FTC Charges Joel Tucker in Fake Debt Sales Scheme; Brother Scott Tucker Ordered to Pay $1.3B in Separate 2016 Case

The Federal Trade Commission announced yesterday that it has charged a Kansas man and his companies with selling portfolios of fake payday loan debts that debt collectors used to get people to pay on debts they did not owe. At the FTC’s request, a federal court halted the operation pending litigation.

According to the FTC, Joel Jerome Tucker, SQ Capital LLC, JT Holdings Inc. and HPD LLC sold lists of fake loans supposedly made by a phony lender, “Castle Peak,” or by an online loan provider known as “500FastCash.” The listings had the social security and bank account numbers of people who supposedly owed money. Debt buyers and collection agencies subsequently used this information to persuade people that the debts were real and/or to get them to pay the fake debts.

The FTC alleges that the defendants listed loans the named lenders did not make, and falsely claimed that purported borrowers had failed to repay debts they never owed. It also alleges that the defendants did not have the authority to sell debts of the lenders they named. The complaint alleges that these practices provided the means for deceptive statements, and were unfair, in violation of the FTC Act.

To add credibility to the fake 500FastCash payday loans, Joel Tucker invoked the name of his brother, racecar driver and payday loan vendor Scott A Tucker. In 2012, the FTC brought an action against Scott Tucker and others engaged in payday lending under various names, including “500FastCash.” In October 2016, a federal court ruled that Scott Tucker must pay $1.3 billion for deceiving and illegally charging consumers undisclosed and inflated fees. In 2015, a co-defendant in that case, 500FastCash trademark owner Red Cedar Services Inc.agreed to pay $2.2 million and cancel consumer loans to settle FTC charges that it illegally charged consumers undisclosed and inflated fees.

The FTC previously brought actions against two collectors that used Joel Tucker’s fake loan portfolios: Delaware Solutions, whose defendants were banned from the debt collection business in a settlement with the FTC and the New York Attorney General’s office, and Stark Law LLC.

After this complaint was filed against Joel Tucker and his companies, the court granted the FTC’s request for a preliminary injunction that prohibits the defendants from selling fake debt. The FTC seeks to permanently end the unlawful practice.

The Commission vote authorizing the staff to file the complaint was 3-0. It was filed in the U.S. District Court for the District of Kansas.

insideARM Perspective

insideARM vigorously supports actions against crooks whose business model is based on fraud and deception. If the allegations in this case are proven to be true, Tucker should be banned from the industry. Scams involving debt buying and collection - which have been so easy to perpetrate - have made it extremely challenging for consumers and legitimate companies to communicate. This is bad for everyone.