United States v. Moseley

• Decision Date: 03 November 2020
• Docket Number: Docket No. 18-2003,August Term, 2019
• Citation: 980 F.3d 9
• Parties: UNITED STATES of America, Appellee, v. Richard MOSELEY, Sr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

980 F.3d 9

UNITED STATES of America, Appellee,

v.Richard MOSELEY, Sr., Defendant-Appellant.

Docket No. 18-2003

August Term, 2019

United States Court of Appeals, Second Circuit.

Argued: January 6, 2020

Decided: November 3, 2020

DAVID ABRAMOWICZ (Edward Imperatore, Anna M. Skotko, on the brief) Assistant United States Attorneys, Of Counsel, for Audrey Strauss, Acting United States Attorney for the Southern District of New York, New York, NY, for Appellee United States of America.

AMY ADELSON (Daniela Elliott, Of Counsel, on the brief), Law Offices of Amy Adelson LLC, New York, NY, for Defendant-Appellant Richard Moseley, Sr.

Before: KEARSE, CARNEY, and BIANCO, Circuit Judges.

CARNEY, Circuit Judge:

Defendant-Appellant Richard Moseley, Sr., appeals from a judgment of conviction and sentence entered on July 2, 2018, by the United States District Court for the Southern District of New York (Ramos, J. ), in connection with Moseley's operation of an illegal payday-loan scheme. A jury found that Moseley violated the Racketeer Influenced and Corrupt Organizations Act (RICO), the Truth in Lending Act (TILA), and federal wire fraud and identity theft statutes from 2004 through 2014, a period when his payday-loan business engaged in the following conduct: it lent money to borrowers in New York and other states at interest rates exceeding—by many multiples—the maximum legal interest rates allowed in those states; in its loan documents, it failed to meet TILA disclosure requirements; and it issued loans to borrowers without their consent and then falsely represented that borrowers had, in fact, consented to the loans. The district court sentenced Moseley primarily to 120 months in prison and ordered Moseley to forfeit $49 million. On appeal, Moseley attacks both his convictions and his sentence. With regard to the RICO counts, he contends that the district court erred as a matter of law by instructing the jury that, as to his business's loans to New York borrowers, New York usury laws governed the transaction rather than the laws of the jurisdictions specified in the loan agreements, which set no interest rate caps. With regard to his TILA conviction, he maintains that his loan agreements disclosed the "total of payments" borrowers would make, as TILA requires, and that the evidence was insufficient to show that these disclosures were inaccurate. Moseley also raises several other arguments, challenging his convictions and his sentence. On review, we conclude that Moseley's arguments are unpersuasive. Accordingly, we AFFIRM the judgment of the district court.

BACKGROUND

I. Moseley's Offense Conduct¹

Beginning in approximately 2004 and continuing through 2014, Moseley ran a form of what is generally known as a payday-loan business,² utilizing several domestic and foreign entities, including entities incorporated in Nevada, the Federation of Saint Kitts and Nevis (together, "Nevis"), and New Zealand.³ Throughout this period, Moseley and his employees administered the enterprise solely from offices physically located in Kansas City, Missouri. In September 2014, the Consumer Financial Protection Bureau shut the business down on the basis of the illegalities later prosecuted here against Moseley individually.

Moseley's business offered small-dollar, short-term, unsecured loans in amounts up to $500. Instead of charging a traditional interest rate, Moseley's business charged "fees" that functioned, in effect, as interest payments. Utilizing the Internet as its platform, Moseley's business directly credited the borrower's bank account with the loan principal using the borrower's private banking information. For each "loan period" (that is, the term before repayment was due or the loan was "refinanced," App'x 570), Moseley charged a $30 fee (the "finance charge") for each $100 of the borrower's total loan amount. These fees were automatically debited by Moseley's business from the borrower's bank account and credited to Moseley's entity at the end of the first loan period. But, unlike the debited fees, repayment of the principal would not automatically occur. Instead, unless the borrower affirmatively acted to pay off the principal by the end of the two-week loan term, the loan would be "refinanced" and the term automatically extended. For each such extension, an additional and equal fee would be debited against the borrower's account and credited to Moseley's business.

In fact, absent an affirmative act by the borrower to pay off the principal, Moseley would continue debiting the account as described. This meant that a $100 loan could—and on occasion did—cost the borrower $30 in fees charged every other week, or approximately 26 times over the course of a year: in other words, it could lead to total finance charges of $780 on the original $100 loan, in effect an approximate yearly interest rate of 780%. Moseley's business would credit none of these fees toward repayment of the loan principal.

Although some borrowers did put a halt to the debiting by paying off their loans, continued fee collection in amounts totaling far more than the principal was far from uncommon in Moseley's operation. For example, at one point in 2013, the business records reflect 2,513 active accounts for borrowers living in New York. Approximately 24% of those accounts (600 of them) had been debited for at least 12 fee payments. Moseley generally would allow his staff to "zero out" an account—that is, to stop future debiting—only after 40 or 45 separate finance charges had been paid. App'x 760-61.

While lucrative to him, the business's extremely high effective annual interest rates posed a legal problem. Many states cap the legal interest rate at a level far below the effective rates Moseley sought to charge. New York law, for example, sets the civil usury rate at 16% for unlicensed lenders and treats all usurious contracts (that is, contracts violative of that rate) as void. See N.Y. Gen. Oblig. Law §§ 5-501, 5-511 ; N.Y. Banking Law § 14-a(1).⁴ It sets the criminal usury rate at 25 %—that is, at a rate exceeding 25 %, lending becomes a crime in New York. N.Y. Penal Law § 190.40.

Therefore, as part of a strategy to avoid such caps, in his early years of operation Moseley incorporated entities in Nevada, and, after 2006, offshore, in Nevis and New Zealand. None of the three jurisdictions has usury laws. Moseley then edited the loan agreements that he provided his borrowers online to include a choice-of-law provision specifying that the law of one of these three jurisdictions governed the transaction.

Moseley received numerous borrower complaints while his business operated and drew substantial regulatory scrutiny from state attorneys general beginning at least as early as 2010. In response, he engaged in various techniques to disguise the fact that the enterprise's actual operations and personnel were located solely in Missouri, and to evade regulatory action. These moves included, for example, marking "return to sender" on mail sent to and received by the Missouri office to imply that Missouri was not the operation's locus and misrepresenting the administrative staff's location in conversations with borrowers who complained by phone.

Concurrently with these operations and evasions, and as part of a separate scheme, Moseley also issued loans to borrowers without their consent and began to debit "fees" related to these unauthorized loans. This worked as follows.

A potential borrower in search of a short-term cash infusion would enter certain personal information online in a "lead generator" website maintained by a third party engaged by Moseley's business. (A "lead generator" website is one in which a potential customer may express an interest—as relevant here, in receiving a loan—but has not been provided the loan's terms and is not actually agreeing to receive one.) Upon getting that expression of interest, the "lead generator" third party would then forward the prospective borrower's information to Moseley's business and its role in the transaction would be complete.

Moseley would then have his employees attempt to contact the potential borrower by phone and try to obtain borrower approval for making a loan. If phone contact was made, the employee explained the loan's terms by phone to the potential borrower, who could then accept or decline the offer. If the potential borrower did not answer the phone, employees would leave a voicemail message about the offer and the loan would be approved and made anyway, even absent the borrower's consent. (This was possible only because individuals provided banking information at the get-go, in their inquiry to the "lead generator," without having established a business relationship or entered into an agreement.) In any event, Moseley's business would then deposit the loan principal into the "borrower's" account and begin deducting fees.

In testimony provided at trial, one of Moseley's employees estimated that, of the business's total loans, it had never made direct contact with approximately 70% of eventual borrowers. Although all borrowers eventually received loan documents by email, the e-signatures on those documents were falsified.⁵

Finally, the disclosures contained in Moseley's loan agreement documents fell short of complying with applicable federal consumer protection laws. Among other requirements, the TILA and its implementing regulations mandate that the lender disclose to the borrower, when originating the loan, the "total of payments": that is, how much in total the borrower is "scheduled" to pay to close out the loan and cover all related liabilities. See 15 U.S.C. § 1638(a)(6) ; 12 C.F.R. § 226.18(h). Moseley's "Loan Note and Disclosure" documents included a text box labelled "Total of Payments" that it described to the borrower as "[t]he amount you will have paid after you have made the scheduled payment." See, e.g. , Supp. App'x 58. The figure displayed in this text box was the sum of the loan principal and a...