Top fraud stories of 2019

Throughout this year, more than 20 cases of auto loan fraud in the U.S. have racked up millions of dollars in fake loans and stolen cars.  

The list of lenders nailed by fraud schemes in the past 12 months include Ally Financial; AmeriCredit; Capital One Auto Finance, Navy Federal Credit Union; Pentagon Federal Credit Union, PNC Bank, Santander Consumer USA, USAA Bank; and captives Ford Motor Credit; Hyundai Capital America; and Nissan Motor Acceptance Corp. Independent financiers Exeter Finance, Global Lending Services and Skopos Financial were also victims of auto fraud in the past year. 

Here are the highest-priced fraud schemes of 2019.  

Reagor-Dykes defrauds Ford Credit with floorplan scheme  

So far, 11 Reagor-Dykes Auto Group employees have pleaded guilty this year to their roles in what Ford Credit dubbed “the largest floorplan financing frauds in the history of the U.S.,” according to court documents. The breakdown of the fraud is as follows: 409 vehicles worth $13.8 million were absent from the dealership chain’s inventory; 352 vehicles were sold and funded, totaling $11.6 million; and 37 vehicles worth $1.6 million were “double-floored.” 

The dealership chain is currently awaiting approval from the United States Bankruptcy Court on its $14 million restructuring plan – a proposal Reagor-Dykes hopes will keep some of its locations in operation. GM Financial, another floorplan financier for the Lubbock-based dealer group, is fighting the plan in court, calling it “inadequate.” Meanwhile, the 11 guilty employees await sentencing hearings, which are scheduled for 2020.  

FBI busts Porsche dealer in $3M fraud scheme 

A former dealer for Pompano Beach, Fla.-based Champion Porsche pleaded guilty to a fraud scheme racking up $3 million.  The fraudster, Shiraaz Sookralli, pleaded guilty to conspiracy to commit mail fraud and wire fraud. He faces a maximum sentence of 20 years in prison, according to the U.S. Attorney’s Office of the Southern District of Florida.  

To facilitate the scheme, Sookralli sold non-existent exotic Porsche models to 30 customers. He required the buyers to provide deposits in the form of wire transfers, bank checks and cash that he later deposited into his shell company’s bank account. Sookralli opened the shell company in 2017 with a name similar to the Champion Porsche dealership, for which he worked, in order to trick buyers, according to the Department of Justice’s press release.  

NMAC wins $2.5M in floorplan fraud case 

A federal judge ruled in favor of Nissan Motor Acceptance Corp. after it was determined a used-car dealership defrauded the captive on its floorplan loan by selling vehicles out of trust. 

Helena, Mont.-based Robert Allen Nissan owes NMAC $2.5 million, plus attorneys fees and costs incurred by NMAC to date, according to a Nov. 5 filing with the Helena Division of the U.S. District Court of Montana. According to a Feb. 22 complaint filed by NMAC, the dealership sold vehicles out of trust for months by keeping the proceeds – totaling $795,584 for 25 vehicles – and failing to pay them to NMAC.

FBI arrests fraudsters in $1.7M auto scam 

In August, the Federal Bureau of Investigation arrested six fraudsters for falsely obtaining millions of dollars in auto loans. The scammers operated three fake dealerships — called Premier Luxury Motors, Platinum Motors Auto Sales, and 5-Star Motorsports — which had no employees, inventory, or licenses. 

The perpetrators secured 80 fraudulent auto loans worth $1.7 million, though they attempted to secure $2.7 million in loans, according to the Northern District of Georgia Attorney‘s office. The conspirators applied for auto loans with banks and credit unions, supplementing their applications with fake vehicle purchase orders. Lender-issued loan checks would be deposited into financial accounts opened by the conspirators and held in the names of the fake dealerships. The conspirators would split the money rather than repay the lenders. The scheme spanned about four years, the investigation discovered.  

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