By Nate Raymond
NEW YORK (Reuters) - U.S. authorities on Wednesday launched a broad offensive against abusive online pay lenders, arresting three people tied to the industry, including a race car driver, for exploiting more than 5 million cash-strapped consumers.
Prosecutors said Scott Tucker, who competes on U.S. and European racing circuits, ran a $2 billion enterprise that used sham tribal relationships to claim immunity from state enforcement actions over its abusive lending practices.
An indictment filed in Manhattan federal court said Tucker earned hundreds of millions of dollars in profits through payday loans, spending on luxury homes, cars, jewelry, a private plane and his professional racing team, Level 5 Motorsports.
The indictment also charged Timothy Muir, who prosecutors said was general counsel to Tucker's Overland Park, Kansas-based company AMG Services Inc, which claimed to be owned by the Miami Tribe of Oklahoma.
Two tribal corporations controlled by the tribe have agreed to forfeit $48 million in a non-prosecution deal, Manhattan U.S. Attorney Preet Bharara said.
A separate indictment charged Richard Moseley, who authorities said from Kansas City, Missouri ran a fraudulent $161 million online payday lending enterprise through offshore companies.
All three men face charges including Racketeer Influenced and Corrupt Organizations Act violations over schemes to collect unlawful debts through loans with interest rates of 700 percent or more.
Federal Bureau of Investigation agents arrested Tucker, 53, and Muir, 44, in Kansas and Moseley, 68, in Missouri. Their lawyers did not respond to requests for comment.
The arrests are part of a crackdown on abusive practices by payday lenders, which provide small extensions of credit that borrowers agree to repay in a short time, such as when they next receive a paycheck.
The companies say they help struggling consumers but critics say borrowers end up with large debt loads due to high interest rates, fees and loan rollovers. Fourteen states and the District of Columbia prohibit payday loans.
The indictment said Tucker exploited 4.5 million people through lenders including Ameriloan and One Click Cash that shared employees and costs with 600-employee AMG Services.
After several states sued beginning in 2003, the indictment said Tucker entered into sham relationships with Native American tribes to claim sovereign immunity, despite his continued control.
His arrest came after the Federal Trade Commission brought a lawsuit in 2012 seeking $1.32 billion from Tucker and his deceased brother's estate. The FTC already obtained $25.5 million in settlements with entities including AMG Services.
The cases in U.S. District Court, Southern District of New York, at U.S. v. Tucker et al, No. 16-cr-091, and U.S. v. Moseley, No. 16-cr-079.
(Reporting by Nate Raymond in New York; Editing by Bill Trott and Chizu Nomiyama)