Operating a network of 20 companies, Hydra Financial and its principals allegedly collected on fake, short-term, small-dollar online loans, bilking hundreds of thousands of U.S. Consumers out of $227.7 million, generating approximately $69.6 million in gross profits, over a nearly 10-year period.
The Consumer Financial Protection Bureau (CFPB) alleged that the defendants obtained consumers’ sensitive personal and financial information from third-party data brokers, and used that information to access consumers’ bank accounts without authorization.
According to the CFPB’s complaint, the Hydra Group deposited loans in consumers’ bank accounts, then debited biweekly “finance charges” indefinitely. In many cases, the Bureau alleged, consumers never saw loan agreements and were not aware of the account activity until after the loan was deposited and finance charges were withdrawn. Additionally, the Bureau alleged that, even when consumers did receive loan documents, the written disclosures misrepresented the price terms and repayment obligations of the purported loan.
This month, a federal district court in the Western District of Missouri entered an Order effectuating a settlement between the CFPB and Hydra principals Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated corporate entities they controlled.
Under the terms of the consent order, the defendants will be banned from the industry, forfeit approximately $14 million in assets, and pay a $1 civil money penalty. (The civil penalty amount is based in part on the defendants’ limited ability to pay.) The order imposes a judgment for $69 million for purposes of paying consumer redress.
In November 2017, a jury in New York found Moseley, Sr. guilty of: conspiracy to collect unlawful debts; collection of unlawful debts; conspiracy to commit wire fraud; wire fraud; aggravated identity theft; and making false disclosures under the Truth in Lending Act. Moseley, Sr. has appealed that conviction.
On February 10, 2016, the U.S. Attorney’s Office for the Southern District of New York unsealed an indictment charging Individual Defendant Moseley, Sr.
On November 15, 2017, Moseley, Sr. was found guilty following a jury trial in New York on all counts of Indictment.
On June 12, 2018, Moseley, Sr. was sentenced to 120 months in prison and entered a Preliminary Order of Forfeiture as to Specific Property/Money Judgment in the amount of $49 million.