James Carnes and Scott Tucker, two Kansas City-area businessmen sentenced by federal judges to pay restitution for fooling payday loan clients, have donated more than $ 160,000 to federal candidates and to political parties over the past decade, including 17 members of Congress overseeing payday lenders.
Tucker and his business partners were ordered by a Nevada judge last week to pay $ 1.2 billion in restitution to customers they tricked into paying exorbitant amounts for small loans.
Carnes, in another case, was ordered to pay $ 38.2 million in restitution, as well as a civil fine of several million dollars, for hiding the true cost of payday loans from clients while he was at the head of Integrity Advance.
Since 2006, Carnes has donated $ 138,850 to members of Congress, Congressional candidates, presidential candidates and the Republican Party, according to Federal Election Commission records. Tucker donated $ 25,200 to the candidates and the party.
Carnes donated a total of $ 10,200 to a dozen members of the US House Financial Services Committee, which oversees the payday lending industry. This includes $ 2,500 for Rep. Jeb Hensarling, the Texas Republican who chairs the committee.
In 2008, Carnes donated $ 2,300 to Representative Dennis Moore, a Democrat from Kansas who served on the committee and chaired a subcommittee that oversaw and investigated the financial services industry. In 2012 and 2013, Carnes donated $ 5,000 to Moore’s successor, Republican Representative Kevin Yoder, who is a member of a subcommittee that oversees payday lenders.
Congressman Jay Sidie, a Democrat, challenges Yoder in the November 8 general election. His campaign accused Yoder of hauling water for the payday loan industry.
“A judge recently discovered that one of Yoder’s bankrollers had cheated on his clients and had to pay tens of millions of dollars,” said Shawn Borich, Sidie’s campaign manager. “The congressman should immediately return this tainted money and explain the extent of his relationship with James Carnes.”
Yoder’s campaign declined to comment on Borich’s donations and accusations.
Although most of Carnes’ gifts went to Republicans, he was not a strict supporter. Rep. Paul Kanjorski, a Democrat from Pennsylvania, received $ 1,000 when he was a member of the Financial Services Committee. Representative Emanuel Cleaver II, a Democrat from Kansas City, is also a member of the committee that received $ 1,000.
Carnes gave $ 23,000 to Online Lenders Alliance PAC, a political action committee that has sent more than $ 800,000 to congressional candidates since 2008, according to FEC figures. PAC donated $ 46,500 to members of the Financial Services Committee during the 2016 election cycle.
Senator Pat Toomey benefited the most from Carnes’ donations, receiving $ 24,800 in a bitter and costly race in 2010. The Pennsylvania Republican now sits on several payday lender oversight committees, including a subcommittee responsible for protecting consumers from financial institutions. Also on this subcommittee is Senator David Vitter, R-La., Who received a donation of $ 1,500 from Carnes.
Both Kansas senators accepted Carnes’ donations. Senator Pat Roberts received $ 1,000 in 2008 and Senator Jerry Moran received $ 2,500 in 2011, according to FEC reports.
Tucker, by comparison, donated a small amount to the candidates, sending $ 20,000 to groups aligned with Republican presidential candidate Mitt Romney in August 2012. He also donated $ 5,200 to the representative. Tom Cole, a Republican from Oklahoma.
Kansas City has become an epicenter of the massive payday loan industry. Payday lenders collected $ 4.2 billion in fees last year alone, according to Delvin Davis, a researcher at the Center for Responsible Lending, a non-partisan group critical of payday loans.
“It creates a treadmill where you never pay back or pay that loan back,” Davis said.
On Friday, a public comment period ended on proposed federal restrictions on payday lenders. Consumer Financial Protection Bureau rules would require lenders to determine that consumers have the ability to repay a loan before granting it and limit the ability of lenders to extend loans to someone who has not yet repaid. other loans.
Payday loan officials have generally opposed attempts to restrict their borrowing power. The Center for Responsible Lending and other industry critics fear the new CFPB rules contain big loopholes that will render them moot.
“The CFPB has a pretty unique opportunity here to get the payday loan debt trap under control,” Davis said, “but lenders will exploit any holes the law allows.”