Regulators, dealer attorneys and compliance consultants, and your industry news sources all tell the same sad tale: Despite the countless warnings and well-publicized efforts of federal, state, and local authorities, U.S. auto dealerships continue to be a reliable source of criminal activity.
A complaint is lodged against the dealer, a manager, or a staff member. Investigations, arrests, and prosecutions follow. Settlements are reached. Fines and restitution are paid. Prison time is served. It’s the same old story.
You would think all the publicity would discourage those who would engage in bank fraud, not to mention the embezzlers and outright thieves. Evidently the temptation is just too great.
If you are tired of reading these stories, that’s understandable. We are tired of reporting them.
So let’s switch gears. Dealerships are not only a source of fraud but a frequent victim. When fraudsters have invaded their stores, F&I professionals and other frontline employees have taken action.
In August, a Canadian man purchased a $120,000 vehicle at an unnamed St. Catharines, Ont., highline dealership. An alert employee suspected something was amiss with the customer’s documents and contacted the Ontario Provincial Police.
With assistance from the dealership, OPP detectives tracked down and arrested the suspect. In the weeks that followed, two other agencies joined the investigation, and he now faces a litany of charges for allegedly defrauding at least three dealers. The police departments issued a provincewide warning, asking dealers to remain vigilant.
Busted by dealership staff, he made a run for it.
A month earlier, in Bryan, Texas, a Houston man was charged with attempting to purchase a vehicle with fraudulent identification and a falsified credit application. Busted by dealership staff, he made a run for it. Police found him hiding in the men’s room at a nearby clinic.
This summer also saw the indictment of Andy Gabler, a Pennsylvania dealer and former head of the National Independent Automobile Dealers Association, and Chad Bednarski, an F&I manager for Gabler’s Lakeside group, which includes a Chevrolet franchise and a used-car dealership.
Court documents have since revealed two employees went to Lakeside’s controller, claiming Gabler — who had already been caught selling vehicles out of trust, prosecutors say — owed the group’s floorplan financier more than $1 million, all concealed by manipulated sales reports. One of them also called the bank, which called the FBI. They built their case on interviews with the controller and the employees.
And dealership vigilance is not limited to fraud. In April, James “Kip” Charles, general manager of Kiplin Auto in Charleston, N.C., learned from the morning news that a local woman and her friend had been carjacked the night before. When he got to work, he got a call from the victim, who turned out to be a customer. The car was equipped with a GPS tracker. Charles and his staff checked the computer, found it 92 miles away in South Carolina, and called police. They arrested the suspect — after a brief high-speed chase — that same morning.
One month earlier, a fire outside the service department at Bob Baker Chrysler Jeep Dodge Ram Fiat of Carlsbad, Calif., destroyed eight vehicles. A suspect was quickly identified and arrested thanks in part to an array of high-definition security cameras. GM Kurt Anderson had only recently upgraded the cameras; a fellow dealer promised they would help prevent service fraud by documenting exterior damage when vehicles entered the lanes.
As our resident compliance expert, Gil Van Over, points out in this month’s ACE column, a number of practices once considered business as usual are now expressly forbidden and frequently prosecuted. So don’t let anybody convince you powerbooking, intentional yo-yos, and fudged apps are non-crimes. They are in fact felonies.
But neither should you let anyone tell you your association with this great industry casts you as a potential criminal. You could just as easily be a hero.
