Texas Company Agrees to $550,000 Settlement Over Subprime Auto Loans
The Delaware Department of Justice has reached a $550,000 settlement with a company accused of marketing subprime auto loans to hundreds of Delaware car buyers, Attorney General Kathy Jennings announced Monday.
April 08, 2019 at 05:54 PM
3 minute read
The original version of this story was published on Delaware Law Weekly
The Delaware Department of Justice has reached a $550,000 settlement with a company accused of marketing subprime auto loans to hundreds of Delaware car buyers, Attorney General Kathy Jennings announced Monday.
The DOJ said in a statement that Exeter Finance LLC had signed a cease and desist agreement, after a larger investigation revealed that it had facilitated car loans to consumers with poor credit. Under the agreement, which also included the Massachusetts Attorney General's Office, Texas-based Exeter will pay the state of Delaware $50,000 and ask major credit bureaus to wipe all trade lines on the credit reports of affected consumers, the department said.
“Protecting consumers from unfair lending practices is extremely important,” Jennings said. “Today's settlement with Exeter provides monetary relief to Delaware borrowers and repairs damaged credit.”
Exeter did not admit to breaking any state or federal laws and neither confirmed nor denied the allegations as part of the agreement. A company spokesman said Monday that Exteter was “pleased to have resolved this matter.”
“Exeter is committed to ensuring the highest standards of customer service in its business when delivering vital auto financing options to consumers,” the spokesman said.
The settlement with Exeter was part of Jennings' industrywide review of securitization practices in the subprime auto market. In March, the DOJ secured nearly $2.9 million from Santander Consumer Consumer USA Holdings Inc., another auto financier, for its role in financing similar loans.
“Our office will continue to investigate the subprime auto lenders to ensure that Delaware consumers receive a fair deal when they are extended credit to finance a purchase,” Jennings said.
According to the DOJ, subprime auto loans are often made through contracts signed at the car dealership, but funded by non-dealer financial institutions, like Exeter and Santander. As a part of the funding process, those institutions convert the loans to securities and fund them by selling investment notes.
Under the settlement, Exeter is required to pay $550,000 to an independent trust, which will be used to repay affected customers, as well as to cover the costs of implementation and the DOJ's investigation. An independent trustee, chosen by the DOJ and Exeter, would be responsible for administering the fund.
It will be up to the DOJ, however, to determine the amount of restitution provided to Delaware borrowers. The department is expected next month to provide the trustee with a list of consumers it believes are eligible for relief based on loans and certain subprime contracts that Exeter acquired between 2011 and 2015.
The case was handled by the DOJ's fraud division, which includes investor protection director Jillian Lazar, consumer protection director Christian Wright, Deputy Attorneys General William Green and Joseph Tabler, forensic accountant Clyde Hartman, and paralegal Courtney Patas. It was initiated by former investor protection director Owen Lefkon.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllTesla Shareholders Move to Consolidate Cases Over Musk's Focus on X, AI
4 minute read'When Does It End?' Chancellor Asks Defense Counsel in Dispute Over Musk Compensation
5 minute readElon Musk's Latest Tesla GC Shows Staying Power Despite Tricky Role
Trending Stories
Who Got The Work
Dechert partners Andrew J. Levander, Angela M. Liu and Neil A. Steiner have stepped in to defend Arbor Realty Trust and certain executives in a pending securities class action. The complaint, filed July 31 in New York Eastern District Court by Levi & Korsinsky, contends that the defendants concealed a 'toxic' mobile home portfolio, vastly overstated collateral in regards to the company's loans and failed to disclose an investigation of the company by the FBI. The case, assigned to U.S. District Judge Pamela K. Chen, is 1:24-cv-05347, Martin v. Arbor Realty Trust, Inc. et al.
Who Got The Work
Arthur G. Jakoby, Ryan Feeney and Maxim M.L. Nowak from Herrick Feinstein have stepped in to defend Charles Dilluvio and Seacor Capital in a pending securities lawsuit. The complaint, filed Sept. 30 in New York Southern District Court by the Securities and Exchange Commission, accuses the defendants of using consulting agreements, attorney opinion letters and other mechanisms to skirt regulations limiting stock sales by affiliate companies and allowing the defendants to unlawfully profit from sales of Enzolytics stock. The case, assigned to U.S. District Judge Andrew L. Carter Jr., is 1:24-cv-07362, Securities and Exchange Commission v. Zhabilov et al.
Who Got The Work
Clark Hill members Vincent Roskovensky and Kevin B. Watson have entered appearances for Architectural Steel and Associated Products in a pending environmental lawsuit. The complaint, filed Aug. 27 in Pennsylvania Eastern District Court by Brodsky & Smith on behalf of Hung Trinh, accuses the defendant of discharging polluted stormwater from its steel facility without a permit in violation of the Clean Water Act. The case, assigned to U.S. District Judge Gerald J. Pappert, is 2:24-cv-04490, Trinh v. Architectural Steel And Associated Products, Inc.
Who Got The Work
Michael R. Yellin of Cole Schotz has entered an appearance for S2 d/b/a the Shoe Surgeon, Dominic Chambrone a/k/a Dominic Ciambrone and other defendants in a pending trademark infringement lawsuit. The case, filed July 15 in New York Southern District Court by DLA Piper on behalf of Nike, seeks to enjoin Ciambrone and the other defendants in their attempts to build an 'entire multifaceted' retail empire through their unauthorized use of Nike’s trademark rights. The case, assigned to U.S. District Judge Naomi Reice Buchwald, is 1:24-cv-05307, Nike Inc. v. S2, Inc. et al.
Who Got The Work
Sullivan & Cromwell partner Adam S. Paris has entered an appearance for Orthofix Medical in a pending securities class action arising from a proposed acquisition of SeaSpine by Orthofix. The suit, filed Sept. 6 in California Southern District Court, by Girard Sharp and the Hall Firm, contends that the offering materials and related oral communications contained untrue statements of material fact. According to the complaint, the defendants made a series of misrepresentations about Orthofix’s disclosure controls and internal controls over financial reporting and ethical compliance. The case, assigned to U.S. District Judge Linda Lopez, is 3:24-cv-01593, O'Hara v. Orthofix Medical Inc. et al.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250