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FTC charges racecar driver Tucker's brother with selling fake debt

Scott Tucker exits the Manhattan Federal Court in New York February 23, 2016. Tucker, a race car driver, pleaded not guilty on Tuesday to charges stemming from what U.S. prosecutors called his role in a $2 billion online payday lending enterprise that exploited 4.5 million cash-strapped consumers. REUTERS/Brendan McDermid TPX IMAGES OF THE DAY - RTX289ZJ

(Reuters) - A federal judge has blocked a brother of professional racecar driver and payday loan businessman Scott Tucker from selling bogus debt portfolios to collection agencies, which have used them to get consumers to pay debts they did not owe, the U.S. Federal Trade Commission said.

A preliminary injunction against the brother, Joel Tucker, was entered on Friday by U.S. District Judge Julie Robinson in Kansas City, Kansas, court records show.

Joel Tucker could not immediately be reached for comment, but according to court records he plans to hire a lawyer.

The FTC on Dec. 16 filed a civil lawsuit against Joel Tucker and three of his companies, claiming that they sold fake loans supposedly made by the bogus lender Castle Peak or the online loan provider 500FastCash, whose trademark belongs to a company linked to Scott Tucker.

According to the regulator, Joel Tucker’s loan lists contained Social Security and bank account numbers, which collection agencies then used to persuade consumers that the debts were real.

Payday lenders offer short-term loans, often with high effective annual interest rates, to tide over borrowers until they receive their next paychecks.

Scott Tucker, who has competed on U.S. and European racing circuits, pleaded not guilty last February to federal criminal charges in Manhattan of running a $2 billion payday lending scheme that exploited 4.5 million consumers.

An April 17 trial is scheduled in that case. Scott Tucker is also appealing a Sept. 30 order by a federal judge in Nevada that he and several of his companies pay $1.27 billion to the FTC.

The Kansas case is FTC v Tucker et al, U.S. District Court, District of Kansas, No. 16-02816.

Reporting by Jonathan Stempel in New York; Editing by Leslie Adler