January 21, 2016 / 9:57 PM / 4 years ago

U.S. agency seeks $1.3 bln in racecar driver's payday lending case

Jan 21 (Reuters) - U.S. regulators have asked a federal judge in Nevada to order a professional racecar driver and various entities he and his late brother controlled to pay more than $1.32 billion for engaging in a scheme to deceive payday lending customers.

The Federal Trade Commission on Wednesday filed papers in federal court in Las Vegas seeking to force Scott Tucker and the estate of his deceased brother Blaine Tucker to pay up for allegedly running a deceptive online payday lending enterprise.

The FTC, which previously obtained $25.5 million in settlements with several payday lending companies in the case including AMG Services Inc, said the sum equals the $1.32 billion consumers paid beyond the disclosed cost of their loans.

The regulator said the scheme enabled Scott Tucker, 53, to receive at least $419.8 million and pay for luxury vehicles, private charter and jet flights, and for an $8 million residence in Aspen, Colorado.

Another $67.6 million was transferred to his racing team, Level 5 Motorsports, for “sponsorship” fees, the FTC said.

The regulator added that a complete tally of Tucker’s payments was not possible as he invoked the U.S. Constitution’s Fifth Amendment protection against self-incrimination.

Payday lenders provide small extensions of credit that borrowers agree to repay in a short time, such as when they next receive a paycheck.

While these companies say they help strapped-for-cash consumers, critics say their loans leave borrowers with lots of debt due to high interest rates, fees and loan rollovers.

Eighteen states and the District of Columbia prohibit payday lending, according to the advocacy group Consumer Federation of America.

Tucker’s lawyers have previously said he was “a - if not the - target” of a related criminal investigation by Manhattan U.S. Attorney Preet Bharara’s office.

A lawyer for the Tuckers did not respond to requests for comment on Thursday. In court papers, they said the FTC was seeking “to extract massive monetary relief without any statutory authority for doing so.”

In 2012, the FTC sued the Tuckers and companies including Overland Park, Kansas-based AMG, which it said like other online payday lenders had affiliated itself with a Native American tribe to claim sovereign immunity from state laws.

In fact, the FTC said, AMG, which said it was owned by the Miami Tribe of Oklahoma, and related companies were controlled by the Tuckers, whose payday lending enterprise materially misstated the cost of consumers’ loans.

The case is Federal Trade Commission v. AMG Services Inc, et al, U.S. District Court, District of Nevada, No. 12-00536. (Reporting by Nate Raymond in New York; Editing by Will Dunham)

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