Court punishes finance company and owner
Mahmood “Mike” Nasiry, a veteran of the lending business, decided women couldn’t be counted on to repay loans. So when he started a company to purchase overdue loans at a discount from used-car car dealers, he paid lower prices if the borrower was a woman — in more than 1,000 instances over a period of 21 months.
That decision is turning out to be costly. An appeals court has just upheld $6.2 million in discrimination penalties against Nasiry and his company, M&N Financing Corp., and a California civil rights agency wants further damages for employees who were forced to take part in the practice.
The practice was “an invasion of the female borrowers’ legally protected interest to be free from arbitrary sex discrimination,” the state’s Second District Court of Appeal said Monday. The court said the lending bias also violated car dealers’ rights by lowering their returns on loans to women.
Nasiry had been in the loan business for 10 years when he founded his Los Angeles company in 2012. In its 2014 lawsuit, the state Department of Fair Employment and Housing said Nasiry told his employees “that women were unable to make payments on a car; they needed a man to help them. He compared entering a loan contract with a woman to dating a woman with a sexually transmitted disease: The contract would sting you in the end.”
Nasiry, though, said he was doing nothing illegal or improper. The court quoted an employee as saying Nasiry told him banks had the same lending practices.
When M&N bought a loan from a car dealer, the court said, it paid 1% less if the car had been bought by a woman, and 0.5% less if a woman was a co-borrower on the loan.
The company paid lower rates to 517 auto dealers on 1,037 contracts until July 2014, when it halted its practice after the state agency opened its investigation, the court said. Citing California’s civil rights laws, the agency claimed penalties of $4,000 for each violation — one for each dealer, and one for every discriminatory loan — totaling $6.2 million.
Upholding those penalties, which were awarded by a Superior Court judge in 2019, the appeals court rejected Nasiry’s argument that the department had no authority to sue because no women had filed complaints. The agency can enforce the law on its own, Justice Dorothy Kim said in the 3-0 ruling.
The court also reinstated the department’s claim, which the judge had dismissed, seeking damages for Nasiry’s employees who objected to the lending practice but were ordered to take part.
Kim said one employee, Khayyam Etemadi, told Nasiri several times, starting in 2012, that the company was acting illegally. Nasiri denied it, then threatened to fire Etemadi and ruin him financially, and falsely told credit agencies that the employee had failed to repay a loan from the company, Kim said. She said Etemadi collapsed at work in 2013 and was hospitalized with heart palpitations, then returned, but left the company in 2014 and filed a complaint with the state agency,
Employees who are coerced to violate a state civil rights law can be considered “aggrieved parties” who are entitled to sue, Kim said.
Roy Weatherup, a lawyer for Nasiry, said he would appeal the ruling to the state Supreme Court.
Bob Egelko is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @BobEgelko