3 INTERESTING AUTO FINANCING FRAUDS FROM 2019

Auto loan financing is simple.  An auto dealership extends credit to a borrower in order for them to purchase the vehicle.  When the borrower purchases the vehicle, they are required to pay the loan back with interest over time.  It is really that simple.  An auto loan payment calculator can help someone understand how the specifics work.  Including the relationship between the interest rate, the loan amount and the loan length.

With that said, is it any surprise that each year there are numerous auto loan fraud schemes committed throughout the US?  Unfortunately for the good car dealerships(or not), there are a few bad apples that cause the origin of the stereotypes for car dealerships and their employees.  Here are just a few of the biggest auto loan financing frauds of 2019.

Reagor Dykes Auto Group – Ford Motor Company Credit Fraud

The Reagor Dykes Auto Group was a dealership located in Lubbock, TX.   As many as 11 employees have pleaded guilty to various crimes involved in a fraudulent auto loan scheme.  Their scheme involved providing false information to the Ford Motor Credit Company.  Some say this was the largest floor plan financing fraud in US auto financing history.  The scheme breaks down like this.  409 vehicles were missing from the dealership chain’s inventory worth $13.8 million; 352 vehicles worth $11.6 million were sold and funded; and 37 vehicles were double counted worth $1.6 million.

The way their scheme worked is they would use VIN numbers from vehicles that they had already sold in the past.  Then they would request financing from FMCC and say that they needed it in order to purchase the now used vehicle back from the owner.  Once the funds were transferred, the company would then use the funds for other expenses.  When audited by the FMCC, falsified paperwork would be provided in order to pass the audit.

There aforementioned 11 former employees who have pleaded guilty, are being charged primarily with the conspiracy to commit wire fraud.  They will each receive up to 5 years in prison and required to pay restitution and fees of up to $23 million.

One has to ask, what were they thinking!?  Did they really think they weren’t going to get caught?  Did they think that millions of dollars would go missing and nobody would discover it?

Porsche Dealership – Pompano Beach

Shiraaz Sookralli was the vice president of marketing at Champion Porshce in Pampano Beach, FL.  When customers would come into the dealership to make a deposit on a new vehicle.  Instead of depositing the money in the dealerships account, he would deposit the money into a personal bank account disguised to look like a Champion Porsche bank account.

In order to get customers to make deposits, he would use fake documents to make them believe they were really making a deposit on a new vehicle.  The good news is that after the fraud was discovered, Champion Porsche made every customer whole by paying back any money they had made as a sports car down payment to Sookralli.

Sookralli was said to be using the roughly $3 million dollars stolen to splurge at high end nightclubs and restaurants.  Sookralli also had 10 kids and over $150,000 in credit card debt.  But again, what was he thinking!?  He had to know that eventually his customers would wonder where their cars were.

The FBI is charging Sookralli with wire fraud, mail fraud, and money laundering.

3 Fake Auto Dealerships

Somehow, a fake company that had no employees, no licenses to operate, and no new or used automobiles was able to convince auto lending companies to lend them $1.7 million over a 4 year period.  The way their scheme worked is they would apply for auto loans through various banks and credit unions using fake documents to convince them of authenticity.

Then rather than repay the money, the money would be split among the co-conspirators in the crime to be spent on whatever they chose.  This is such a simple scheme that it begs asking, what were they thinking!?

Conclusion

Each of these auto financing frauds of 2019 are unique.  However, they each have more in common than differences.  The most important thing they have in common is that they end with an FBI investigation and jail time for the perpetrators.  And as obvious as it was that each of these frauds were doomed to failure from the outset, the people behind them somehow convinced themselves they wouldn’t get caught.  It is exactly the fact that people believe they can get away with it that will result in numerous auto loan frauds being discovered in 2020.  And that same question will need to be asked in 2020.  What were they thinking!?

 

 

 

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