The owner of Condor Capital, a Long Island subprime auto lender accused of bilking thousands of customers, has agreed to surrender his license and liquidate the company, according to court filings.
In a letter to a federal judge in Manhattan, a lawyer for the Hauppauge company said Stephen Baron would take the "painful step" of acquiescing to state regulators who accuse him of pocketing millions in customer overpayments.
"Condor will then be dissolved," wrote the lawyer, Leah Mary Campbell, "ending its existence as a New York corporation."
The move comes eight months after the state Department of Financial Services levied its charges in a lawsuit against Condor, which holds roughly $389 million in loans. The suit prompted Judge Colleen McMahon to suspend Baron from running the company and appoint a receiver in his place.
While regulators have asked the judge to close Condor, Baron's pledge to liquidate appears to have caught them off guard.
Regulators learned of the development late Thursday, moments before they were scheduled to meet with Condor for settlement talks, according to a letter to the judge filed Friday. Those talks are ongoing, and the state has asked the judge for time to consider Baron's decision.
Baron's lawyer and a state Department of Financial Services spokesman both declined to comment.
Condor, which employs 52 people, was founded in 1996 and lent to low-income borrowers whose credit history prevented them from qualifying for conventional loans. Regulators say the company pocketed money when people accidentally overpaid accounts.
For example, borrowers sometimes paid Condor more than they owed when trading in a vehicle or receiving insurance settlements. In other cases, they wrote too big a check for their final payment.
Instead of issuing refunds, Condor closed borrowers' online accounts, leaving them unable to see whether they were owed money, authorities said.
Since the lawsuit, Condor has repaid $5.6 million to some of the 39,000 customers it allegedly cheated.
On Tuesday, Condor's court-appointed receiver said he had reached a deal to sell a portion of the company's loans next week for $185 million to pay off a $168 million line of credit from Wells Fargo.
Once the sale concludes, Baron's lawyer has asked that he be allowed to resume control to sell off the remaining assets.