A federal judge has granted Wells Fargo the right to intervene in a lawsuit filed by state regulators accusing a Long Island subprime auto lender of misappropriating $11 million from customers.
Hauppauge-based Condor Capital Corp. owes Wells Fargo more than $260 million, and the San Francisco-based bank has argued that it should have a say in the company's future.
"The lenders unquestionably have an interest in this action," Judge Colleen McMahon said in a 26-page ruling in Manhattan.
On Tuesday the judge appointed a receiver to assume control of Condor, which is accused of pocketing overpayments from up to 39,000 customers. McMahon, who has frozen the company's assets, gave the receiver 20 days to determine whether Condor should resume its lending operations.
Founded in 1996, the company specializes in lending to low-income borrowers who can't qualify for conventional loans. Yet, the New York Department of Financial Services says the company systematically pocketed money from them when insurance settlements and vehicle trade-ins caused them to inadvertently pay more than they owed.
Condor owner Stephen Baron said during a hearing Monday he was a "big picture guy" and didn't understand the minutiae of running his company. He blamed keeping the overpayments on accounting mistakes and computer errors, saying Condor did not have a policy of pocketing money from customers.
The judge, however, called Baron's testimony preposterous. "Mr. Baron does not seem to know any of the details of the running of Condor's business," the judge wrote. "So I have no reason to think that he knows what Condor's refund policies are."