Behind the Bastards - The Payday Loan Industry Is Bastards All The Way Down

Episode Date: May 14, 2019

In Episode 60, Robert is joined by Shereen Lani Younes to discuss the Payday loan industry.  Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

What would you do if a secret cabal of the most powerful folks in the United States told you, hey, let's start a coup? Back in the 1930s, a Marine named Smedley Butler was all that stood between the U.S. and fascism. I'm Ben Bullitt. I'm Alex French. And I'm Smedley Butler. Join us for this sordid tale of ambition, treason, and what happens when evil tycoons have too much time on their hands. Listen to Let's Start a Coup on the iHeart radio app, Apple podcast, or wherever you find your favorite shows. Did you know Lance Bass is a Russian trained astronaut? That he went through training in a secret facility outside Moscow, hoping to become the youngest person to go to space? Well, I ought to know because I'm Lance Bass. And I'm hosting a new

podcast that tells my crazy story and an even crazier story about a Russian astronaut who found himself stuck in space with no country to bring him down. With the Soviet Union collapsing around him, he orbited the earth for 313 days that changed the world. Listen to The Last Soviet on the iHeart radio app, Apple podcast, or wherever you get your podcasts. What if I told you that much of the forensic science you see on shows like CSI isn't based on actual science and the wrongly convicted pay a horrific price? Two death sentences in a life without parole. My youngest, I was incarcerated two days after her first birthday. Listen to CSI on trial on the iHeart radio app, Apple podcast, or wherever

you get your podcasts. What's Lance and my boils? I'm Robert Evans. This is Behind the Bastards, the show where I talk about terrible people and try out a new intro every week. Shareen, what did you think of that one? Is that a winner? Yeah, I'm cringing. Just so I think an emotional reaction is what you wanted and you got it. Yeah. And we've done extensive market testing in our listeners. Our huge fans of Boils and Lance's Boils. Sophie brought that info to me last week, so we're trying to play to that demo. Yeah, I haven't thought about Boils in a long time. I'm glad you brought that back to my attention. They're disgusting. Yeah. Make Boils beyond Shareen's mind again. I suppose we've spoiled the fact that our guest today is Shareen Lana Unis

from the ethnically ambiguous podcast. Shareen, you got any other plugs to plug up at the start? That's me. That's all I got. Follow me on the socials, and that's all about it. Share Hero 666. There we go. Follow Shareen on the socials. Now, Shareen, today we are talking about the payday loan industry. Have you ever had to use a payday loan? Fortunately, no. Good. Good. I have not either. It's a pretty messed up thing, and today we're going to talk about it for like an hour or so. I cannot wait for you to teach me all about this thing I know nothing about. Excellent. Well, everyone buckle in, strap your listening chairs on, throw on your hearing goggles, and prepare to be taken on a journey into the payday loan

industry. That was beautiful. Thank you. Thank you. Am I on the magic school bus? Yes. I like to think of every episode of this show as like an episode of the magic school bus, but Miss Frizzle is drunk and abusive. Are you saying that you are drunk and abusive? Yes. Oh, and imagine that Miss Frizzle is drunk, abusive, and just has a gun. Yeah. I mean, I do have a gun as well. But no, yeah. I hope that the rest of the audience is kind of not the most informed about this topic, because I kind of like being a plebe surrounded by plebes, and you can be the Miss Frizzle, you know? Yeah. And I was the plebe until about 72 hours ago when I started reading about this.

So, yeah, exactly. This is the slightly less blind leading the blind into the land of eyeglasses. I kind of lost the thread of that metaphor. We're in the magic school bus. Where are we going? We're going into a payday loan. We're going into... We're going into a payday loan store. Yeah. Yeah. So, I want to start by asking people to think about how weird it is that workers have to wait weeks, if not months, to get paid for the work that they do. Theoretically, your employer benefits from your labor as soon as you do it, whether you're driving an Uber, managing a bank, or using a drone to fire missiles at insurgents or wedding parties in rural Afghanistan. But you, the laborer, don't

actually get paid for your work until long after you do it. This is such a normal accepted part of our system that I don't think most of us ever really talk about it much. And this peculiarity in our labor market has led to the creation of an entire mighty industry, the business of payday loans. Short-term lending, as it prefers to be called by its friends and family, got its start in the United States in the late 1800s. This was the dawn of what we today recognize as normal jobs, where people make a regular salary and get paid on an intermittent basis. Prior to this point, it had been more normal for folks to make a daily wage. If you showed up and worked 12 hours on a farm or a building project or a factory, you walked home with cash in your pocket at the end of the

day. Regular, modern-style jobs changed the norms, and this caused problems for workers. Bank accounts didn't really exist for normal people in the late 1800s, and it was common for them to run out of money between paychecks because they'd have medical emergencies or things would break or whatever. And short-term loans evolved as a way to keep the emerging blue-collar working class alive in the gaps between payday. So it starts like you can see in kind of this normal space, is like people are getting paid differently, so they need a little bit of money now and then to help them bridge the gap between their pay cycles, right? Can I raise my hand? I'm raising my hand. Yes, raise your hand.

I have a question. That means I have a question. Where does the money come from? Well, it comes from payday lenders. So you would have like normal people wouldn't have credit and like wouldn't be able to get like a loan from a bank. Like a bank's not going to give you a loan if you need 300 bucks to make up a hole in your budget or whatever. So instead, these companies come in and basically front you 300 bucks. So they're like private companies? Yeah. Private lenders. So essentially like a rich person. Yeah, that's literally how it was in some cases, is just like someone with enough money to throw out loans. And because they're small loans, like a normal loan like 6% would be a lot of interest to

pay. But because these are small loans and they're very short term, they have like way higher rates of interest. So a one week loan would regularly be somewhere between 120 and 500% APR. Yeah, so that now we're talking the 1800s still and that seems insane. But those rates are actually really low compared to the modern equivalents and payday loans. So like today's payday loans will regularly top 500% in interest. Yeah, so that seems like it might be a little bit abusive, right? Yes, yes, it would. Now, this is where we get the term loan shark. That's how these people came to be known primarily because they got essentially famous if you would like watch a lot of old TV shows from the 40s and 50s that would show loan characters. Like, you know,

you've heard the story about like the mob guy threatening to break someone's legs or whatever if they don't pay a debt, right? Of course. Yeah, of course. That happened from time to time, but the reality is that they more often relied on wage garnishment, public embarrassment, or what was called balling out, which is less fun than it sounds. It's basically screaming at someone to shame them into paying. What the fuck? Yeah, that's that's like just public humiliation. Yeah, that's exactly how most of the payday loan industry worked in the late 1800s was if you didn't pay, they would try to humiliate you. That's like psychological torture. It's like psychological manipulation. It is psychological manipulation, but does it

does it change your opinion on this at all, Shireen, to learn that this actually created a great job opportunity for women in the workplace? Slightly, you know, keep talking. I'm going to quote from a Scholarly Commons article, quote, To compel payment, salary lenders pestered debtors incessantly at home or sent ballers out to make a scene at work or processed wage assignments or use the powers of attorney they had taken to confess judgment for before justices of the peace. They did not have to lay a hand on customers in arrears to do a profitable business. Indeed, many firms had a preference for hiring women as loan agents, because as one new story explained, they give an appearance of harmlessness to the lending

establishment and an outraged borrower is not so anxious to kick the manager out of a window if she is a woman. So it wasn't necessarily for the benefit of women, but not at all. It was just because you wouldn't beat up a loan shark who was a lady. Sick. Well, as much as I really appreciate job opportunities for women, I mean, that's problematic as shit. Yeah, I would say problematic as shit is fair. So starting after the Civil War, what were called chattel mortgage lenders became increasingly common. So these were payday loans backed up by the debtor's furniture and family possessions as collateral. The explicit goal of the arrangements offered was to trap debtors in an endless cycle where they would never quite pay off their loan and thus would spend the rest of

their lives racing to pay off the interest in order to avoid literally losing their bed. So people would like mortgage their furniture in order to make ends meet. That's so sad. That's like, I mean, I feel like it just boils down to a rich person taking advantage of a poor person that's desperate. That's all it boils down to. Yeah. And that's so sad. Yeah. That is essentially the whole industry. I mean, the rich person must have better things to do, but no. They're just greedy. They want money. But they already have it. Yeah, but they already have it. They want more. So the term loan shark came up essentially because the very form of the deal trapped the borrower in an endless cycle. So you were essentially always being chased down by the shark. You couldn't escape it. The

practice was almost immediately recognized as problematic by various state governments as well as the federal government. And they tried a number of ways to get a handle on the problem. States started by placing what were called ursary caps. And by the 19 teens, most states limited annual interest at between 18 and 42%. So this seems a lot fairer than 150 to 500%, right? And it would stop people from getting trapped in unsustainable cycles of debt. But it also kind of wiped out the entire short term loan industry. See, the only way that these loans could work was by giving relatively small amounts of money to people with no credit. By definition, their consumer base had a high default rate. A lot of people would just completely fail to pay their debts. So

the only way the industry could be profitable was to charge these high rates of interest. When the government capped that, loan sharks didn't go away, but they did change. The endless debt cycles and ballings out were replaced by mafia men who would offer illegal loans and insured repayment by beating the ever-loving shit out of clients who failed to pay. So that's kind of... That solves the problem. Solving the problem forever. So you're saying this is all stemming from the fact that people don't get paid by the day as much as they do every other week or every month or whatever?

Yes. And that's like one of the things you have to remember at the core of this issue, is that no matter how fucked up the payday loan industry is and seems, people still need them. Because they have no money for nine or ten days and their kid has to go to a doctor or like they have a... Isn't that something that we should tackle? It seems like it. It seems like youth... Yeah, it certainly seems like it. But we're not. Why would we tackle systemic

problems in our economic system as opposed to... Just covering up a band-aid or like your knee gets gassed open and you're just like worrying about the blood trickling on your ankle and not actually the wound. It's... That's a gory thing. Yeah. Sorry, Mr. Fizz. It is a gory situation. Now, I started by saying that like the mob guys would beat the shit out of people for not paying

loans and that did happen. But one of the weird things about this story is that the majority of evidence suggests that mafia lenders weren't actually all that bad by the standards of payday loans. Like the more legitimate lenders, they made their money by locking people into an endless cycle of debt. But they like didn't actually beat people up all that often and their interest payments were kind of low compared to like when legitimate companies would offer payday loans. So I found a great quote on exactly how sort of like physical violence in the loan industry really did work. You know, the stereotype is the mob guy breaking your legs from not paying a debt. That wasn't super common to happen. According to scholarly comments, quote,

the debtor is motivated to pay not only because his body is pledged as collateral, but also because he wants to preserve his only line of credit. The creditor in turn wants to avoid the expense of hiring a nutcracker to collect the debt. As a 1960 Chicago juice man, that's what they called people who beat people up for loans, explained, the cost of hiring a thug to break a deadbeat's leg might exceed the sum he owned. Oh, and with a broken leg, it would be hard for the debtor to own money and catch up on his payments. Imposing a less debilitating penalty usually made more sense. A finger deliberately slit open with a razor blade never kept anybody from working and serves as a constant reminder

of the next payday. But the best strategy this loan shark insisted was to select customers carefully and not load them with excessive debt. When business is good in a smoothly run operation, muscle is seldom needed for collections. One of the few empirical studies of a mob loan shark operation confirms this view. Based on FBI case files, the study reported that interviews with 115 customers of the loan business turned up only one debtor who had been threatened. None were beaten. So, I mean, I feel like I've watched enough Sopranos to know that's not true, but I'm just kidding. Now, I think it's also very interesting that it went from psychological manipulation and torture to the complete opposite, just like pure physical. Isn't that fascinating? That's fascinating.

Like, it's weird how that happens, how like when the businesses are completely legal and the legal system allows them, they psychologically torture you in charge, utterly ruinous rates of debt or of interest. And then when the business is illegal, the interest rates go down, but they have to slice open your finger to get you to pay sometimes. You have to pick one of the two because people are going to get these loans either way. I mean, it's a little bit still psychological because you said something like cutting a finger, like it'll be a constant reminder of your debt because it's on your hand. Yeah, it hurts all the time. That's so fucking manipulative. It is. I mean, I gotta say, I'm more on the mob side than the legitimate lenders. Oh, same here.

Yeah. No, same here. I think ultimately, even though the mobsters are probably better off, like financially, I feel like for the majority of the time mobsters kind of came from lower class or like middle class. They're working class people. Yeah, they have a better understanding of maybe the desperation they feel or like the trials, tribulations of not having a lot of money. And also, I mean, Tony Soprano is a complicated character, you know? This is just going to turn into this Soprano episode. Tony Soprano put in a 40-hour work week every week. Yeah, he was busy. He wasn't slacking off like certain unnamed presidents losing a billion dollars. Yeah, I mean, he was fucking around, sure. He was fucking around and like

whatever, but at the same time, he's a busy man. And I think that's the difference. I think that's the difference because legal operation is usually run by rich people that usually don't lift a finger for their money. Exactly. Or maybe they don't anymore. Maybe they have in the past where their daddy did or whatever. But Tony Soprano, working guy. Yeah, that's why I have a lot more respect for like a drug dealer than one of these guys who worked at like a mutual fund or whatever, scanning people out during the financial crash. Someone who was like, we're going to Wells Fargo selling people bad loans. At least the drug dealer, for one thing, it's an honest transaction. You want some heroin, you get some heroin. And for another thing, they're out there pounding the

ground. They're working the floor, so to speak. They're putting on some risk. I gotta respect that more than you respect the financial criminal. So I feel the same way about the mafia in this case. Yeah, maybe you're cutting open some people's fingers, but at least that's honest, finger cutting work. Yeah, that's honest finger cutting work. Honest finger cutting work. Now, by the 1960s, it was not uncommon for mafia lenders to offer annual APRs of under 200% for their short term loans. FBI studies also reported surprisingly low rates given the industry, often around 150% APR. In many cases, mob loans were less than a half as expensive as modern payday loans. Now, as I stated, violence was not the norm, but cases did occur that were shocking

enough to spark public outrage. In one incident in 1935, a young clerk was beaten within an inch of his life for welching on a debt. This launched a series of investigations by Thomas Dewey, the governor of New York. 27 people were arrested for violent collection of debts. Throughout the 1940s and 50s, US states cracked down on mafia loan sharks. And unfortunately, they did so by doing the opposite of what they'd done to kill the nonviolent loan sharks, raising erzory caps and allowing legal lenders to charge exorbitant interest rates once again. So by the 1970s, deregulation of the payday loan industry had largely starved the mob out of the business and allowed a thriving new industry of perfectly legitimate companies charging 5 and 600% interest

for short term loans. Individual states realized pretty quickly that this was even worse than letting the mob give people loans, and so they started to change their laws back and reintroduced caps to interest rates. But the big banks had gotten a taste of how much money payday loans could provide. They brought out their lawyers. In 1978, the Supreme Court ruled on a case in Minnesota. That state had imposed strict laws on the interest that could be charged on loans, but banks from other states with higher limits had started coming in and operating payday loan businesses, charging the interest rates of their state of origin. When this case hit the Supreme Court, the Supreme Court ruled that this behavior was totally fine. And from now on, banks would

partner with short term lending companies to charge outrageously high interest rates for short term loans, regardless of what the individual states themselves had on the books. As a result of this, certain states like Kansas and Nevada became the hubs for increasingly enormous payday lending businesses. So that's cool. What a twist. What a twist. So by the early 1990s, the payday loan industry was growing at an exponential rate. It had gone from the purview of shady, but ultimately human mobsters to a multi-billion dollar business run by gigantic, faceless corporations that hid behind a multitude of names and constantly moved across state lines to make their questionably legal behavior harder to prosecute. Again, it's kind of a mark of where

the story's going that we're going to look back on the old days of the mafia cutting up people's fingers is the good old days of payday lending. Yeah. I mean, it's crazy that throughout basically over a century of this, no one's ever been like, let's just get to the root of the problem. Why do people keep wanting money or needing money rather? It's because of the time between their paychecks and that's infuriating that that hasn't even been addressed. It's just the payday loan fucking clusterfuck keeps getting more clusterfucking. Yeah. And nobody ever even talks about like, well, maybe we should reform how workers get paid because maybe people deserve to get their money the day that they earn it because why wouldn't they? The only reason it

seems weird to suggest that change to us is because it's not how it works. But if you try to think back on it, well, why does the company get the value of your labor immediately, but you have to wait weeks or months to get the money that you have? Yeah. When you put it that way, it's fucking bullshit. It's total bullshit. It's fucking bullshit. What if I work an immense amount of work and then I die the next day? You know what I mean? They have benefited, but I have not. Yeah, exactly. You should be able to- And I'm owed on my deathbed. Yeah. That's bullshit. And they got to bury a bunch of money in your casket, which isn't going to help you any, and it'll probably take some time. I'm freelance. I've never actually had a salary

full-time job, but I work on a day rate when I work in production or whatever. As a filmmaker, you get a standard rate sometimes. But even that, it's weeks after the job is over that you finally get paid. And I'm wondering, maybe there are some things that are like, well, the budget- I don't know, man. I don't think there's no solving this. There's no- Oh my god. Yeah. There are some companies. There's one company, based out of the Bay Area, that's trying to reform the system. And the way they're trying to do it is by, essentially, if you work for a company like Uber or Lyft, you sign up a thing with them, and basically, they pay you what you earn, when you earn it, and they take like 1%, like a flat rate,

and you get your money instantly. And then when the company pays you, the money goes to the company that has been giving you your money. So essentially, yeah. So there are attempts- But also, is it because of taxes? I don't know, because it can't be in most cases, because like you, I've spent most of my working career as a freelancer, usually getting paid four to six weeks after I do the work, and they don't take any taxes out. That's like how freelancing works. So I think it's just a system that was set up because it really benefits the companies that employ us, and that has been going on for so long that most people don't ever think about how messed up it is that they've got to wait a month to get their money.

Yeah. Yeah. You're right. But then, at the same time, I'd like- I mean, maybe I've worked on too many indie film shoots, but like when I hire someone as a sound person or whatever, I try to pay them, like, if not after the workday, like within the next morning or the day after that. So it's like, I feel like when you're not married to the system, when you're not thinking this is the only way it has to be, then you're more open-minded. Like, I've never had a salary job where I had to wait a couple weeks in my mind. I was like, well, they work for me all for 12 hours today. I will pay them. You know what I mean? So I think maybe we're just- maybe the majority of people are just- they think this is the way it has to be.

Yeah. It's not true. We got to break free, man. It's not. I mean, to go back to the noble drug dealer, you know, when I was a very poor young man, the only friends of mine who ever had cash on hand were the ones who made their living selling drugs because you get paid as soon as you provide a service if you're a drug dealer. Yet another reason all of business should take a hand out of the leaf out of the book of dealing drugs. Yeah. What if everything worked like drugs? Okay. But then the wire to bring it back to television, I mean, it doesn't end well for a lot of people. I only watched the first episode of the wire, but it seemed like it was going pretty- Well, you're wrong. Well, you're wrong. You need to watch the wire.

Does it go to a dark place? That's unfortunate. Well, first of all, it's an amazing show. But also, I mean, I keep bringing up TV because I think it's funny to think that my only source of information about drugs or the mafia are from television, but at the same time, not false. But I do think it is a very insightful way to understand, I don't know, like how else do we learn just from film and television? And that's how the word gets out. Yeah. But I think this episode is just trying to tell you all that- Burn the system down. Give drug dealing a shot. Just give drug dealing a shot. Oh, I mean, that too. I was going to say burn the system down. But you know what,

our listeners shouldn't burn down, Shareen. Ad breaks. The wonderful companies that support our show with products and services, don't- What if a payday loan ad came on right after this? Then I'm sure it's a completely ethical payday loan company, just like completely ethical company Coke Industries who advertised on our show. Are you shitting me? Oh, no, we love Coke Industries. Why am I here? Shareen, you were just telling me the other day, Robert, I really have a lot of crude oil that

I need refined. Do you know anyone who can refine my crude oil and put out more than twice as much carbon into the atmosphere as other crude oil refineries? And I said- Oh, that was verbatim what I said. I know, exactly. And Coke Industries, that's your go-to. You're not wrong. Yep. You're not wrong. You know what else isn't wrong? Products! During the summer of 2020, some Americans suspected that the FBI

had secretly infiltrated the racial justice demonstrations. And you know what? They were right. I'm Trevor Aronson, and I'm hosting a new podcast series, Alphabet Boys. As the FBI sometimes, you gotta grab the little guy to go after the big guy. Each season will take you inside an undercover investigation. In the first season of Alphabet Boys, we're revealing how the FBI spied on protesters in Denver. At the center of this story is a raspy-voiced, cigar-smoking man who drives a silver hearse. And inside his hearse was like a lot of guns.

He's a shark. And not in the good and bad ass way. He's a nasty shark. He was just waiting for me to set the date, the time, and then for sure he was trying to get it to heaven. Listen to Alphabet Boys on the iHeart Radio App, Apple Podcast, or wherever you get your podcasts. I'm Lance Bass, and you may know me from a little band called InSync. What you may not know is that when I was 23, I traveled to Moscow to train to become the youngest person to go to space.

And when I was there, as you can imagine, I heard some pretty wild stories. But there was this one that really stuck with me about a Soviet astronaut who found himself stuck in space with no country to bring him down. It's 1991, and that man, Sergei Krekalev, is floating in orbit when he gets a message that down on Earth, his beloved country, the Soviet Union, is falling apart. And now he's left defending the Union's last outpost. This is the crazy story of the 313 days he spent in space, 313 days that changed the world. Listen to The Last Soviet on the iHeart Radio App, Apple Podcast, or wherever you get your podcasts.

What if I told you that much of the forensic science you see on shows like CSI isn't based on actual science? The problem with forensic science in the criminal legal system today is that it's an awful lot of forensic and not an awful lot of science. And the wrongly convicted pay a horrific price. Two death sentences and a life without parole. My youngest, I was incarcerated two days after her first birthday. I'm Molly Herman.

Join me as we put forensic science on trial to discover what happens when a match is not a match, and when there's no science in CSI. How many people have to be wrongly convicted before they realize that this stuff's all bogus? It's all made up. Listen to CSI on trial on the iHeart Radio App, Apple Podcast, or wherever you get your podcasts. We're back. We're talking about payday loans. So when we last finished at least reading into the script, we'd gotten to the point

where the Supreme Court in 1978 ruled that banks could essentially charge whatever interest rates were legal in their states of origin, but extend the loans to people in other states that put on different caps on interest rates. And this is sort of responsible for the meteoric rise of the modern payday loan industry. So by the late 1990s, rates of between 200% and 500% had become the norm. Lenders began tacking on additional service fees to get around limits on the amount of interest they could charge. By the early 2000s, 11 million Americans spent an average of $500 a year on fees alone.

The situation was already out of control, but not so out of control that an extremely gifted grifter couldn't make it out of control here. And this brings us to a little guy who's a little bit of an expert in the field of name Scott Tucker. You ever heard of Scott Tucker, Shareen? Sounds like a motherfucker. Scott Tucker is a motherfucker. He was originally going to be the subject of this entire episode.

He's not the father of payday loans, but I think it might be accurate to call him like the stepfather who moves in when you're already 16 and shares his Miller tall boys with you. He's the that guy of payday loans. Does he look at you funny when you were short in the house? Yes. And he never quite crosses the line, but in a way just making the comments is crossing the line, but you can't do anything actionable because your mom's really into him.

He's that guy of the payday loan industry. Like you maybe got some food next to your lip and he just uses his thumb to take it off without saying anything to you and you have goosebumps everywhere and you have to keep it to yourself for the rest of your life and then maybe they have a kid and then that kid has no idea that his dad is a fucking creep. Yeah, you really have a feel for Scott Walker. You said Scott Walker, but you didn't mean it. Oh, Scott Tucker.

Sorry. That's another piece of shit named Scott. Not a great name. Not a great name. Scott freeze the way to beat. That's advertising for tape. Scott was born on May 5th, 1962 in Kansas City, Missouri. He attended Rockhurst High School in Kansas State University where he studied business

administration. Two years into that degree, he decided he'd learned enough about business. So he dropped out of school and went into business for himself. In 1988, he borrowed $50,000 from the American Bank of Kansas City, offering what he said was his new Porsche as collateral. Now, the reality is that Scott did not own a Porsche. He had briefly, but he'd sold it in order to fund his scams and just lied to the bank that he still had it.

Tucker's business plan was to use the money he acquired from this real loan to fund a fake loan business. According to the Center for Public Integrity, quote, while a partner in Oregon ran newspaper and magazine ads throughout the country offering commercial loans, Tucker posed as the president of a seemingly high-powered investment bank in Overland Park called Chase, Morgan, Stearns, and Lloyd. The operation was a fraud, collecting more than $100,000 in advance fees from at least 15 borrowers without providing any loans.

So his first loan business doesn't actually give people loans. He's just stealing money. Wow. And kind of stealing the name of J.P. Morgan and Chase as well as Barrie Stearns and Lloyds of London. But I don't feel so bad about that because all of those companies are terrible. But that is what he's doing. Now, Tucker wasn't only.

Do you only have me on to talk about shitty white men grifters? That way I'm here. Yes. You're my shitty white men grifters. I mean, immediately after this episode, we're going to talk about Jacob Wohl again. So I cannot wait to bring up that motherfucker again. So Tucker wasn't only a major crimes kind of guy in 1989 while he was in the middle of his stealing money from people and pretending to run a loan company business.

He got in trouble for writing bad checks to a moving company. He hired to move loads of used furniture for another one of his businesses. This kind of sloppiness ensured that Tucker was quickly caught committing tens of thousands of dollars in fraud. He was convicted in 1991 and spent a year in prison. Now, the next five years of Tucker's life are a little bit of a mystery. He either kept his nose clean and obeyed the law for half a decade, or he got up to a series of smaller scale grifts and he wasn't caught for them.

Whatever the truth, by 1997 he was ready to get back into the major crimes game. That year he met Charles Hallinan, generally referred to as the Godfather of payday loans, although that isn't quite true as we've gone over already. But Hallinan was wildly successful at running a series of shady, quasi-legal companies operating under the lending laws of one state while offering loans in completely different states. Because con men instinctively recognized their own, Hallinan instantly liked Tucker. The two became fast friends, and Hallinan saw the young man as a protege. He agreed to loan Scott Tucker $500,000 to create a payday lending company.

Tucker would be president and run the business from Overland Park, Kansas. As part of the deal, Tucker signed a contract, promising not to create any competing payday loan companies. I'm sure that's going to go well. Yeah. Two con men just shaking hands. What a pure friendship. What a pure friendship, I am sure neither of them will take advantage of the other. Let's read the next paragraph. Hallinan and Tucker inked their deal in September of 1997.

Tucker instantly started a new company, CLK Management, in direct violation of the contract he just signed with his mentor. He began shuffling assets over from the company he created with Hallinan to his new business. Next, Tucker built up a network of dummy corporations based out of Carson City, Nevada, which he could use to receive money from the network of payday lending businesses he established at the same time. Within a couple of weeks, Tucker was running through a convoluted series of businesses lending companies with names like Cash Advance, Preferred Cash Loans, and United Cash Loans. For years, Tucker kept Hallinan in the dark about the fact that he'd basically used the

other man's money to build up a payday loan empire that he was the sole beneficiary of. He called his friend every Saturday and gave him updates on their company, which was actually the fakest of his fake companies. He assured the other man that CLK Management was just a part of their new lending service. The reality, however, is that Tucker had done something new and completely unprecedented in the world of scammy payday loans. The standard for Hallinan and other payday lenders was to base your company in states like Nevada and Kansas that allowed cripplingly high rates of interest to be charged. Then, thanks to the Supreme Court, they could offer loans to people in states like California with stronger laws in place.

But even the states with the loosest ursary laws still had some laws about that kind of thing, and some laws was too many laws for Scott Tucker. He realized that Native American reservations offered a unique opportunity. They got to pass- No! Leave them alone! Leave them alone! Yeah, yeah. Haven't they suffered enough by the hands of a white man? No, no they have not. Now they're getting sucked into one of his grifts for literal pennies on the dollar.

Fuck this fucker. Yeah, yeah. So Native American reservations could pass their own laws about like ursary levels and stuff. And Scott Tucker found that if he basically convinced reservations without laws about these things to let him operate companies out of their land and offered them a token bribe, well then he could really, really get into fucking over some poor people. So- Wow. Yeah, he's an innovator. You love innovators. That's what built this country.

Yeah I love innovators. I mean this country was literally built by innovative people finding innovative ways to take advantage of Native Americans, so like he's really- He's just following the steps of his ancestors, really. Yeah. Yeah, Scott Tucker, the junior, junior, junior, the fourth, the fifth whatever. He's just following in the footsteps of his shitty fucking scum relatives. It's a noble tradition. I made him. A noble tradition. Noble. Yes. Take that back.

Mr. Frizzle. Sorry, that's her name now. I mean, look, it all, all Tucker is doing, like Shireen, 500% APR is clearly not enough to be charging people for short-term loans. So he had to find some way to get that number above 700% and using Native American reservations was the only way to do it. That seems perfectly ethical to me. Um, I'll, I'll be right back. I'm just going to go jump out of this window really quick. It's fine. I'm just going to jump out of the balcony. Yeah. And I'm, I'm just going to set up a little business on a Native American reservation near my house. But also, but also it's like, how much money is enough for these fucks? You know what I mean? Like you're already rich.

You're already benefiting and, and profiting off of people that are so much less fortunate than you and less privileged than you. Like how much is enough? Why can't these greedy fucks just, just be fucking satisfied? We'll get to why he couldn't be satisfied with the amount of money he had in a little bit, Shireen, because Scott Tucker's got, got some big plans for the money. He's grifting out of people. I don't want to, I don't want to make it think like he doesn't have, he doesn't have some ambitions here. So, uh, is he investing in becoming a DJ or something or like getting something? Kind of. He's, he's does the very rich person equivalent of becoming a DJ. Um,

we'll get to that in just a second. So, uh, according to the Kansas city star, Tucker's businesses quote, operated under brand names, including a Maryland, cash advance, one click cash, united cash loans and 500 fast cash. In addition to steep interest rates, authorities said consumers were tricked by the terms of the loan through renewals and fees. A $500 loan could result in the borrower owing $1,925. So that's the kind of like level of grift we're talking about. Like your kid gets a medical bill and you need 500 bucks to cover the debt. And then, you know, in a month or two, you wind up owing two grand to Scott Tucker because you don't know how to read a contract as well as Scott Tucker's lawyers know how to write one.

And because he's operating out of Native American land, it doesn't matter what the laws are in your state. Um, yeah, so that's fun. Over the years, Tucker turned a $500,000 investment into a $2 billion a year business with more than four and a half million annual customers. This meant his companies accounted for roughly 40% of the 11 million Americans who used payday loans. Now, Tucker did of course attract legal attention, but it wasn't immediately clear that Scott Tucker was actually behind any of his companies. Regulators wound up fighting his front businesses, never realizing that they were all essentially disposable shell companies, arms of the same octopus. Now, Kansas was the first state to attempt to do something about one of Tucker's companies,

a payday lender called cash advance. Back in the early aughts, they went after it for deceptive practices that led to Kansans illegally being charged almost 800% interest in short-term loans. According to the Center for Public Integrity, quote, Danny Vopat, the lead attorney in the case for Kansas bank commissioner says he never knew that Tucker living and working in the same state was actually behind the payday lenders he battled for more than two years. Vopat settled with one of Tucker's shell companies in Nevada, a shell that no longer exists. Tucker quickly abandoned the trade name cash advance. For these reasons, Vopat says it's unclear that Tucker would violate the settlement agreement if he started lending in Kansas again. So you see, because of the way all

these shell companies are set up and where they're located, it's kind of impossible for anyone to go after him, like state level governments. It's the same reason why like a drug enterprise, you would want to have people located in different states doing different things because it disrupts law enforcement. Like it just makes it impossible to catch. So Tucker did keep lending in Kansas just under new companies with new names. His businesses were all run from Overland Park in a massive 600 person office. But in order to keep up the illusion that these were Native American run businesses, Tucker's employees were given daily weather reports from the tribal lands where they were supposed to be based. This way they could more effectively lie to borrowers. It took

until 2005 for any state authorities to even learn the name Scott Tucker. This is because he, yeah, well, it's because he hired an actor to pretend to be the CEO of his business and to register all the shell companies he named. No! Fuckin' love, like the beginning of like, well actually no, JT Leroy was nothing like that. But what is it with, I'm just mad. Yeah. I always get so mad on your fucking show, Robert. I mean, but Charine, does it change your mind to know that it's not illegal to do that in the state of Nevada? I don't fucking care about what's illegal or not in this fucking country. Obviously we're fucked. Yeah, yeah. So I miss Tony Soprano. I know he's not real. Yeah, it's amazing that Tony Soprano was breaking the law, but Scott Tucker wasn't. I mean,

he was actually, but at this point he wasn't. So when this con came to light and the Colorado Attorney General subpoenaed him, Tucker was not charged with any crime because it wasn't illegal to have a fake person pretend to be the CEO of the company. Who was the actor? Oh, it was just some guy he hired. Did he just shmuck? Yeah, it was just some shmuck. He just needed a name that wasn't his. And what would he do? Who would just like appear at places that Tucker was supposed to be at? No, no, it wasn't even that detailed. He would just register, like sign his name when they were registering the new companies. And like, yeah, like it was that simple. Like he just wanted a name that wasn't Scott Tucker on all this stuff. So it was that much harder to come after him.

Oh, I see. Yeah. So years later, one of Tucker's former employees laid out under oath exactly how many of these shell businesses Tucker operated. Quote, in addition to owning one click cash, CLK also owned or was affiliated with a Marilone, US fast cash, United cash loans, preferred cash loans and internet cash advance marketing. I understand that there are at least 500 internet based payday lending companies that are currently affiliated with one of the five companies mentioned above owned by CLK. So this employee was witness to some of the unspeakable human cost of Tucker's empire of debt. He later reported under oath, I often saw a customer loan of $300 turn into a $900 debt in a very short period of time due to interest rollover and late fees. He estimated

that 60% of the money he brought in during a given month came from the interest rollover and late fees rather than the customer paying down the principal balance. So again, the business isn't people paying down their balance. The business is conning them into paying extra money through late fees and service charges and whatnot. And for a very long time, Tucker's payday lending business did spectacularly well for him. He netted somewhere around $400 million and that's just the money we can verify. He bought a $1.3 million Ferrari, an $8 million house in Aspen and a $1.8 million house in Kansas. Most of his ill-gotten riches, however, were spent on his true passion. You want to guess what it is, Shireen? You want to guess what this guy's equivalent to becoming a

DJ is? Um, let me think. Maybe singing or like some type or no, you know, he wanted to be a arcade master. No. I mean, that is kind of close because a lot of arcades have racing games and Scott Tucker wanted to be a race car driver. What? That's the most, that's the widest dream I've ever fucking heard of. Yeah, if you look him up on Wikipedia, his name is even given as Scott Tucker, a parentheses racing driver. Um, and he wasn't, you say it's the widest dream? It's really not because he doesn't get involved in the honest, God-fearing, beer-soaked kind of races that like NASCAR fans watch. He did prestige fancy races in like Europe and shit, like the Ferrari Challenge and the Rolex sports car series and the American Le Mans series. Like he didn't even do like the

honest drunken NASCAR rally kind of races. Like he was, he was really in like the stupid fancy rich guy multi-million dollar car sort of thing. I have a question. Yes. Is this guy married or with anybody or is he fucking? Yeah, no, he was married to some broad. What is humanity? What is... No. So if we just show me a picture of him, he's gross. Yeah, he's a gross looking guy. He's a fucking droopy ass motherfucker. His face is like melting on either side. Yeah, he looks like like a young Jeff Gordon if Jeff Gordon had wandered too close to a candle. Now, he does seem to have been a pretty decent race car driver. Like at least he won some races and he was rookie of the year at one point. I don't think he was like super good, but I don't

have any real ability to rate race car drivers. He seems from what I've read like he was sort of on the edge of where he might have been good enough to drive professionally if he hadn't had hundreds of millions of dollars, but he probably wouldn't have ever established a racing career if he hadn't had hundreds of dollars. Now, the term used within the racing community for dudes like Scott is a gentleman driver and that's essentially racing lingo for a rich guy who buys a really fancy car and is able to become a professional race car driver because they're rich for some other reason. Okay, yeah. So, gentleman driver Scott Tucker was well known within the racing community and he verged on being famous outside of Kansas. Curiously, he did no racing inside the state of Kansas and

seems to have gone out of his way to avoid attracting any attention there. Articles I've read that interviewed people on the racing scene are mixed about Tucker. Some of his fellow racers said that he was very good, but Gunnar Jeanette, who finished runner-up to Tucker in a 2010 race, was less positive. Here's this American life. Quote, Jeanette said he didn't like the manner that Tucker chose to win the championship. He cheated really well inside of the rules, which maybe says a lot about his character, says Jeanette. He adds that Tucker was a detail-oriented racer who found loopholes. For the first time in series history, he got them to allow him to get points in whichever car finished better. It was very difficult racing against him where he would drive

two cars and basically if one car had an issue and the other car finished better, he would get points for that, says Jeanette, whose team only fielded one car. Wow. He was a con man and everything he did. That's the only thing he knows how to do is be a con man. How are you doing there, Shireen? My blood is boiling. Let's bring it back to the boils. I am going to guess that Scott Tucker spent at least as much money on his side racing career as it would have taken to replace the water systems in Flint, Michigan. When you put it that way, it is disgusting what these grifters do. It's not how selfish and disgusting of a person do you have to be deep down to be that fucking greedy and selfish and I'm just pissed. The alternative, Shireen,

is that he wouldn't be able to own multiple million-dollar Ferraris. Can you imagine anyone being happy without that? That is true. I guess you need one for every day of the week. Exactly. You can be seen driving the same one on Monday and Tuesday. Yeah, like a poor person driving a Ferrari on two consecutive days. Yeah, exactly. Like some kind of fucking dirt farmer. Now, starting in 2008, Tucker began dealing with increasing legal threats to his empire. One of them came from his old mentor, Hallinan. Hallinan claims that around 2006, Scott's weekly call stopped and was replaced by occasional emails. Hallinan sent an accountant

over to look into their company and found that it had, quote, essentially been ransacked and substantially of all of its assets, catch and profits, diverted. Realized that this business he'd put half a million dollars into funding had basically been hollowed out by the guy he thought was his partner and all of the money put into establishing an empire of scammy payday loan businesses. Hallinan sued his former business partner, which had the unhappy side effect of drawing legal attention towards both men who, up until that point, had mostly been insulated due to the structure of their companies. In October of 2008, an Olaf County, Kansas deputy sheriff, ticketed Scott Tucker for going 86 miles per hour in a 60 mile per hour zone.

Here's how a joint investigation between CBS and I Watch News described what happened next, quote, two days later, Tucker's wife, brother, sister-in-law, and sister-in-law, as well as several businesses with ties to the payday loan mogul, suddenly donated a total of $4,000 to the campaign of a candidate for local district attorney, the office that prosecutes traffic tickets. Among the businesses that donated $1,000 to the campaign were two payday loan companies that the Miami tribe of Oklahoma claims to own. Weeks later, the ticket was reduced to a proper parking to the surprise of the deputy who ticketed Tucker. The charge kept Tucker's driving record clean. Wow! Cool. Cool stuff. Now, the good news is that this lawsuit with

Hallinan, his old partner, which was settled out of court and this bribery of a district attorney candidate to get his charges reduced, these would wind up being the seeds of Scott Tucker's undoing. But before we get to that, you know what we got to get to right now? Um, I was going to jump out of the window after the ad breaker before. After? Okay, I'll do that after. Okay, well, we are back. Products! During the summer of 2020, some Americans suspected that the FBI had secretly infiltrated the racial justice demonstrations. And you know what? They were right. I'm Trevor Aronson,

and I'm hosting a new podcast series, Alphabet Boys. As the FBI sometimes, you got to grab the little guy to go after the big guy. Each season will take you inside an undercover investigation. In the first season of Alphabet Boys, we're revealing how the FBI spied on protesters in Denver. At the center of this story is a raspy-voiced, cigar-smoking man who drives a silver hearse. And inside his hearse was like a lot of guns. He's a shark. And not in the good and bad ass way. He's a nasty shark. He was just waiting for me to set the date, the time, and then for sure he was trying to get it

to heaven. Listen to Alphabet Boys on the iHeart Radio App, Apple Podcast, or wherever you get your podcasts. I'm Lance Bass, and you may know me from a little band called NSYNC. What you may not know is that when I was 23, I traveled to Moscow to train to become the youngest person to go to space. And when I was there, as you can imagine, I heard some pretty wild stories. But there was this one that really stuck with me about a Soviet astronaut who found himself stuck in space with no country to bring him down. It's 1991, and that man, Sergei Krekalev, is floating in orbit when he gets a message that down on Earth, his beloved country, the Soviet Union, is falling apart. And now he's left defending the Union's last outpost.

This is the crazy story of the 313 days he spent in space, 313 days that changed the world. Listen to The Last Soviet on the iHeart Radio App, Apple Podcast, or wherever you get your podcasts. What if I told you that much of the forensic science you see on shows like CSI isn't based on actual science? The problem with forensic science in the criminal legal system today is that it's an awful lot of forensic and not an awful lot of science. And the wrongly convicted pay a horrific price. Two death sentences and a life without parole. My youngest, I was incarcerated two days after her first birthday. I'm Molly Herman. Join me as we put forensic science on trial to discover what happens when a match isn't a match and when

there's no science in CSI. How many people have to be wrongly convicted before they realize that this stuff's all bogus. It's all made up. Listen to CSI on trial on the iHeart Radio App, Apple Podcast, or wherever you get your podcasts. We're back. So I actually am really thrilled because I like that the undoing of this motherfucker was in fact just their greediness getting the better of them. You know what I mean? Yeah, it's kind of how like Ted Bundy got caught because he was driving all times. You know, Ted Bundy only got caught by police when he was driving stupidly because he doesn't know how to drive, obviously. They're not the same type of evil at all, but I'm saying I like when

they're undoing is done by them. Yeah, I like that too because it's this kind of thing where like it's not even a serious charge, like going 26 miles over the speed limit. If that's your only traffic crime, it's not going to get your license taken away or anything like that. Yeah. You'll pay a heavy fee like fine, but like Scott Tucker could afford that shit. He just it bugged him to not have a perfect driving record because he fancied himself this great racecar driver. So he essentially exposed everything for that and that's funny. That's really funny. In 2011, I Watch News published an investigation that marked the first time Tucker's fraudulent lone empire was laid out in the open. Now by that point,

the IRS and law enforcement were already interested in Tucker's business because of the lawsuit with Hallinan and he'd started to claim in public that he no longer had anything to do with any of his paid a loan businesses. I Watch's investigation looked into the structure of his bribes to the Kansas district attorney and essentially use that to like lay out the structure of his organization. So I'm going to quote from their investigation. Among the companies that gave $500 campaign donations to the prosecutor on the same day as several of Tucker's relatives were two tribal businesses, AMG Services and M&E Services. AMG Services operates out of an office complex in Overland Park, the same office that Tucker listed his own insecurities and exchange commission

filings. AMG Services pays the property tax on Tucker's $8 million vacation rental in Aspen, Colorado, according to the county records. One of AMG Services biggest vendors said in a lawsuit that Scott Tucker in 2009 was the owner and chief officer of AMG Services. Most revealing of all, bank records showed that Tucker and his brother Blaine were the only two people able to sign for four payday lending businesses of one tribe. The tribes may only receive a sliver of the revenue from the payday lending business. So all this sort of laid out the exact structure of his company, including the fact that he was basically bulking these Native American tribes for their land and giving them pennies on the dollar. Another class action lawsuit from borrowers in California revealed

that the exact amount that these tribes received was between 1 and 2 percent of revenue from the loans, which again raked in 800 percent or more in interest. Over the years, 22 different states took Tucker to court with varying degrees of success, but a combination of years of lawsuits and dogged reporting gradually revealed the true face of Tucker's business. In 2014, facing increasing legal challenges, Scott's brother Blaine committed suicide by leaping off the top of a parking garage. I should not make any jokes about jumping out of windows, that's what I've learned. Well, I mean, a window is not a parking garage unless that parking garage has windows. Wait, why did he do mean, obviously that's a stupid question, but was he involved in the business

at all? Yeah, both of his brothers were involved in the business. And in fact, one of his brothers got in trouble because the money that they were making sort of legitimately through payday loans wasn't enough. And so he just started buying people's information and calling them and telling them that they owed him money and having debt collectors threaten people who hadn't taken out loans. And one of the debt collectors that he hired to do this threatened to rape a guy's wife for not paying a debt that he didn't owe. And so that guy started suing the pants off of Scott Tucker's brothers. And it was this whole big mess. Scott Tucker was mostly focused on the basic crimes of running these- Wait, so it's a fucking family of awful evil. It's not just- Well, yeah. Once

Scott Tucker got successful, he brought his brothers in and his brothers were even less disciplined than him. How many does he have? He had two, I think. Two that were involved at least. Two too many? Jesus fucking Christ. Yeah, yeah. Good riddance, whatever. Way too, too many. The Tucker family is a great case for why condom should be free. Yeah, yeah, I agree. Yeah. Wait, so after his brother committed suicide, did that change anything? Well, there were a number of federal lawsuits and investigations underway at that point. So his brother's suicide, like it ended his brother Blaine's problems, but Scott Tucker was still in hot water. And in September of 2016, the Federal Trading Commission hit Scott

Tucker with a $1.3 billion civil judgment, the largest ever obtained in a litigated case. Tucker's home and his beloved race cars were all repossessed by the government. It's a real high breaker. Yeah. Yeah, he probably cried about that. I'm sure he did. It makes me happy. Yeah, it does. I feel happy for the first time today, thinking about his race car being taken away and him crying in his garage. Yeah, you get to see him be sad in dirty money, the first episode of that Netflix series, because it's filmed right around when the government was taking all of his shit, and it's pretty good. It's pretty good. Nice. Now, in 2016, like that same year, a New York grand jury

indicted Tucker and a bunch of his business partners for extending deceptive loans on lawful debt collection and racketeering. The case revealed that Tucker had actually been charging even more interest than had previously been known. Some of his customers paid upwards of a thousand percent interest on their loans. A thousand percent. I can't even compute that in my fucking plebe brain. What the fuck, a thousand percent? No, and it's weird that the sentence is something I'm going to literally say, but it's definitely more ethical to just cut people's fingers open. I agree with you. I've never agreed with you more. Yeah, wild that that's the case. So yeah, Tucker was sentenced to 16 years in prison for running a $3.5 billion

criminal empire. That same year, Tucker's mentor, Helen Ann, was convicted of collecting more than $492 million in illegal debt. He was sentenced to 14 years in prison. But, Shireen, if you're thinking the bust of two major payday loan scammers meant the industry itself was in for hard times, think again. Were you thinking that? I mean, I know that there are still payday loan companies that exist now. So I know that their end or their demise or their fucking decade of vacation time in prison didn't mean the end of the payday loan companies. But you would think, I mean, in a world that is better than the one we live in, you would think that evil people in control of payday loan companies would at least learn from these evil people's mistakes, right?

You would think that, but no. I mean, they learn from their mistakes and that they don't commit as obvious a crimes, but they do continue to do the same terrible things. So it didn't lessen it at all. No one was scared enough to change their ways. No. And in fact, the region of Kansas that Tucker worked in, specifically around Kansas City, like the wealthy neighborhoods there became sort of a haven for the payday loan industry because of local laws in that regard. And suddenly, like anybody with enough cash to open up a business was able to create online payday loan companies that just funneled huge amounts of money into neighborhoods like Mission Hill around Kansas City, where like the very wealthiest people in

Kansas lived. I found an article published a year after the FTC indicted Scott Tucker. It quotes several attendees at Catholic churches in wealthy areas, most notably St. Ann's and Mission Hill's, about sort of how the payday lending industry flushed the area with cash around 2013-14. One worshiper recalled, quote, it was most obvious at the school auctions, you'd see these clicks of people pulling up in limos, acting wild, dropping a lot of money on exotic two-week vacations, and the other lavish items up forbidding, or all of a sudden so-and-so has a brand new Range Rover, or so-and-so family is moving into some giant Mission Hill's mansion. You see it enough times and you start to go, where's this money coming from? And on one hand,

it's St. Ann. This is a school in a church that serves Mission Hill's and Prairie Village. You expect to see nice cars in the parking lot, but there was something so sudden and so loud about this. It was this bizarre explosion of really extreme wealth. So David Hudnall is the journalist who wrote this story, and he pressed Reverend Keith Lunsford of St. Ann as to whether or not he thought taking money gotten from fleecing the poor was a very Christian thing to engage in. And Reverend Lunsford responded, I don't have any firsthand knowledge of anybody at St. Ann involved in the payday loan industry. So he didn't. Isn't the church just one big giant payday loan industry? Yeah, the Catholic Church, for sure. Like, yeah, yeah. And a lot of the Pentecostal

ones as well, like Creflo Dollar and some of those folks. So I have an unrelated question when you have a sec. Yeah. My hand is raised. Absolutely. Ask away. Okay. Thank you, Mr. Frizzle. I want to ask, a while ago, you mentioned that Tucker worked at a building that had like 600 employees. So the employees at these companies, are they paid well? Or are they basically like labor force that are like, they might as well be factory workers that get paid the bare minimum and just to survive? Or at the very least, are they paying their workers a decent amount to live? You know what I mean? Some of them were paid very well, like the ones whose job was to actually collect debts generally got a portion of those debts. And if they were bringing in tens of

thousands of dollars a month, they lived very well. As you know, when it came to people that weren't as critical to the business and weren't involved in as much of the shady stuff, I think Tucker probably paid them as little as he could get away with because that's how most of these people tend to work. You see, I was trying to give him the benefit of a doubt that was like, maybe he at least gave some people jobs. But in the end, he is unredeemable. So keep going. Sorry for interrupting. I would call him an unredeemable asshole. Speaking of unredeemable assholes, after the payday loan industry exploded in Mission Hills, St. Anne's Church managed to meet an $8 million fundraising goal. One parishioner told The Pitch, which is the site I found this

article in that covers local Kansas City news. It presented a moral conundrum for St. Anne, because there was all this money coming into the church through donations and through the auctions. And I mean, it was huge money. And gradually, everybody realized that it was money that if you trace it back to its root came from poor people who were being taken advantage of, who were being charged crazy interest rates. So there were a lot of behind closed doors, hushed tones conversations happening about it. People on the finance committee and the school board were talking about the morality of taking that money. But in the end, I think they just looked the other way. Now, David Hudnall, the journalist who wrote this story, also went

over to a poor part of town and talked to a reverend at a church whose clientele were the victims of rich people who funded the renovations at St. Anne, because David Hudnall is a good journalist. He talked to reverend Ernie Davis, who told him, we've seen members of our parish who lost their homes through the snowball effective payday lending. It has absolutely ravaged the lives of people in our parish. There's no justification for it and the faith we share, anything that oppresses the poor is condemned in both Jewish and Christian scriptures. People have a sense of what is right and fair, whether it's through scripture or through their hearts, and charging especially poor people hundreds of percent in interest is oppressive. So that's fun.

Yeah. But was this guy still part of the problem? No, no. This guy led a church in a poorer part of town where all of his parishioners were losing their houses because the loans the people at St. Anne's were making millions off. Wow. Yeah. Because it's Kansas. Not all churches bullshit. I guess some people, okay. Just rich churches. Yeah, okay, cool. Now, keep going, sorry. I bet you're wondering, Shireen, how bad is the payday loan industry really? What do we know statistically about the actual impacts that it has on poor people? I have a couple of questions that I've been saving up, but yeah. Yeah, well, yeah, drop the questions and then I'll get I'll get on to my. Well, well, okay. So I was thinking credit cards. So you have payday loan industries that supply

poor people or desperate people with immediate money. Then you have credit cards. It's very easy to open a credit card as long as you have decent credit. I'm sure a credit card will give you credit. I mean, a credit card company is going to give you a credit card if you were just like passable. So our payday loan industries tackling those that have worse credit that can't have a credit card or that's exactly it. These are for people who can't get credit because they I mean, oftentimes because they had credit cards and they like were really bad with them. But other times just because they've never had any sort of credit history because they're very, very poor and they've only ever worked like a lot of the people who get payday loans have never

had a bank account. You know, they're the kind of people who grew up in the poorest parts of town. Like like a lot of them are like black and Hispanic people who grew up in very, very poor circumstances and have only ever worked sort of cash and hand jobs and who just don't. I've just showed my privilege thinking that everyone can get a credit card, but obviously I forgot that it's a privilege to even consider getting a credit card. Yeah, exactly. Like the the payday loans are mainly for people who really like credit cards aren't even an option for them because as bad as the credit card industry is, it's generally a lot less abusive than the payday loan industry. Yeah, I was thinking about that. Yeah, I agree. And I guess, I mean, my other one

is not really a question more of a statement, but I can save it. Okay, well, let's let's let's get on to some statistics. So I decided to look into I wanted to like find all of the research I could on how bad payday loans were and like how they actually impact the poor and communities. I found a 2014 Consumer Financial Protection Bureau study that they did on like they evaluated 12 million payday loans in three states. According to the New York Times quote study discredits once and for all the industry's portrayal of these loans is a convenient option for people who can easily repay the debt on the next payday, customarily in two weeks. In fact, only 15% of borrowers in the study could raise the money to repay the total debt without borrowing again within 14 days. 20% of

these borrowers default on a loan at some point, which can result in credit damage and more bank fees and 64% renewed a loan sometimes more than 10 times and had to pay fees that put them on a slippery slope towards debt that we would be difficult to repay. So Richard Cordray, the director of the Consumer Financial Protection Bureau described the story of a woman in Pennsylvania who lost her job at a hospital and took out a short term $800 loan to pay rent. As of the time she spoke to the CFPB, she had paid more than $1400 on the loan and was still in debt. She was also still being hounded by debt collectors. Wow. Yeah. In 2016, Christine Dobridge of the Federal Reserve conducted a study that found payday loans actually helped families in the wake of natural disasters

and other singular issues. Quote, in periods of temporary financial distress, after extreme weather events like hurricanes and blizzards, I find that payday loan access mitigates declines in spending on food, mortgage payments, and home repairs. In an average period, however, I find that access to payday credit reduces well-being. Loan access reduces spending on non-durable goods overall and reduces housing and food-related spending particularly. So it's not an inherently bad thing to offer short-term loans like this to people who have had a disaster hit them, like a hurricane, fuck up their house, or whatever. I mean, I understand that, but at the same time, if that happened, like if the natural disaster did occur and a family or a person needed money

immediately, in what world does the majority of these people, like, because they have to pay back the loan pretty much immediately or very shortly after they borrow it so they won't rack up interest? So if they don't have $800 a week ago, why would they have it the next week to pay it back? You know what I mean? It feels like they would have to borrow from other companies even. They would have to keep having loan after loan after loan unless they're truly just waiting for their paycheck. You know what I mean? And if that paycheck can help, it can help them in the end. But I don't know. It's an evil cycle. It is an evil cycle. And I think what Doebridge found is that the only people for whom it wasn't an evil cycle were the people with

regular paychecks that just got delayed because something fucked up happened, or the government shut down. A lot of people use payday loans. And I'm going to guess those people were less hurt from it than the very impoverished tended to be. So the primary communities preyed on, what studies have found that the primary communities where payday loans operate in are neighborhoods with higher minority populations, lower education levels, and more poverty. They're also particularly common in the families of U.S. service personnel. And in fact, studies have found that access to payday loans reduces job performance of soldiers and lowers retention levels of U.S. military personnel as well. Dude, that's fucked up. Yeah, it's super fucked up.

Yeah, that like we take advantage of the people that are trying to serve us. Yeah, that that's like the like one of the number one like customer bases of the payday loan industry is soldiers who can't make ends meet. Yeah, kind of messed up. That's fucked. Yeah. I mean, it's already fucked that they take advantage of marginalized people. That's already fucked as it is because oftentimes communities that are impoverished are by default have a large marginalized community because that's just like the systematic racism at work. But that's just layers of fucked up after layers of fucked up. Wait, but are the interest rates any better now? Are they just as bad? They're better than like tough. No one charges what Scott Tucker was charging. You're

not seeing 1000% interest rates, but like five to six, something 700 sometimes percent is still pretty, pretty normal. I think 500% is more like the norm. But that's a lot. Yes. That's a lot of money. Yes. That's not fair. Here's where things get really convoluted, Shareen. Because as I... How could it get worse? Well, because I wanted to end this with like a big dump of statistics I found on how bad payday loans were. And I already read a few of those to you. I definitely found some. But I also found a bunch of studies saying that they were good and that they don't hurt people and that they don't primarily target minority communities and that... So you mentioned the natural disasters. Yeah. So one place I wound up at was like a website called Journalist Research,

which is an actually really useful little site that summarizes research on a subject. And they had a bunch of links to like summaries of payday loan studies, about half of which said payday loans were bad and about half of which sounded like this. Quote, Chintel Desai at Virginia Commonwealth University in Gregory Elliehausen at the Federal Reserve found that a Georgia ban on payday loans hurts locals' ability to pay other debts. They conclude that payday loans do not appear on net to exacerbate consumers' debt problems and call for more research before new regulations are imposed. So you run into a lot. I ran into a lot of stories like that. As I dug around more, I started to worry that I might have made a mistake in focusing on the payday loan

industry as a bastard. I found a Freakonomics article titled, Are Payday Loans as Evil as People Say? It cited a lot of that same research and came to the conclusion that actually everything is fine in the payday loan industry and the growing calls to have the government regulated are short-sighted. No, I don't believe. Freakonomics benefits in some way. I don't trust them. Give me a moment, give me a moment. They're owned by the Koch brothers. I dug around a little bit more and then I came across a Washington Post article titled, How a Payday Loan Industry Insider Tilted Academic Research in its Favor. So the article starts in 2013 when the Consumer Financial Protection Bureau under President Obama was preparing to lay out a sweeping series of regulations to

make the payday lending industry less of an abusive nightmare. Henry Miller, who is an attorney who works in the payday lending industry, reached out to a professor in Georgia and asked if she'd be interested in testing the number one criticism of the payday loan industry, which is that its customers are hurt by its loans. According to the Washington Post, quote, over the next year, Miller worked closely with Jennifer Lewis Priestly, a professor of statistics and data science at Kennesaw State University, suggesting research to cite the type of data to use and even lecturing her on proofreading. Punctuation and capitalization are somewhat random. He said in a February 2014 email responding to a draft of the report, you might want to have your maiden aunt who went

to high school before 1960 read this. What the fuck? I know. He was mansplaining the English language to her? He sure was and she let him do it because he was giving her a $30,000 grant to publish the study. And this is a different Henry Miller than the one that wrote like Tropic of Cancer, right? Yes, this is not the Henry Miller. This is the Henry Miller who is a shill for the payday loan industry. Okay, cool. Just another white guy. Yeah, or Hillary, Hillary Miller. Oh, if I said Henry. But one L, yeah. Priestly's report ultimately concluded that taking out repeated payday loans did not. And according to the emails, Miller discussed the results with a CFPB economist. It's unclear how it factored into bureau decisions, but it has been repeatedly touted by

payday lending supporters. So basically, Priestly's report concluded that payday loans were actually not bad for people and that that wound up going to the Consumer Financial Protection Bureau and being weighed in on their decisions as to whether or not to regulate the industry. Now, oh my God. Priestly's report is only one of the pro payday loan sources I ran into when I was trying to figure out how bad the industry was. And the post lays out a pretty damning story of industry academic collusion here. In exchange for that $30,000 grant, Priestly gave Miller and his payday loan industry bosses shocking control over her work. In one December email, Miller asked her to change the way she analyzed data about borrower credit scores. Priestly responded, I am here to

serve. I just want to make sure that what I am doing analytically is reflecting your thinking. The email ended with a smiley face. When the report was published, it noted that Miller's non-profit, which was essentially a mouthpiece for the payday loan industry, did not exercise any control over the editorial content of her paper. But when the post interviewed her, Priestly admitted that she offered to share authorship of the report with Miller and he declined. Now, one of Hillary Miller's goals for his pet academic was to have her attack the idea that payday loans trap people in an unending cycle of debt. A 2014 Consumer Financial Bureau study found that most borrowers are forced to renew their loans so many times that they pay more in fees than the actual amount

they borrow. In March of 2014, Miller sent Priestly an email asking her to avoid the term cycle of debt. In general, we do not accept the notion that a cycle of debt even exists, and I would appreciate it if you would delete all references to this term unless you are rebutting its existence. Priestly did as she was asked. Who is this asshole that just trotted onto the scene? You could almost say she's kind of like the people who are being taken advantage of the payday loan industry in that she needed a chunk of money quickly. They're not charging her interest for the 30 grand. I'll give them that. That's in modern, that's like recent. That's a recent thing. You were researching it the other day. Some other person is going to be researching

whether or not they should take out a loan and they're going to come across an article being like, they're not that bad and then they're going to continue. It actually gets a lot more infuriating than that. Okay, let's hear it. According to the Washington Post, quote, as the publication of the study neared, Miller congratulated Priestly on her work. Priestly's study found that payday loan customers who repeatedly borrow money over a long period have better financial outcomes than those who borrow for a shorter time. These borrowers also benefited from living in states where payday lending wasn't heavily restricted, the report found. This is a terrific paper, he said in an April 2014 email. When it is done, you are going

to be famous and your phone will ring off the hook. The group was developing a strategy for releasing the report, he said. We want them to believe that the results are honest, verifiable, and most importantly, correct. Now, Shireen, if this was just one cooked study, it would be damning, but not damning of all of the different studies that I came across that seem to have positive things to say about the payday loan industry. But of course, it wasn't just one study. The Huffington Post published an article in 2015 that discussed the payday loan industry interference into multiple studies, including a 2011 paper, Do Payday Loans Trap Consumers in a Cycle of Debt? One guess as to the paper's conclusions. Here's the Huffington Post.

Quote, The emails show that the payday loan industry gave economics professor Mark Fusaro at least $39,912 to write his paper, and paid an undisclosed sum to his research partner, Patricia Cirillo. In response, the industry received early drafts of the paper, provided line-by-line revisions, suggested deleting a section that reflected poorly-end payday lenders, and even removed a disclosure detailing the role payday lending played in the preparation of the paper. Fusaro cut two critical findings from his paper at Miller's behest. The first was a finding that payday loan borrowers tended to have frequent debt overdrafts in the period before their loan. This looked bad for the industry because one of their chief claims was that most borrowers

could afford the loans. They were stable people dealing with emergencies. Obviously, if people were failing to pay their debts prior to getting a payday loan, then it makes it seem like the payday loan industry is just taking advantage of people who are having financial difficulties. In an email, Fusaro's co-author told him, quote, Hillary called me the other day for an update. I told him about where we were in data collection and also this other finding. I suspect he isn't too happy about that finding and pointed out it wasn't the original objective of the study. I acknowledge that. They cut this finding. Miller also had them cut a chunk of the author's note, which would have disclosed that payday lending companies had helped to write the study. Here's

a quote from Miller in an email he sent to them. The unnamed payday lenders and the unnamed blind reviewers do not need or want your thanks. It will actually undermine the lender's objectives in participating in the study if you do so. So that's cool. I think just the phrase objective of the study is already just does not make any sense. You don't make a study with an objective. If you study to find the correct response, you know what I mean? If you go into a study, quote, unquote, with an objective, you're already skewing it. Yeah. It makes no sense. The objective of science is to arrive at the truth through the testing of observable phenomena, not... That's what I'm saying. Yeah, exactly. You don't have an objective going in. That doesn't make any fucking

sense. Yeah. It's frustrating. It's the same people that fact check fucking scientists when it comes to climate change. They just make up their own definitions of what the words facts mean, what the word study means, and then people just buy into it because they haven't learned this new definition. That's incorrect. Now, Doreen, you may not remember from way back in 2008, but one of the things that President Obama ran on when he was first running for election was that he was going to reform the payday loan industry. He spent years and years and years as president having the Consumer Financial Protection Bureau figure out a list of rules that they could kick into place to essentially wipe out the payday loan industry as it currently

exists. Near the end of his term, they finally hit upon exactly what new restrictions they needed to put in place. Now, they announced these restrictions in 2017, and they were expected to reduce payday loan volume by 62%. So this would have been a massive hit to an incredibly slimy industry. However, a couple of months ago, the new restrictions should have hit in August of 2019, but very recently, the Consumer Financial Protection Bureau under President Trump changed course and scrapped most of the proposed changes the Obama administration had spent years putting together and preparing to implement. According to the Motley Fool, quote, the CFPB will gut most of the rules it previously sought, leaving only modest changes

to payday lending practices. The one rule that remains impacts lender's collection of loan payments. Most borrowers pay by automatic bank drafts. Under the new rule, after two failed withdrawal attempts, lenders would have to get authorization for any additional withdrawal attempts. And that's it. Everything else gets to stay. The article also notes- Wait, so the things that Obama tried to implement since he was elected in 2008 were- it was going to be until last August, like 11 years later? Well, I mean, it took a long time. Long enough for Trump to overturn it, basically.

Yeah, exactly. And it's worth noting that in April of 2018, not that long before the CFPB changed its rules, the Payday Loan Industry Trade Group, the Consumer Financial Services Association, held its annual conference. You want to guess where they held their 2018 annual conference? In my butthole? I don't know. No, not in your butthole, but in the Trump National Doral Golf Club in Miami. That's the same place. Yeah. Yeah, it is a butthole, that's for sure. Yeah. It's now all of our buttholes.

How you feeling, Shireen? I need more therapy is what I'm feeling. Yeah. But, you know, there are moments where you have such little faith in humanity that you're just like, what's the point? Why am I still here? And I'm glad that coming onto your show really makes me think of my life as such a meaningless blip in a white man's game. So thank you for that, Robert. Well, you're welcome, Shireen. Hope is as toxic as cigarettes according to most

World Health Organization reports. Is that in a recent study? Was that their objective to find? Okay. Yeah, it was actually funded by the Payday Loan Industry. So you know it's good. What if this entire episode was just a huge ad for the Payday Loan? What if you were sponsored? Actually, at this point, nothing would surprise me. If you were actually like Scott Tucker's son or some shit.

Well, you know, Shireen, if you really do need a short-term loan, AmeriCash can lend you up to $1,000. No questions asked. And interest rates less than 900%, you know, and that's pretty low. 900 is a smaller number than 1,000, so you're kind of making bank. Those are numbers that are smaller than the other. Yeah, those are numbers. Those are numbers. That's actually the motto of AmeriCash. You know, like when you strain too hard on the toilet and maybe pop out of hemorrhoid or two, and your asshole becomes unredeemable.

An unredeemable asshole. That is Scott Tucker. He is an unredeemable asshole, and you can't go back after that. Maybe you could tuck in a hemorrhoid or two on a good day, but most of the days, you have a little tag just flopping in the wind. I might say that Scott Tucker, like the whole payday loan industry, is an unredeemable asshole, and Scott Tucker is one particularly flappy hemorrhoid. Yeah, I like that metaphor. And then on the next episode of the Magic School Buzz, we're going to go straight into the asshole.

And we're going to be the enema, the enema going right in before a really rigorous, just a night of really crazy strap-on pegging. I'm pissed. Yeah. When I'm pissed, I talk about butts. You talk about pegging a lot when you're pissed. I'm starting to realize this, which is good. Dude, pegging is not, don't shame pegging. I'm not shaming pegging. It's a fun time. I'm sure you'd be open to it, I think. If I know anything about you, you'd be open to pegging.

I have no issues with pegging. Pegging is much more ethical than, for example, the payday loan industry. I agree. Can we get sponsored by pegging? The concept of pegging? Yeah, we'll just try, just get a strap-on sponsor. I'm just trying to make myself feel better. I'm trying to make myself feel better after this awful decision I had to come on your show again. So I'm thinking of pegging. Well, I'm thinking that next we should talk about Jacob Wohl for like an hour.

How does that feel? A nice pallet cleanser? Yeah, a nice pallet cleanser. I mean, those of you that have been following the show, probably remember me from being on the Other Grifters episode. And like last week or something, the tweets about our first episode together with Jacob Wohl and the grifters started getting a lot of retweets and comments again. So I was like, oh, I guess he's in the news. So I'm curious what you have for me today, for update me on this fucker's life. Well, Shireen, you and I will have that conversation in a manner of minutes,

but for our listeners, it will happen on Thursday when they hear the next episode of Behind the Bastards. So before we break for that, do you want to plug some plugables, which is different from pegging pegables? You know, anal plugs are also a thing, but not today. Today I'm going to plug the podcast I co-host ethnically ambiguous. It's a fun time. I co-host it with my friend Anna Hosnie. I was going to say Anna, but we could call her both. And we talked about Middle Eastern experience in the U.S.,

being daughters of immigrants. And we also have fun guests on, just like me, that I'm a guest on this one. That's what podcasting is. Okay, anyway, you can follow us on ethnicallyamb, AMB on Twitter, ethnicallyambig on Instagram, and I'm shirohero on Instagram, sh-e-e-r-o-h-e-r-o on Twitter, shirohero666. I hope you guys enjoyed this episode more than I did. And I hope that you enjoyed this episode

more than I enjoyed reading about payday loans. You can find me on Twitter at IWriteOK. You can find this podcast on the twinstagrams at atbastardspod. You can find our website with all the sources for this at behindthebastards.com. I have another podcast called It Could Happen Here, and it's about the Second American Civil War, which after an episode like this seems almost more optimistic than just letting some of this continue, but it's not.

It could happen here. It could happen here. It could happen here, aspirationally. But no, it's a super big bummer and very sad. That's, oh, you buy t-shirts on tpublic.com. Oh, yeah. You can also get some payday loans from tpublic.com. Enter the code RobertEvans and you'll get like a 900% versus 1,000%. Yep, we'll knock 100% off of that interest rate for you.

That's all I got for today. Sophie, would you toss some bagels angrily against the wall for me? She would 100% just did that. It ricocheted off the wall and landed right back into her lap. It was a beautiful thing. Physics is real. Physics is, yeah. Fantastic.

That was the first remote bagel throwing that I think anyone has ever engaged in. So, you know, this is a groundbreaking show. That's a groundbreaking show. And until next week's groundbreaking episode, I love about 40% of you. What would you do if the secret cabal of the most powerful folks in the United States told you, hey, let's start a coup? Back in the 1930s, a Marine named Smedley Butler was all that stood between the U.S. and fascism.

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Listen to The Last Soviet on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. What if I told you that much of the forensic science you see on shows like CSI isn't based on actual science, and the wrongly convicted pay a horrific price? Two death sentences and a life without parole. My youngest, I was incarcerated two days after her first birthday. Listen to CSI on trial on the iHeart Radio app,

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