A onetime payday-loan mogul was indicted on federal charges that he made up millions of fake debts and sold them to bill collectors, victimizing people across the country.

Joel Tucker, 49, was able to pull off the scheme because he already had his victims’ personal information from loan applications, according to an indictment unsealed June 29 in Kansas City, Mo. But many of those people never took loans, let alone failed to pay them back, and Tucker didn’t own the loans anyway, prosecutors said. From 2014 to 2016, he earned $7.3 million from packaging and selling the information to collectors, they said.

“Tucker defrauded third-party debt collectors and millions of individuals listed as debtors through the sale of falsified debt portfolios,” according to the indictment. “These portfolios were false in that Tucker did not have chain of title to the debt, the loans were not necessarily true debts, and the dates, amounts and lenders were inaccurate and in some case fictional.”

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Tucker was charged with interstate transportation of stolen money, bankruptcy fraud and falsifying bankruptcy records, counts that carry sentences of as much as 20 years each. The indictment, dated June 5, was unsealed on Friday after Tucker was arrested in Kansas.

Tucker, who was ordered to be released on bond, didn’t respond to an email seeking comment, and his court-appointed lawyer, Tim Henry, declined to comment. The next hearing in the case is scheduled for July 10.

Tucker’s brother Scott was sentenced in January to 16 years in prison in connection with an unrelated payday-loan scheme. He made so much money in the business that he funded his own professional Ferrari racing team. He was convicted of systematically evading state laws by charging as much as 1,000% a year in interest. In some cases, Joel pretended that the debt he sold had been originated by Scott’s companies, according to the new charges.

Bloomberg Businessweek chronicled in December the story of one of the victims of Joel’s scheme, Andrew Therrien, a salesman from Rhode Island. After a collector threatened Therrien’s wife, he turned vigilante, used the collectors’ tactics against them, unraveled the scam, traced it back to Tucker and reported what he learned to authorities.

Tucker had already been sued by the Federal Trade Commission for making up debts and was ordered in September to pay $4.2 million. He has said that any debt he sold was legitimate. But civil penalties didn’t satisfy Therrien, who spent three years gathering information on Tucker. He said in an interview that the federal charges against Tucker feels like a “huge huge weight lifted off my shoulders.”

Therrien is just one of millions of people across the country who have been harassed over phantom debt. The plot is profitable because some people make payments, either in a futile attempt to stop the calls or because they are tricked into thinking they owe money. Some collectors call victims’ relatives or coworkers, or make false threats of arrest.

The FTC and other regulators have made stopping phantom-debt schemes a priority. Last week, New York Attorney General Barbara Underwood and the FTC sued Amherst, New York-based debt broker Hylan Asset Management LLC for trafficking in Tucker’s fake debts. Hylan’s lawyer denied the allegations.

In his heyday, Tucker ran a software company called eData Solutions, a one-stop shop for anyone who wanted to get into the payday-loan business. His company didn’t make loans, but it took applications and sold those to his payday-lender clients. This gave him access to huge amounts of personal information.

After the Justice Department cracked down on payday lending and many of his clients went out of business, Tucker retained that data and sold it to multiple debt brokers in 2014 and 2015, according to the indictment.

In one instance in 2015, Tucker allegedly sold a spreadsheet of made-up debts to a broker who in turn sold them to a collector who used them to file claims in bankruptcy court. Tucker invented a fake payday-loan company called Castle Peak and wrote in that each person owed $390. When a bankruptcy judge raised questions and Tucker was called to testify, he lied and claimed the loans were valid, prosecutors said.

The case is U.S. v. Tucker, 18-cr-153, U.S. District Court, Western District of Missouri (Kansas City).

Bloomberg News