing their laws against Native American tribes.  Beginning in 2003, Tucker entered into agreements with several Native American tribes (the “Tribes”), including the Modoc Tribe of Oklahoma, the Santee Sioux Tribe of Nebraska, and the Miami Tribe of Oklahoma.  The purpose of these agreements was to make it appear that the Tribes owned and operated parts of Tucker’s payday lending enterprise so that when states sought to enforce laws prohibiting usurious loans, Tucker’s lending businesses could claim to be protected by sovereign immunity.  In return, the Tribes received payments from Tucker, typically one percent of the revenues from the portion of Tucker’s payday lending business that the Tribes purported to own. 

Recovery and Distribution of Money for Victims of Tucker’s Payday Lending Scheme

Through various actions, the U.S. Attorney’s Office has recovered hundreds of millions of dollars that will be remitted to victims of Tucker’s scheme.  In addition to the recoveries from the Modoc and Santee Sioux Tribes announced today, the Office has also recovered $48 million pursuant to a non-prosecution agreement with the Miami Tribe of Oklahoma and tens of millions of dollars in cash and properties from Tucker.  In addition, as announced on February 15, 2018, the Office intends to remit money recovered by the Government from U.S. Bancorp for Bank Secrecy Act (“BSA”) violations to victims of the scheme.  In total, the Office has recovered in excess of $500 million for victims.

To facilitate distributions to victims, the Office is transferring the recovered funds to the FTC, which successfully brought a related civil action against Tucker and various entities involved in the illegal payday lending scheme.  Monies recovered by this Office will be pooled with monies recovered by the FTC and distributed to victims by the FTC according to terms and in a manner to be announced later this year.  Victims seeking restitution are encouraged to visit www.ftc.gov/amg for updated information regarding the FTC’s redress program and to sign up to receive email updates.  www.ftc.gov/news-events/press-releases/2018/06/statement-ftc-chairman-simons-dojs-remitting-more-500-million-ftc

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html

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Mr. Berman praised the outstanding investigative work of the St. Louis Field Office of the Internal Revenue Service-Criminal Investigation.  Mr. Berman also thanked the Criminal Investigators at the United States Attorney’s Office, the Federal Bureau of Investigation, and the Federal Trade Commission for their assistance with the case.

The prosecution is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Niketh Velamoor, Hagan Scotten, and Sagar Ravi are in charge of the prosecution.