The Department of Justice made a pair of announcements last week, with one involving Santander Consumer USA and the Servicemembers Civil Relief Act (SCRA).

According to a news release, the finance company’s Chrysler Capital division has agreed to pay more than $134,000 to settle a federal lawsuit alleging that the company denied early vehicle lease terminations to servicemembers who qualified for them under SCRA.

The Justice Department previously settled an SCRA lawsuit against Santander in 2015 for repossessing the vehicles of 1,112 servicemembers without a court order.

Officials reiterated that the SCRA permits servicemembers to terminate their vehicle leases early without penalty after entering military service or receiving qualifying military orders for a permanent change of station or to deploy to another location.

This settlement, which must be approved by the U.S. District Court for the Northern District of Texas, resolves a lawsuit filed in September by the Department of Justice. The lawsuit alleges that Santander unlawfully denied early vehicle lease terminations to 10 servicemembers.

Under the proposed settlement, Santander must pay $94,282.62 in compensation to the 10 aggrieved servicemembers and a $40,000 civil penalty to the U.S. Treasury.

The Justice Department recapped that its investigation, which began in 2019, stemmed from a complaint submitted by U.S. Army Captain Eric McDowell.

Officials said McDowell entered into a three-year lease in October 2017 for a Jeep Grand Cherokee, but he learned in May 2019 that he was going to be deployed to Afghanistan. In August 2019, officials said McDowell returned the vehicle to Santander and tried to terminate the lease, but the company denied his termination request.

The Justice Department said it was not until February 2020, after the United States had opened its investigation and six months after McDowell returned his vehicle to the dealership, that Santander finally approved the lease termination, voided early termination charges and refunded the lease amounts that had been paid in advance.

“Captain McDowell faced significant stress during his deployment to Afghanistan as a result of this six-month delay,” DOJ officials said in their news release. “The department’s investigation uncovered nine additional servicemembers whose SCRA rights it alleges Santander violated.”

As part of the agreement, officials said Santander has also updated its SCRA procedures and training.

“The civil rights of servicemembers who sacrifice so much for our country must be respected,” said assistant attorney general Kristen Clarke of the Justice Department’s Civil Rights Division. “We are committed to ensuring that those serving in our nation’s military receive the full range of benefits and protections that they are entitled to under the Servicemembers Civil Relief Act.”

Acting U.S. Attorney Prerak Shah for the Northern District of Texas added, “Given all our veterans put on the line when they deploy or change station, the last thing they should have to worry about is their car lease.

“The Servicemembers Civil Relief Act is designed to ease the financial burdens associated with active duty military service. We are determined to uphold this important law,” Shah went on to say.

3 plead guilty to conspiracy to defraud financial institutions & other credit issuers

In another development, Justice Department officials in Raleigh, N.C., said North Carolina residents Shawn Franklin, Anthony Maryland and Sabrina Wiggins Branch pleaded guilty last week to defrauding financial institutions and other lenders by using synthetic identities to obtain credit cards and consumer loans with no intention of payment.

Officials said their scheme included the purchase of two vehicles.

According to court documents and the government’s factual representations in open court, Franklin began using synthetic identities in 2012.  By coupling his own name and date of birth with a nine-digit number that looked like a Social Security Number, Franklin created a new credit profile, otherwise known as a Credit Privacy Number (CPN). 

“Individuals, like Franklin, with poor credit scores built fresh credit histories by adding a CPN as an authorized user to credit accounts belonging to other individuals with good credit scores,” the Justice Department said in another news release.

“These ‘trade lines’ enhanced the CPN’s creditworthiness, scamming lenders and credit card issuers into believing the CPN applicants have the ability and intent to pay-off indebtedness.  Individuals using CPNs, however, lack the ability or intent to pay-off the loans and credit card balances,” officials said.

Along with the vehicle purchases, officials said the trio also ran up approximately $650,000 in fictitious charges through merchant accounts associated with Wiggins’ retail store in Wilmington’s Independence Mall. 

The Justice Department said all three individuals pleaded guilty to conspiracy to commit bank and wire fraud and faces a maximum penalty of 30 years in prison when sentenced. 

Officials added that Franklin also pleaded guilty to aggravated identity theft for his use of the names and personal identifiers of 10 NC Medicaid recipients. He faces an additional mandatory two years in prison, consecutive to any other term imposed.