Saturday, April 19, 2008

Former Honda store GM pleads guilty to fraud charges in leasing case

U.S. Attorney pursues dealership manager over altered lease documents

Duane Clark, the former general manager of Chezik Honda in Kansas City, Mo., pleaded guilty in federal court to a wire fraud scheme that involved falsifying paperwork on car leases in order to obtain higher commissions for himself, according to a release from the U.S. Department of Justice.

Mr. Clark admitted that from April 3, 2000, through June 14, 2004, he fraudulently altered car lease worksheets and contracts by adding dealer-installed options that were never actually installed. Those altered documents were then sent to American Honda Finance Corporation (AHFC).

The altered lease contracts showed the vehicle with an inflated value due to the dealer-installed options, which did not exist. As a result, Mr. Clark and others received higher commission checks. The total potential loss, as calculated from the altered lease worksheets, was approximately $62,230.

Mr. Clark could be subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000 and an order of restitution.

This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the Federal Bureau of Investigation.

AFI's take on this:

WOW, I always warn dealership management that leases are one way for a dishonest F&I manager to steal. All the customer agrees to is Monthly payment, initial investment and term. The vehicle's sale price or added equiptment doesn't matter. The interest rate is a non-issue as it is calculated as a money factor.

If they were re-printing leases and adding in parts and accessories, the customer had to have been closed on a monthly payment that reflected these adds. The desk manager then just raised the money factor to match the packed payment. Later, they committed bank fraud by lowering the money factor, adding the accessories, printing a new lease and worksheet and forging the customers name. Wow.

I wonder then, if they were adding accessories from the parts department (as Honda-approved dealer installed options requires an internal RO), the parts such as alloy wheels and spoilers, could then be fenced or sold on Ebay.

Adding to the volume of the Parts department is a must for a dealership General Manager to increase his "commission check" as GM's are paid on total profit dollars. It's scary to think of all the other things these guys were probably doing. I bet getting caught like this was just the tip of the iceberg.


These guys should have visited my automotive F&I managers Laws and Regulations blog:
It will help one to measure a well-run automotive f&i department.

1 comment:

Anonymous said...

I used to work there.... If the owner did not know about it he is either stupid or a horrible business man or both