Recently, a Manhattan federal jury convicted Richard Moseley Sr., the head of an online network of payday lenders and loan servicers, on charges of wire fraud, aggravated identity theft, and violating the Racketeer Influenced and Corrupt Organizations Act and Truth in Lending Act, among other counts.
Moseley was convicted due to his leadership role over a vast and complicated system of interrelated companies that collected over $220 million from more than 600,000 borrowers and deceived regulators in the process. Convincing state and federal regulators and even his own lawyers that his companies were based offshore and not bound by U.S. law, Moseley coordinated a network of lenders and loan servicers that routinely misled both consumers and regulators. At the time of his indictment, then-United States Attorney Preet Bharara stated, "As alleged, Richard Moseley, Sr., extended predatory loans to over six hundred thousand of the most financially vulnerable Americans, charging illegally high interest rates to people struggling just to meet their basic living expenses."
The indictment alleges that Moseley-related lenders went so far as to autodebit accounts in ways unanticipated by borrowers and lend money to borrowers who did not request it after their personal information was sent to various Moseley companies. Moreover, important terms were hidden in small print, interest rates were charged that violated the laws of the states in which the businesses were operating, and lenders and loan servicers made "deceptive and misleading" fee disclosures to borrowers. The case was originally referred to prosecutors by the Consumer Financial Protection Bureau.
Although Mosely claimed to incorporate his companies in the Caribbean and New Zealand beginning in 2006, the indictment states that Moseley's companies operated out of Kansas City, Missouri instead. Based on these incorporation claims, Moseley's attorneys told state regulators that loans from Moseley's network of lenders and loan servicers originated exclusively from overseas offices. In reliance on this materially false and misleading correspondence, many state attorneys general and regulators closed their investigations on the mistaken belief that they lacked jurisdiction over Moseley's companies as they supposedly had no presence or operations in the United States.
Moseley, 73, is not scheduled to be sentenced until April 2018, and his RICO and wire fraud convictions carry 20-year maximum sentences. Following news of the jury's conviction, Acting United States Attorney Joon H. Kim stated, "Moseley can no longer take advantage of those already on the brink, and he now faces significant time in prison for his predatory ways."
The Troutman Sanders' Consumer Financial Services Law Monitor blog offers timely updates regarding the financial services industry to inform you of recent changes in the law, upcoming regulatory deadlines and significant judicial opinions that may impact your business. To view the blog, click here