U.S. Attorney’s Office, Law Enforcement Partners Crackdown on Deception, Fraud in Auto Sales, Financing and Leasing
BIRMINGHAM—The U.S. Attorney’s Office for the Northern District of Alabama, the Federal Trade Commission, and multiple law enforcement partners today jointly announced the results of Operation Ruse Control, a nationwide and cross-border crackdown to protect consumers when they buy a car. The yearlong sweep encompassed 252 enforcement actions in the United States and Canada. The federal prosecution of eight Birmingham car dealership employees is part of the sweep.
The U.S. Attorney’s Office in Birmingham, working with the FBI and the Internal Revenue Service, Criminal Investigation Division, obtained guilty pleas over the past year from three sales managers, two finance managers and three salesmen at Serra Nissan in Birmingham to a conspiracy to boost auto loans and vehicle sales through fraudulent means. Fraudulent representations submitted to lenders by the Serra Nissan employees included inflated buyer’s income, straw purchasers who could qualify for loans, and non-existent vehicle accessories listed in order to boost a loan amount.
The Birmingham cases were among actions from the FTC and more than 30 law enforcement partners at the federal, state and local level in the U.S. and Ontario, Canada. The enforcement actions include both civil and criminal charges of deceptive advertising, automotive loan application fraud, odometer fraud, deceptive add-on fees, and deceptive marketing of car title loans.
“The defendants from Serra Nissan defrauded auto loan lenders by falsifying customer information on loan applications, which also harmed customers by inflating the value of the vehicles they bought or saddling them with loans the dealership officials knew they could not afford,” Vance said. “These predatory practices in providing auto loans, often to people with credit problems or insufficient income, threaten consumer safety and the stability of the auto loan industry.”
“For most people, buying a car is one of the largest purchases they’ll make,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Car ads must be truthful, loan terms must be clear, and dealer practices must be honest. That’s why our partners are working together to crack down on deceptive marketing about car sales, leasing and financing.”
“The FBI is proud to have been a part of Operation Ruse Control,” said FBI Special Agent in Charge Roger C. Stanton. “Consumers should expect honesty when purchasing a vehicle not fraud and deceit. If dealers cross the line and engage in illegal activity they should know the FBI, along with our partners, will be right behind them to hold them accountable and bring them to justice.”
“These defendants lined their pockets with money gained through deceptive and misleading practices,” said Veronica F. Hyman-Pillot, special agent in charge, IRS Criminal Investigation. “Thanks to the agents who worked this investigation, the defendants’ actions did not go undetected and they will be held accountable,” she said. “We will do everything within our power to assist our law enforcement partners with identifying and stopping illegal practices that affect unsuspecting consumers.”
D. SCOTT BURTON, 36, of Odenville, MICHAEL J. WILKINSON, 56, of Moody, TERRY W. HENDERSON, 39, of Pleasant Grove, ROLAND W. RILEY, 28, and DWIGHT A. PERRY, 44, both of Birmingham, ABDUL ISLAM MUGHAL, 48, of Trussville, GERALD R. SHEPARD, 56, of Pinson, and JEFFREY R. GREEN, 33, of Porterdale, Ga., all have pleaded guilty to the conspiracy to defraud financial institutions, Nissan North America and Serra Nissan customers between August 2010 and October 2013 by fraudulently increasing vehicle sales in order to boost personal profits. The eight defendants are scheduled for sentencing between May and July.
Mughal, Shepard, and Burton were sales managers at Serra Nissan, Green and Wilkinson were finance managers, and Perry, Henderson and Riley were salesmen. In addition to the conspiracy pleas, Mughal also pleaded guilty to bank fraud, Shepard to bank fraud and filing a false federal income tax return, and Green to failure to file an individual tax return.