CHARLESTON, W.Va. — A federal grand jury has returned an indictment charging three Kentucky residents with 10 counts of fraud and identity theft relating to a scheme to defraud a major car company of more than $4 million, announced United States Attorney Mike Stuart.
Stuart said James Pinson, 44, Gary Conn, 56, and, Tammy Newsome, 53, organized and participated in a scheme to misuse a car company’s warranty extension program that offered to repurchase certain trucks for 150% of their value — so long as those trucks were owned by individual customers rather than a dealership.
Read: Hyundai Claims Dealer Fraud Forced $5M in Repurchases
Participants in the scheme bought the trucks at wholesale prices at auction through Pinson’s car dealership, Big Blue Motor Sales of Louisa, Ky. They then obtained hundreds of copies of Kentucky and West Virginia residents’ driver’s licenses, fraudulently titled the trucks in the name of those residents, and induced the car company to repurchase the trucks at 150% of value, all according to the indictment.
Prosecutors believe the defendants ran 350 trucks through the scheme between 2013 and 2015, causing approximately $4.3 million in losses to the car company. Newsome is also charged with aggravated identity theft. Frank Russo, 68, of North Carolina and Kevin Fluharty, 58, of West Virginia have already been indicted for their role in the same scheme.
If convicted, the three defendants face up to 30 years in prison.
“At the time of the alleged scheme, Toyota offered a buyback program for trucks that had their frames rusted out.”
“This is the second indictment setting forth very serious allegations of a long-term warranty fraud scheme,” Stuart said. “Five individuals have now been charged in connection with the alleged fraud scheme that resulted in $4 million in losses.”
The aggrieved party was not named in court documents. Courtney Hessler of the Huntington, W.Va., Herald-Dispatch speculated the “major car company” is Toyota.
“At the time of the alleged scheme, Toyota offered a buyback program for trucks that had their frames rusted out. Toyota’s policy for the buyback was to purchase the affected vehicles for 1½ times their value, based on the Kelley Blue Book calculation for vehicles in ‘excellent’ condition,” Hessler wrote.
