Judge appoints receiver to take over Condor Capital

Condor Capital specialized in lending to low-income borrowers

Condor Capital specialized in lending to low-income borrowers without the credit history or financial wherewithal to qualify for a conventional loan. This photo is from May 2012. Photo Credit: Google

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A federal judge Tuesday appointed a receiver to seize control of Condor Capital Corp., a Long Island subprime auto lender accused of pocketing $11 million from customers.

The decision, by Judge Colleen McMahon in Manhattan, strips all authority from Condor owner Stephen Baron and is a victory for state regulators who accuse the Hauppauge company in a civil lawsuit of pocketing overpayments from up to 39,000 customers.

Baron, who has denied the allegations, had asked the judge to allow him to remain in control of the company, saying a receiver was apt to be Condor's demise. A lawyer for the company declined to comment on the ruling.

The judge's order calls for the receiver, Denis O'Connor, to take over immediately. He is a managing director at AlixPartners, a Manhattan consulting firm, with more than 30 years of experience in auditing, restructuring and winding down companies.

McMahon's ruling also extends a restraining order freezing Condor's assets.

The order, which took effect three weeks ago, has hobbled the company's ability to make payroll, forcing it to lay off 30 of its 116 employees.

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The freeze also has left Condor unable to write new loans, which the company says will force it to cut more workers.

State regulators sued Condor last month, accusing it of systematically stealing money when insurance settlements, vehicle trade-ins and other transactions caused customers to inadvertently pay more than they owed.

Baron has acknowledged keeping overpayments. But he said it was accidental, blaming the problem on accounting problems and computer errors.

The company, he said, was gradually refunding the money when the state began investigating. Baron also said the state's estimate of $11 million in overpayments is exaggerated. The figure, he said, is closer to $1.6 million.

Within the next few days the judge will decide if Wells Fargo can join the case. Condor owes the bank more than $261 million, and Wells has asked McMahon to allow it to help determine the fate of the assets backing those loans.

In the meantime, McMahon has ordered O'Connor to continue making Condor's debt payments to the bank.

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