A commercial fleet lender is paying $1.64 million to settle allegations it made false claims to take advantage of a loan loss insurance program.
California Attorney General Rob Bonta settled with Crossroads Equipment Lease and Finance over alleged false claims for reimbursements under the California Capital Access Program after an investigation by the California Department of Justice validated found Crossroads took advantage the CalCAP loan loss insurance program by making minimal efforts to sell trucks it repossessed from borrowers who defaulted knowing the program would reimburse any losses.
The purpose of CalCAP is to encourage lenders to issue loans to borrowers with poor credit or insufficient down payments, encouraging those borrowers to buy cleaner, newer trucks and equipment. California pays into a pooled reserve fund to help participating lenders get reimbursements for losses resulting from loan defaults. Crossroads allegedly used CalCAP to price recovered trucks differently, knowing it would be reimbursed for losses, according to the California Department of Justice.
Under the terms of the settlement agreement, Crossroads does not admit to any wrongdoing. The allegations resolved by this settlement were raised under whistleblower provisions of the California False Claims Act by a former chief risk officer at Crossroads. The whistleblower alleged that Crossroads sold CalCAP trucks at much lower prices because they knew CalCAP would reimburse the losses. They also alleged that Crossroads bundled the sale of CalCAP trucks with non-CalCAP trucks and then switched the sale prices to give the false impression of higher losses on CalCAP vehicles.
Topics
California
Claims
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