Sitting in a prison cell that is his new home, Tim Muir potentially has years to contemplate everything that went wrong in his life and landed him in this position. But he’s not feeling guilty.
Muir thinks about being separated from his family. He still fumes about FBI agents storming into his Overland Park home wearing tactical gear, guns drawn, and arresting him in front of his children. It’s an emotional wound that remains raw years later.
But in a six-page letter he wrote in answer to questions from the Kansas City Business Journal, one sentiment not evident anywhere is regret. Muir believes he was wrongly convicted.
In October, a federal jury in New York convicted Muir for racketeering, wire fraud, money laundering and filing false Truth In Lending Act disclosures. The charges stemmed from his job as general counsel for a payday lending operation, which a jury determined used shell companies to give the appearance of Native American tribe ownership to circumvent state lending laws.
In reality, the operation — owned by Scott Tucker of Leawood — was run out of Overland Park. The operation generated $2 billion in profits and victimized 4.5 million consumers by charging interest rates ranging from 400 to 700 percent, according to prosecutors.
Muir and Tucker were tried and convicted together. Tucker was the flashy one, spending more than $100 million on luxury homes and cars, a Learjet, lavish travel and expenses for a professional racing team with six Ferraris.
By contrast, the low-key Muir played a relatively unknown character in the whole saga. He lived in a $300,000 house on a cul-de-sac not far from 119th Street and Roe Avenue in Overland Park. He coached his daughters’ sports teams. He helped raise money for charities ranging from a child abuse advocacy center to a scholarship fund for foster and adopted children to an organ donor program. A local lawyer who worked on fundraising with Muir said he was actively involved in the bar association and bar foundation, describing Muir as “a tremendous asset to the legal community and the local community in general.”
That’s a dramatically different picture of Muir than the one prosecutors painted: Muir filed false affidavits that claimed the tribes, not Tucker, were doing the lending. Muir orchestrated a sham merger to make it appear the tribes bought the business, and he even had two of Tucker’s corporate entities sue each other in an effort to confuse investigators and throw them off the trail. Prosecutors argued that Muir went too far in shielding the payday lending operations from law enforcement, making him culpable alongside Tucker.
Who is Tim Muir?
Muir, 46, moved to the Kansas City area with his parents at age 6, immigrating from Australia. He graduated from Shawnee Mission West High School in 1989.
Muir earned a biochemistry degree from the University of Kansas in 1998. He was intent on getting a law degree but couldn’t afford to go to law school right away. So he took a job as a manager at Godfather’s Pizza.
He later enrolled at Chicago Kent College of Law, with a focus on patent law. However, he had to leave Chicago Kent after only a year. His oldest brother, Patrick, suffered from a spinal disease that left him paralyzed, so Muir moved home to help care for him.
Muir eventually resumed law school at KU, commuting from Kansas City. He earned a law degree in 2004, at age 32.
He married Stephanie Tucker-Muir in 2007, and they have two daughters.
Seeing a payday
In 2006, two years out of law school and weighed down by student loans, Muir said an acquaintance recommended him to Tucker for a job as general counsel. Tucker already had several payday lending companies up and running. He drove exotic cars and flashed around cash, offering handsome wages for a new legal staff he was assembling.
“I was employed as general counsel for his company for about six months, and then subsequently started my own firm, becoming outside counsel,” Muir wrote to the Kansas City Business Journal. “There was no job description when I started. I joined a very large legal team that Scott had retained through the years.”
Muir estimated that more than 200 lawyers worked on Tucker’s legal matters through the years. Muir eventually took on the various tribal entities as clients, as well.
“The scope of my representation included business, litigation and regulatory matters,” he wrote. “I regularly interacted with tribal officers, attended board of director meetings and accompanied tribal leaders for government-to-government meetings, including with the New York Department of Financial Services, the Treasury Department and the chairman of the Federal Deposit Insurance Corp.”
Tucker set up agreements with Native American tribes, which prosecutors said involved having the tribes establish corporations on reservation grounds for payday loan businesses.
Russell Bradley of St. Joseph was treasurer for the Kickapoo Tribe in Kansas when Tucker reached out offering a business opportunity. Tribal officials asked Tucker why he was approaching them.
“It was mainly because they wanted to get around the activity of the states establishing more regulations to deal with the payday-loan-type businesses,” Bradley testified at Tucker’s and Muir’s trial.
Bradley said Tucker’s pitch amounted to giving the tribes something for nothing.
“We’d be guaranteed $20,000 a month, plus a percentage over $2 million in lending per month,” Bradley testified. “We would be the owners, and they would be the managers of the company; they’d put up the money, and they would make us a regular check every month.”
Aside from on paper, Bradley said the tribe had little to do with the business. The documents signed by the tribe showed it had no obligation to invest money or pay the operation’s expenses, except for maintenance of a business office on the reservation. The business office — a computer set up in the tribal attorney’s office — was used to funnel financial reports. No one in the tribe was trained on how to use the system.
The loans started coming in as soon as the deal closed. Loan terms were confusing, helping generate excessive fees. Borrowers were told they would pay a $90 finance charge on a $300 loan. Then $75 would come out of each paycheck, leading victims to believe they were on track to pay off the loan. However, those $75 debits actually were renewal fees and not principal payments that would cover the debt in the alloted time. Prosecutors said the scheme’s multipart payment plan, if allowed to go to fruition, would result in a $300 loan costing $975.
In a Netflix documentary series titled “Dirty Money,” one victim, a truck driver named Walter Archer, talked about his experience borrowing $500 from one of Tucker’s companies. Archer said it was infuriating to find out those were renewal fees — and none of the principal had been paid.
“If I was in the same room with Scott Tucker, I would tell him there are millions of people you probably put into a position where, at least temporarily, they were homeless, or they did without electricity, or their water and sewer or garbage was turned off, or maybe they did without food for a little while so the kids could eat,” Archer said in the documentary. “Your greed put them in a very bad position, and you need to stand up and take accountability for what you’ve done and publicly apologize.”
Muir argues that borrowers knew the terms. He said the agreement was an industry standard used by more than 100 lenders. Customers received multiple emails describing the payment structure and how it worked, stating that if they took no action the loan would be renewed without the principal paid.
Muir also argued that the operation was up and running when he went to work for Tucker in 2006. He professes that he simply followed the lead of other attorneys before him and operated in good faith that his actions met the legal standard.
“All of my clients, and myself, believed whole heartedly in the legality of their business model,” Muir wrote to the Business Journal. “Whether through litigation, direct consultation with state and federal regulatory agencies or engaging congressional leaders in the legislative process, we never shied away from a debate regarding the lawfulness of tribal online lending.”
But prosecutors liken that argument to someone driving 80 miles an hour down a neighborhood street and, when stopped, arguing that others drove that fast, too. The prosecution convinced a jury that Muir was fully aware of the New York usury statute and that Muir’s job was to maintain the lie that these loans originated from Native American tribes and not Tucker.
“Lawyers paid by Tucker and supervised by Muir drafted bogus resolutions that they directed the tribes to pass to make it seem like the tribes owned part of Tucker’s business,” prosecutors said in the trial’s opening statements. “They filed false affidavits lying to the courts across the country, claiming that the tribes, not Tucker, were doing the lending.”
Employees in Overland Park were told to lie about where the company was located. The company went so far as to provide them with weather reports for the areas where the tribes were located, in case customers made small talk during phone calls.
“What the jury heard in a case like this is that (Muir) had an oath,” said Charlie Harris Jr., a partner at Seyferth Blumenthal & Harris and a disciplinary hearing officer for the Missouri Office of the Chief Disciplinary Counsel. “He knew he had an oath and responsibility to represent the truth to the court for each of the entities that he set up. The jury took a look at this case and said these are no more than sham corporations. The management of these companies were not strictly within the confines of the tribes. In fact, it’s pretty clear that the jury’s reaction was, not only did the tribes have little to no management powers, but he knew they’d have little to no management powers when he set up these corporations, and they were set up solely for the interest of making money.”
Tucker, who allegedly netted more than $1 billion, was sentenced to 16 years and eight months in prison.
Muir received about $10 million for his role in the payday operation, according to sentencing documents. He was sentenced to seven years in prison, starting his time on Feb. 27. Muir has filed an appeal.
Muir ended his letter to the Kansas City Business Journal with a simple statement: “Last, I have one thing to say: Prison sucks.”