As the year comes to a close, so does the New York Department of Financial Services’ lawsuit against Condor Capital Corporation. Benjamin M. Lawsky, superintendent of Financial Services, submitted for the Court’s approval a final consent judgment to settle the department’s lawsuit on December 19th.
The case is being handled in U.S. District Court for the Southern District of New York.
Under the terms of the final consent judgment, Condor and its sole shareholder, Stephen Baron, will make full restitution plus 9% interest to all aggrieved customers nationwide — an estimated $8 to $9 million — the NYDFS wrote in a press release, and admit violations of New York and federal law.
Condor has admitted to violations of the Dodd-Frank Act, the Truth in Lending Act, the New York Banking Law, and the New York Financial Services Law, according to the release. Likewise, Baron admitted to violating Dodd-Frank by providing substantial assistance to Condor’s violations of the law.
Following a sale of its remaining loans in a “manner that ensures appropriate consumer protections,” Condor will surrender its licenses in all states.
The lawsuit against Condor and Mr. Baron was the first legal action initiated by a state regulator under section 1042 of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, which empowers state regulators to bring civil actions in federal court for violations of Dodd-Frank’s consumer protection requirements.
Among its number of violations, Condor allegedly concealed from its customers and the NYDFS that thousands of its customers had refundable positive credit balances, or more specifically, money owed by Condor to a customer as a result of an overpayment of the customer’s account. In fact, a former manager at Condor told Auto Finance News in June that Condor employees were instructed by company owner Baron to never inform consumers if they had overpaid on their loans.
The company instead “retained these positive credit balances for itself and maintained a policy of failing to refund positive credit balances except when expressly requested by a customer,” according to the release.
“We will not tolerate companies that abuse New Yorkers and other customers—particularly vulnerable subprime borrowers who can least afford it,” Lawsky said in the release. “This case demonstrates that the Dodd-Frank Act provides a powerful new tool for state regulators to pursue wrongdoing and obtain restitution for consumers who were abused. We hope other regulators across the country will consider taking similar actions when warranted.”
The Department originally filed a complaint and obtained a temporary restraining order against Condor and Mr. Baron on April 23. The Court granted the Department’s motion for a preliminary injunction and appointed a Receiver on May 13.
“The Receiver will remain in place until Condor’s loan portfolio is sold, the penalty and restitution are paid, and Condor has surrendered all of its licenses,” the NYDFS wrote. “To date, the Receiver has paid more than $5 million in restitution.”