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Alleged sales scam snares Ohio dealers
Can you believe this ???
From Automotive News:
Alleged sales scam snares Ohio dealers
June 24, 2008 - 12:01 am ET
The Ohio attorney general is suing a used-car lot in suburban Columbus that allegedly bought new vehicles from franchised dealerships, sold them to consumers without titles and pocketed the proceeds.
The civil suit, filed this month, also names as defendants two franchised dealerships that prosecutors say helped "facilitate the fraud." But the general manager of one of the dealerships says his store was unaware of the alleged scheme, which he says cost the dealership $160,000.
A lawyer for the lead defendant, NAL Group Inc., of Grove City, Ohio, says his clients did not engage in fraud but were poor businessmen. He says the company closed last November and is broke.
The alleged scheme involves about 44 new and used vehicles. According to the state lawsuit, NAL Group and an affiliate, National Auto Lease, sold new vehicles although they were not licensed to do so. Both businesses operated out of a used-car dealership in Grove City.
Acting as a broker, NAL Group acquired new vehicles from franchised dealerships without paying for them, the suit says. It illegally resold the vehicles without providing titles, according to the suit.
A suit by the State of Ohio outlines how an alleged vehicle-sale scam worked.
-- NAL Group Inc., a used-car lot, bought new vehicles from franchised dealerships but never paid for them. NAL sold the vehicles to consumers without titles.
-- The state has received as many as 40 complaints from consumers who said they could not obtain titles for the vehicles they bought from NAL.
-- Hugh White Honda of Columbus says NAL Group bought 6 new vehicles worth $160,000 but has not paid for them.
The franchised dealerships named in the suit are Lindsay Acura and Hugh White Honda, both of Columbus. Lindsay Acura did not respond last week to requests for comment.
Don Smith, general manager of Hugh White Honda, says NAL Group failed to pay for six new vehicles worth $160,000. He says his dealership retains title to the vehicles, which he declined to identify.
David Brown, a lawyer for Hugh White Honda, told Automotive News the dealership "did nothing but engage in a commercial transaction with National Auto Lease. National Auto Lease illegally sold cars to consumers."
Michelle Gatchell, a spokeswoman for Ohio Attorney Gen. Nancy Rogers, estimates the state has received 30 to 40 complaints from consumers who said they bought vehicles from NAL Group but never received titles.
Gatchell says the state lawsuit names the Honda and Acura dealerships as defendants because they allegedly sought to recover their vehicles from consumers. That action violated state consumer law, the suit claims.
The dealerships "were trying to go after the consumer who had nothing to do with" the alleged fraud, Gatchell says.
Brown says Hugh White Honda did not repossess or try to repossess vehicles.
The dealership will keep the titles while it negotiates a resolution with the attorney general's office, he says.
"In Ohio, physical possession of a certificate of title is ownership," Brown says.
'Company has no assets'
Charles Kaps, a lawyer for NAL Group, acknowledges violations in the vehicle sales. But he says the company's majority owners, Steven Roper and Patrick McNamara, are guilty of nothing more than poor accounting practices. He says the families of Roper and McNamara have paid about $200,000 in restitution for 24 of the disputed vehicles. The families cannot afford to make restitution for the remaining 20 sales, Kaps says.
"We're not declaring bankruptcy," Kaps says. "There is no need to. The company has no assets."
The state lawsuit seeks to force NAL Group to reimburse affected consumers and pay a fine of at least $25,000. No hearing date is set.