Judge Denies Bail for Kansas Payday Loan Lawyer During Appeal

Inside Subprime: March 28, 2019

By Lindsay Frankel

Overland Park attorney Tim Muir, who is currently in prison for his part in a massive illegal payday loan scheme involving former race car driver Scott Tucker, asked the court to grant bail while he appeals his conviction.

The New York judge responsible for Muir’s sentencing denied his request on Wednesday because he said the appeal does not raise a substantial question of fact or law.

Muir will remain at the Moshannon Valley Correctional Institution in Philipsburg, Pa. for the duration of his 84-month sentence.

Both Muir and Tucker were convicted in 2017 after prosecutors found that they cheated millions of borrowers with illegal interest rates and misleading loan terms.

Payday loans are short-term, high-interest loans that don’t require a credit check, making them appealing to low-income consumers who lack access to traditional forms of credit. Consumer advocates contend that these loans trap borrowers in debt, leaving them worse off financially. Industry representatives argue that payday lenders provide a much-needed service for borrowers who have nowhere else to turn.

Tucker’s businesses charged illegally high interest rates up to 1,000% APR, even in states that have laws limiting interest rates on small-dollar loans. Tucker’s businesses also failed to communicate clearly the cost of the loans to borrowers. He was sentenced to more than 16 years in prison for his deceptive practices. He was also ordered to pay $1.26 billion.

Muir, who served as general counsel for AMG Services, a central business in Tucker’s payday loan enterprise, was arrested in 2016. He was accused of helping Tucker deceive borrowers and set up fake business relationships with Native American tribes to get around state laws, according to the indictment.

Muir wrote his own appeal, which pointed out errors in jury instructions that might result in a new trial. He also questioned his convictions under the Truth in Lending Act, stating that he is not a creditor, did not knowingly violate the law, and should have received Statutory Good Faith Immunity. Tucker is appealing as well.

Muir also argued in the appeal that he does not pose a flight risk nor a danger to the community. But while Judge Kevin Castel of the U.S. District Court for the Southern District of New York agreed that Muir would be unlikely to flee, he also wasn’t convinced by Muir’s appeal.

Even legal payday loans can be dangerous. Annual interest rates reach almost 400 percent on average, according to the Consumer Financial Protection Bureau. The exorbitant interest rates make it difficult for low-income borrowers to pay back their loans on time, which leads to re-borrowing and an endless cycle of debt. Those seeking quick cash should consider alternative sources whenever possible.

For more information on subprime loans, see our city and state financial guides including Kansas, Kansas CityLawrenceOlathe, Topeka and Wichita.