Payday armageddon continues as feds seek millions more from Joel Tucker, Amit Raizada, Scott Asner, others

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Eighteen months ago, in courtroom 8B of the Western District of Missouri in downtown Kansas City, Missouri, Judge Dean Whipple asked a simple question: Where did the money go?

He was addressing the attorneys of Tim Coppinger and Ted Rowland, as well as the attorneys of the Federal Trade Commission, which had brought a civil suit against Coppinger and Rowland for running an illegal payday-lending scheme. The FTC alleged that Coppinger’s company CWB Services had issued $28 million in loans and extracted $46 million in return. “Where did that $18 million go?” Whipple asked. “I expect to learn where that money went.”

Last summer, a settlement was reached in the case. Coppinger gave up several personal bank accounts, the contents of which totaled about $520,000. He also was ordered to sell his house at Lake Lotawana, which netted $137,000. The penalty for Rowland, who was less involved in the operation, was about $400,000. The settlements also contained avalanche clauses: If Coppinger or Rowland violated the terms of the settlements (by, say, being involved in another lending business), they would be hit with significantly more severe judgments of $32 million and $22 million, respectively.

The settlement with Coppinger and Rowland did not bring to an end the FTC’s case. A provision in the settlement allowed Larry Cook, the court-appointed receiver on the case, to continue making attempts to demand and recoup assets related to the case — whether from investors in CWB Services or from entities that assisted in its operation — for the next six months. Last July, after determining that an Arizona investor named David Harbour had received $6.6 million from the payday-lending scheme, Cook submitted a motion for him to turn over the full amount. Harbour and Cook subsequently reached an undisclosed settlement.

Cook’s window has been extended a few times since then, and he is still at it. This month, he has filed motions seeking large sums from several Kansas City names.

The biggest is Joel Tucker, founder of eData Solutions and brother of payday coverboy Scott Tucker. As The Pitch has previously reported, eData Solutions was a lead generator for multiple online payday lenders in the Kansas City area. Cook’s report refers to the company as a “one-stop-shop for online payday lenders [including CWB Services], providing customer/borrower leads, qualifying the leads, providing a loan management software system, and buying defaulted consumer loans to sell to third party collectors.”

For its services, entities like Coppinger’s would pay eData Solutions a monthly fee of 7.5 percent of any outstanding consumer-loan portfolio balance.

“These clients are wholly dependent on eData to operate a payday lending business,” Cook writes in the motion he filed in early March seeking restitution from Joel Tucker.

In that motion, Cook also cites evidence that eData raised money for entities like CWB Services. He writes that eData Solutions “actively solicited capital, and raised millions of dollars in debt financing to provide funding for certain payday lending clients to increase loan volume (because the greater outstanding total consumer loan balance, the greater monthly fees generated for eData).”

After crunching the numbers, Cook found that Coppinger and Rowland’s companies paid Joel Tucker $29.9 million in fees. Cook is seeking the full amount from Tucker.

There’s more. Documents previously obtained by The Pitch indicate that Spectrum Business Ventures, a partnership among Amit Raizada, Scott Asner, Michael Gortenburg and Chuck Rouse, had a 17 percent stake in eData Solutions. Yesterday, Cook filed motions seeking turnovers from all four of those individuals.

From Raizada, the feds are seeking $8.5 million. From real-estate investment partners Asner and Gortenburg, the amounts are $3.6 million and $3.7 million, respectively. From Rouse, a Leawood lawyer, it’s $1.5 million. You can read about all these guys in our January 2015 story on Raizada.

The most damning detail that emerged in the FTC’s original complaint against Coppinger was that his companies were debiting money from the accounts of people who had never requested loans. The suit contained dozens of sworn declarations from consumers who said they had entered their personal information into a payday-loan website but subsequently opted not to authorize the loan. Despite this, they received unsolicited deposits into their bank accounts from Coppinger’s various business entities. These consumers told investigators that they were then charged fees and interest on those unauthorized loans — and were then harassed by debt collectors. This fraudulent practice is  referred to in the online-payday-lending world as “autofunding.” One might also call it “stealing.”

As the lead generator for Coppinger’s outfits — in other words, the entity capturing people’s personal information — eData Solutions appears to be responsible for passing phony leads on to Coppinger’s companies. How aware Coppinger was of the fraudulence of the leads he was receiving is unclear.

It was also unclear, until now, how much these phony loans contributed to the success of entities like CWB Services. But Cook’s latest report has an update on that. After reviewing e-mails, voice mails, various documents, and loan-management software, he found that Coppinger’s companies autofunded as much as 20 percent of their consumer payday loans. “Although autofunded loans were a small portion of the total loans, the autofunded loans generated proportionately greater gross profit than non-autofunded loans,” he writes.

Raizada and the others in Cook’s sights have until April 11 to file a response. 

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