TRUCKLOAD OF IMPROPER FUNDS: ATTORNEY GENERAL BONTA ANNOUNCES $1.64 MILLION SETTLEMENT OVER FALSE CLAIMS ALLEGATIONS FOR TRUCK REIMBURSEMENTS

The following information was released by the office of the California Attorney General:

California Attorney General Rob Bonta today announced a settlement with commercial fleet lender Crossroads Equipment Lease and Finance (Crossroads) over alleged false claims for reimbursements under the California Capital Access Program (CalCAP). A whistleblower claimed, and an investigation by the California Department of Justice validated, that Crossroads took advantage CalCAP, a 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 settlement agreement requires Crossroads to pay $1.64 million.

"Our settlement with Crossroads underscores the need to hold companies accountable for fraudulent practices. When powerful companies use their power to cheat our government, California taxpayers are also cheated," said Attorney General Bonta . "Crossroads used a public access program to gather a truckload of ill-gotten funds, but today's settlement is a reckoning and a shift in gears. With this settlement, my office is proud to return taxpayer dollars to the people of California. The California Department of Justice is committed to fighting against false claims and all those who defraud the government of public funds."

BACKGROUND

The purpose of CalCAP is to encourage lenders, like Crossroads, 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 receive reimbursements for losses resulting from enrolled loans that default. The program ended in July 2023, but claims for reimbursements can still be made until the funds run out. As a participating lender since 2012, Crossroads allegedly used CalCAP to price recovered trucks differently, knowing it would be reimbursed for losses and any costs to recover or repair the truck before sale.

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 Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter 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. A California Department of Justice investigation validated those claims.

These settlements are made possible by the critical help from whistleblowers who report fraud and false claims made against the State. Members of the public who would like to advise the Attorney General of a potential false claim against the state should contact the Attorney General's Public Inquiry Unit.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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