CLK Management & AMG services: Illegal payday loans (2016)

Controversy

Scott Tucker 

Scott Tucker is a well-known individual in the business world, however unlike most individual Tucker is known for all the wrong reasons. In February 2016 Scott Tucker was indicted and convicted on federal criminal charges for his role in an illegal payday loan business he started in early 2001. CEO of AMG services and owner of CLK Management, Scott Tucker made illegal high interest, low principle loans to nearly 4.5 million Americans nationwide.  Despite the fact Tucker continues to state he was just helping those in need of money fast, recent investigations of his operations showed his loans were anything but helpful and exploited people who were in need of money fast and had no where else to turn. Aside from the interest rates that reached nearly 700% there were also countless disclosed fees that were not clearly stated in their contract and in some cases were not presented at all.

As both AMG services and CLK management continued to grow at a substantial rate so did the amount of unwanted attention. Tucker knew this would be an issue and in 2008 managed to arrange an essentially fake sale of his business with the Miami Tribe that was based out of Oklahoma. This “sale” of his business allowed Tucker to retain management over his 3.5-billion-dollar company while shielding him from lawsuits because of the tribal immunity gained through the "transfer" of ownership. Aside from the illegal loans, and fake sale of his business the investigations also revealed Tucker had been understating his profits by the millions for years with not only his businesses income, but also his personal income. Tucker is now serving nearly 17 years in federal prison and many believe even that does not give justice to the millions of Americans lives he devastated.

Stakeholders

Example of extremely high interest loan found in Tuckers contract 

Although Scott Tucker finally received the sentence many believed he deserved it does not mean the stake holders necessarily won. Overall CLK Management and AMG Services stole billions of dollars from vulnerable people in need of short term cash to pay their bills which is why I believe the primary stakeholders are the victims who took these loans and experienced Tuckers lies first hand. One of the victims Walter Archer even went on to say “It was a relief to get the money, I knew everything would be paid and my kids wouldn’t be cold for the winter. Once they tried to take $900 out of my account without my permissions though I knew something was wrong.  In polite terms, they were trying to screw me over in every which way they could.” (Dirty Money).  This is just one example of millions, where an individual in need was targeted and lied to by Tucker and his greed driven company and had to pay the price. Aside from those who directly took the loan other stakeholders involved include the immediate family who had to face the unfair repercussions such as Walter Archers children mentioned in the example above. The final stakeholders although not commonly talked about include the near 600 employees of these companies who played a key part in the loan process. Despite the fact some may have had more important roles than others they were all important factors in the overall the process and have been affected in many ways including being labeled as unethical and in many cases also losing their job because of the illegal activity their company was involved in despite the fact they were just doing their job as they were told. 

Individualism

Friedman’s theory of individualism basically states the main goal of a business is to make as much profit as possible while staying within the law. Although Scott tucker and his business were very good at making profit, overall an individualist would most likely label this case as unethical. As noted above Tucker broke numerous laws and was even convicted on 14 different accounts including racketeering, wire fraud, and money laundering. This is not only illegal, but also most likely resulted in a net loss because of the billions of dollars himself and his company had to pay back to the government which goes against everything an individualist believes in.

Scott Tucker invested huge portions of his
 income towards his semi pro racing career.

Utilitarianism

Overall the core idea of utilitarianism is to maximize happiness in the greatest number of people possible and if that outweighs those who are not happy than it is still considered ethical. If a utilitarian was viewing this case, there is no doubt they would consider it to be unethical. The overall goal of Tucker and his company was to make a profit at the cost of others around him. This means for the nearly 4.5 million customers his company supplied loans to it only resulted in happiness for about the 600 employees within his company including himself and possibly a small percentage of the people who found the loan useful and the high interest rates not specified in the contract as reasonable. Although someone may argue the loans must have been beneficial to some of the consumers it still does not outweigh the millions of other people and their family’s that were lied to and put into financially unstable situations by Tucker and his company.

Kantianism

Kantianism is a theory that revolves around four main principles that state always act rationally, allow and help others to make rational decisions, respect people, their autonomy, and their individual needs and differences, and be motivated by good will. From a Kantian perspective this case would be viewed as unethical because Tucker did not respect the people he was doing business with, did not provide them with the information necessary to make rational decisions and above all used his consumers as a mere means to make profit. One core example of these issues can be seen in the legally binding contracts between Tucker and his clients which didn't even contain the correct information. This also goes against Kantian formula of humanity which states it is not morally permissible to use people as a mere means to an end. Tucker was clearly not motivated by good will and would not be viewed ethically by a Kantian.

Virtue theory

Virtue theory is based upon four core values which include courage, honesty, temperance, and justice. When analyzing this case from a virtue theory perspective it is also viewed as unethical. CLK Management, Scott Tucker, and AMG Services did not have the courage to tell their customers the truth about their loans. They were not honest with their contracts and lied directly to their consumers, the expectations they set were unreasonable for someone in a financial position so bad they needed a loan to begin with, and there was no justice involved for the victims these companies targeted which all shows how unethical this business truly was from a virtue theorist standpoint.

References

Faux, Zeke. “Millions Are Hounded for Debt They Don't Owe. One Victim Fought Back, With a Vengeance.” Bloomberg.com, Bloomberg, 6 Dec. 2017, www.bloomberg.com/news/features/2017-12-06/millions-are-hounded-for-debt-they-don-t-owe-one-victim-fought-back-with-a-vengeance.

Flitter, Emily. “U.S. Bank Cited by Federal Authorities for Lapses on Money Laundering.” The New York Times, The New York Times, 15 Feb. 2018, www.nytimes.com/2018/02/15/business/us-bank-money-laundering.html.

Pagliery, Jose. “Race Car Driver Scott Tucker Arrested in Alleged $2 Billion Payday Lending Empire.” CNNMoney, Cable News Network, 10 Feb. 2016, money.cnn.com/2016/02/10/news/payday-lending-scott-tucker-arrest/index.html.

Press, Associated. “Pro Racecar Driver Scott Tucker Gets over 16 Years in Prison.” ABC News, ABC News Network, 5 Jan. 2018, abcnews.go.com/amp/Sports/wireStory/pro-racecar-driver-scott-tucker-16-years-prison-52172216.

Stempel, Jonathan. “Payday Loans: Racecar Driver Scott Tucker Owes $1.27 Billion | Money.”Time, Time, 3 Oct. 2016, time.com/money/4517199/scott-tucker-payday-loans-ftc/.