When accusations of fraud cross state lines, the perpetrators run afoul of federal prosecutors.  - Photo by geralt via Pixabay

When accusations of fraud cross state lines, the perpetrators run afoul of federal prosecutors.

Photo by geralt via Pixabay

(Bobit) — In December, the husband-and-wife owners of a Florida dealership were charged with selling 35 phantom sales contracts to an auto finance company, a California dealer group accused Nissan of forcing a fire sale of two franchises to a competitor, and the U.S. Securities and Exchange Commission opened an investigation into BMW’s U.S. sales reporting.

Remarkably, in terms of known liabilities, none of those stories cracks the top 10 fraud cases investigated or adjudicated in the auto retail and finance industry in 2019. Listed by associated dollar amounts, this year’s list includes:

1. FCA to Pay $40M Fine for ‘Cookie Jar’ Sales Reports

Fiat Chrysler Automobiles was slapped with a $40 million civil penalty by the SEC following an investigation into falsified sales reports. At issue were a series of press releases published between 2012 and 2016 and allegedly designed to mislead the public — and included in the factory’s SEC filings.

2. Calif. Dealer Wins $15.8M in Toyota Lawsuit

Southern California Toyota dealer Roger Hogan refused to back down from claims the OEM had retaliated against him for his vocal opposition to selling the 2010–’14 Prius, which Hogan said were built with faulty inverters. A jury found Toyota liable for breach of contract for withholding inventory.

3. Former GM Gets 4 Years, Owes $8M for Embezzlement

The former general manager of Sonnen Motorcars’ Marin County, Calif., Audi and Volkswagen dealerships, Amir Bakhtiari, was sentenced to 4½ years in prison and ordered to pay $8 million in restitution. Bakhtiari admitted to embezzling $6.6 million from 2009 to 2016.

4. Hyundai Claims Dealer Fraud Forced $5M in Repurchases

Hyundai accused Pittsburgh used car dealer Christopher Pantelis of buying approximately 600 used 2011–’14 Hyundai Sonatas, damaging their engines beyond repair, and reselling them to the factory for a total of about $5 million through a program intended only for private owners.

5. Ky. Dealer Charged With Leading $4M Repurchase Fraud

Federal prosecutors charged James Pinson, Gary Connect, and Tammy Newsome with defrauding a “major car company” — thought to be Toyota — of more than $4 million by running 350 used pickups through a factory buyback program that offered 150% of retail value to individual owners.

Sookralli admitted to falsifying at least 30 sales orders to pocket the down payments.

6. Former Porsche Salesman Pleads Guilty to $3M Fraud

Shiraaz Sookralli could spend the next 20 years in federal prison after pleading guilty to perpetrating a $3 million fraud scheme. The former salesman for Champion Porsche of Pompano Beach, Fla., admitted to falsifying at least 30 sales orders to pocket the down payments.

7. Feds: Fake FinCo Scored 80 Auto Loans Worth $1.7M

Seven defendants accused of operating fake auto dealerships and a fake auto finance company will spend up to 34 months in prison apiece for fraudulently securing auto loans for nonexistent vehicles. Prosecutors said the scheme netted about $1.7 million over four years.

8. Fla. Chevrolet Dealership Agrees to Million-Dollar Settlement

The former owners of Jacksonville’s Riverside Chevrolet agreed to pay $1.47 million to settle fraud and tax evasion charges. Florida Attorney General Ashley Moody said an investigation, triggered by local news reports, found the dealership systematically failed to pay liens on trade-ins.

9. Mass. Dealer Agrees to Nearly $1M Settlement

The AutoMax group of independent dealerships agreed to pay $750,000 in restitution — plus a suspended penalty of $175,000 — to settle charges brought by the Massachusetts AG’s office, including misrepresenting warranty and service contract coverage and failing to disclose fees.

10. Fake Dealer Gets 5 Years for Fraud, Drugs

Montgomery, Ala., businessman Gene Earl Easterling was accused of posing as a licensed auto dealer to fraudulently obtain 16 auto loans worth $682,980. He will spend 63 months in federal prison after being convicted of bank fraud, mail fraud, and possession of cocaine with intent to distribute.

Read: Va. Parts Manager Faces 20 Years for Embezzlement

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