A federal judge who already ruled that former race-car driver Scott Tucker violated U.S. lending laws must now decide whether to order him to pay $1.3 billion for operating an illegal payday-lending business.
The Federal Trade Commission this week asked U.S. District Judge Gloria M. Navarro of Nevada to award the large sum in damages, which it said was how much borrowers were overcharged for the company’s payday loans from 2008 to 2012.
Until court documents were recently unsealed, the size of Tucker’s enterprise was unknown. The Center for Public Integrity and CBS News exposed Tucker’s online business in a 2011 joint investigation. Tucker at that point was best known as a millionaire professional race-car driver in the American Le Mans series.
The investigation revealed that Tucker set up a series of shell corporations to hide his involvement in the payday lending company, AMG Services of Overland Park, Kansas. Once state law enforcement agencies tried to shut down those shell companies for violating payday lending laws, Tucker turned over ownership of the business to the Miami and Modoc tribes of Oklahoma and the Santee Sioux tribe of Nebraska. However, the deal allowed the tribes to keep only 1 percent of revenues.
In April 2012, the FTC sued Tucker and tribal entities for making loans with deceptive terms. Borrowers were told that a $300 loan would cost only $90 in interest, but in fact borrowers would have to repay as much as $1,000, the court found.
The tribal entities settled last year for $25 million. AMG Services shut down and Tucker dissolved his racing team.
The federal agency now says the judge must decide damages for Tucker and his businesses. The FTC says the payday lending business gave $60 million to Tucker’s racing team, Level 5 Motorsports, with little to show for its sponsorship. The FTC also claims that $20 million went to Tucker’s wife and $8 million was used to buy a home for the couple in Aspen, Colorado.
The agency is also asking the judge to bar Tucker from ever being able to operate a lending business again, noting that he previously was convicted on federal charges related to making illegal loans.
The FTC is seeking damages from the estate of Blaine Tucker. Blaine, Scott’s brother, committed suicide in 2014 shortly after the judge ruled against the defendants.
Tucker’s attorneys accused the FTC of overreaching its authority in seeking such a large amount in damages. They say Tucker agreed shortly after the lawsuit was filed to stop engaging in business practices that the FTC said were illegal.