Hyundai Capital America and Nissan Motor Acceptance Corp. accused a dealer group with operations across Pensylvania and Michigan of failing to repay floorplan loans and selling $10.5 million worth of vehicles out of trust, according to court documents.
The dealerships include Hazleton Hyundai and Hazleton Kia in Hazle Township, Pa. Additionally, NMAC filed lawsuits against three Nissan stores with one in Hazle Township and two in Detroit. The dealerships are owned by Michael Saporito and ex-NFL players Jessie Armstead and Antonio Pierce.
Dealership fraud has surfaced in several lawsuits over the last few months between lenders and their dealer partners, Josh Wortman, an analyst with General Forensics, told Auto Finance News.
“The focus on fraud is actually wrong,” Wortman said. “Fraud is too narrowly defined and too hard to pin down. By the time you must accuse a dealer of fraud it is too late, the damage has been done. The more useful, smart approach is to focus on spotting early indicators of suspicious behavior.”
A month prior, Ford Motor Credit Co. sued Texas-based Reagor-Dykes Auto Group for $41 million, claiming it defaulted on financing agreements by delaying payments on sold cars, falsifying records to obtain additional loans, and partaking in a fraudulent scheme related to inventory flooring.
However, the case for HCA began in August when the captive said the dealerships owned nearly $2.7 million on 184 vehicles, Automotive News reported. HCA also alleges the dealerships missed loan payments due Aug. 1.
Additionally, an Aug. 29 court order allowed Hyundai’s captive to remove collateral from the two dealerships of about 90 vehicles valued at over $2 million.
