The Federal Trade Commission filed suit Monday against an online payday-lending operation that has claimed American Indian tribal affiliations to circumvent state regulation.

The FTC said the lender allegedly piled on undisclosed and inflated fees and collected loan payments illegally by threatening borrowers with arrest and lawsuits. The agency has asked a federal court to stop the allegedly illegal business tactics while the FTC pursues its case against the defendants.

The lending operation had been the target of eight years of inquiries by the Colorado attorney general’s office. However, a Denver district judge in February ruled that the attorney general could no longer investigate because the lenders’ affiliated tribes are protected from state investigation by tribal sovereign immunity laws.

The FTC alleges the defendants’ claims of tribal affiliation do not exempt them from complying with federal law.

Named as defendants in the FTC case are Scott A. Tucker, Blaine A. Tucker, Timothy J. Muir, Don E. Brady, Robert D. Campbell, Troy L. LittleAxe, AMG Services Inc., Red Cedar Services Inc., SFS Inc., Tribal Financial Services, AMG Capital Management LLC, Level 5 Motorsports LLC, LeadFlash Consulting LLC, PartnerWeekly LLC, Black Creek Capital Corp., Broadmoor Capital Partners LLC and the Muir Law Firm LLC.

A related case investigated by the Colorado attorney general alleged that loan companies Cash Advance and Preferred Cash Loans, controlled by Scott Tucker, created affiliations with the Miami tribe of Oklahoma and the Santee Sioux Nation of Nebraska to circumvent state regulations.

Critics have termed the arrangements “rent-a-tribe.” The Native American Fair Commerce Coalition, an advocacy group for tribes engaging in online business, said the FTC lawsuit was a concern.

“We’re surprised the FTC would take this action,” said Barry Brandon, executive director of the group. He said the recent Denver District Court ruling shows that the tribes were legitimately involved in the businesses and that their sovereign immunity was appropriate.

The FTC said the lending operation has generated more than 7,500 complaints to law enforcement authorities. In many cases, the defendants’ inflated fees left borrowers with supposed debts of more than triple the amount they had borrowed.

Steve Raabe: 303-954-1948 or sraabe@denverpost.com