A man who defrauded more than 600,000 Americans out of a total of $ 200 million over the past decade was sentenced last month to 10 years in prison and a $ 49 million fine, the FBI announced Thursday.
Richard Moseley, Sr. scammed clients using a group of payday loan companies called Hydra Lenders. Moseley charged his victims up to 700 percent interest on the money they would borrow.
Payday loan businesses provide short-term loans to people who need to borrow money, often low-income and financially vulnerable people. Borrowers agree to repay the loan on the next payday.
While this type of deal may be successful, Moseley used illegal tactics to drain clients of their finances.
When complaints reached state governments and officials questioned Moseley, he claimed his business was located abroad on Nevis, an island in the Caribbean, and New Zealand, where regulations did not apply.
Throughout the FBI investigation, however, it was revealed that Hydra Lenders was, in fact, located in Kansas City, Missouri.
After an investigation of his financial records and interviewing employees and victims, the FBI discovered that he had broken the law regularly and was using fake letterheads and a mail forwarding service to conceal his location.
Between 2004 and 2014, Hydra’s lenders charged illegally high interest rates, took additional fees without disclosing them to clients, allowed the loans to incur interest by not applying their money to pay off the loan and instead only charging interest, and create payday loans for clients. that he had simply inquired about eligibility, rather than agreeing to participate.
These tactics largely took advantage of people who were already financially vulnerable. “Some of the victimized individuals were having financial difficulties at the time, including grandmothers, grandfathers and former members of the military who served our country,” said FBI New York Supervising Special Agent Matthew Taylor.
“In most cases, the victims did not recover the money that was illegally taken from them.”
A 2018 study showed that low-income American citizens who do not have a bank account and minority groups are more likely to use an “add-on service,” which is a term used to describe services such as payday loans, payday loans, pawn and auto title lenders. .
Payday loan services were found to be more common among blacks and Hispanics than among whites and Asians. They are also more common in female-headed households than in male-headed households.
A family with an income of $ 25,000 was found to spend $ 2,400 of their salary on one of these services, paying $ 530 in fees and interest on loans averaging just $ 375, the study showed.
Meanwhile, Moseley used his fraudulent earnings to pay for homes both inside and outside the United States, high-end cars and an exclusive membership in a country club.
While each victim did not lose a substantial amount of money, they were forced to close their bank accounts and open new ones.
Moseley was convicted in November 2017 of wire fraud, aggravated identity theft and Truth in Lending violations, as well as racketeering offenses.
There have been efforts to end the payday loan debt trap in the last decade. Former President Obama announced rules in 2015 to protect military service members from financial abuse, and the Consumer Financial Protection Bureau finalized new rules in 2017 to require a pre-transaction test to determine whether borrowers will be able to repay the loan.
However, despite the rules, loopholes remain.