GLENDALE, Calif.—Clearpath FCU has filed suit against its former CEO, John Lee, for more than $136,000 for allegedly taking out three car loans and two personal loans without intending to pay them back.
The suit further alleges that the former CEO, terminated in July of 2016, misused the credit union’s business credit card to buy home furnishings, electronics, meals at upscale restaurants and more. Lee took over as CEO in January of 2016, moving up from his CFO role.
The majority of the damages cover allegedly unpaid balances on three cars—a 2016 BMW i3 ($57,229), a 2012 Toyota Prius ($5,867) and a 2015 Hyundai Sonata ($28,307).
The $106-million CU has also filed a complaint against Lexus of Glendale, which sold Lee the Prius, for $15,000 or return of the car.
Clearpath is seeking $129,752 to cover the unpaid balances on the vehicle and personal loans, and $6,849.89 to cover what it alleges were “unauthorized” credit card charges. The suit also seeks attorneys’ fees.
In the complaint against Lee, filed in Los Angeles County, Clearpath alleges Lee never intended to repay the car loans, and even took out a loan for the BMW shortly before he was terminated in July, adding that Lee was aware an investigation by the credit union was underway regarding the alleged misuse of funds.
The complaint against Lee states that “almost immediately the defendant began abusing his position as CEO of the credit union by using the business credit card for his own personal usage, such as purchasing home furnishings, meals at high-end restaurants, and electronics in the amounts of approximately $4,422.35 without consent of the credit union’s board of directors.”
The suit also states that Lee spent the CU’s money on upgraded hotel rooms in the amount of $613.45, and purchased unauthorized gifts and issued himself personal and vehicle loans that “he did not intend to repay.”
“Without permission, consent and authority the defendant used the credit union’s funds to pay for his personal items, including an electric charging station specific to his new BMW vehicle, that he had the credit union finance shortly before his termination during the time period of his ongoing embezzlement under the false representation that it was a universal charging station,” the lawsuit states. “The defendant misused the credit union’s funds for his personal advantage and gain to pay for installation of an additional charging station in the sum of $1,813.99.”
According to the suit, Lee has turned over the Hyundai and BMW, and surrendered the Prius to Lexus of Glendale, which the credit union is suing.
In that suit the credit union is seeking $15,000 (the estimated value of the car) from the dealership or return of the car. In the complaint Clearpath alleges that Lexus of Glendale had sent a check to the credit union for $5,867, but that the funds were returned to the car dealer because the money did not cover Lee’s lien on the vehicle, the complaint states. The suit also states that Clearpath “repeatedly requested” that the dealership return the car to the credit union, as it is subject to a cross-collateral clause, and that the CU is therefore the legal owner of the vehicle. However, according to the complaint, the dealership has refused to surrender the car.