The owner of Condor Capital, a Long Island subprime auto lender accused of pocketing $11 million from customers, apologized in court Monday for not aggressively repaying victims even after state regulators launched an investigation.
Stephen Baron, 64, testified in federal court in Manhattan that his Hauppauge company failed to grasp the importance of quickly processing refunds for customers who accidentally overpaid loan balances.
"Certainly we did not, in hindsight, give those refunds fast enough," Baron said. "We failed to put in the labor necessary due to a lack of urgency. I apologize for that."
Lawyers for the state, however, said Baron's contrition is overdue and self-serving.
"You feel bad because you got caught -- correct?" said Andrew J. Melnick, a lawyer representing the New York State Department of Financial Services.
The agency sued Condor last month, accusing it of systematically stealing money when insurance settlements, vehicle trade-ins and other transactions caused up to 39,000 customers to inadvertently pay more than they owed.
Baron acknowledged the company kept overpayments. But he denied doing it intentionally. Rather, he blamed accounting woes, computer errors and an overall dearth of internal controls.
The company also contended that the state's estimate of $11 million in overpayments is overblown. The figure, Baron said, is closer to $1.6 million.
After the state filed suit, Judge Colleen McMahon imposed a restraining order, freezing Condor's accounts. It paralyzed the company, making it difficult to pay employees and impossible to write new loans. Condor has since laid off about 30 of its 116 employees.
"If this company isn't able to originate loans, it will be forced to lay off 70 more people," said Michael Rosensaft, a lawyer for Condor.
McMahon said she would rule by late Tuesday whether to continue the restraining order and whether to grant the state's request for a receiver to take over the company and, if necessary, shut it down.
The judge also will decide if Wells Fargo, which has lent Condor $261 million, can join the case and help determine the fate of the company's assets.
Condor opposes having a receiver, saying it would be its death knell. Rather, Baron asked if he can continue running Condor under the watch of a court-appointed monitor.
"Nobody knows the business like the people who work there," Baron said. "I would like very much to continue the business and cure the things that are wrong."
State regulators, however, said Baron has had enough chances.
"This company has already verified that it has no internal controls," said Richard J. Bettan, a lawyer for the state. "This is a case of too little too late."