This Dealerships Million Dollar Fraud Scheme is Wild

Car dealer fraud is one of the oldest and most common frauds here in the US. And it seems that some dealerships never stop thinking of new and creative ways to scam both lenders and consumers.

And the fraud scheme that the co-owners at Big Red Kia in Norman Oklahoma cooked up is pretty wild.

This week, a federal jury convicted Bob MaysCharles Gooch, and Courtney Wells, all residents of Norman, of multiple counts of wire fraud, conspiracy, issuing forged securities, and aggravated identity theft.

Read the Indictment Here Which Involves Scores of Lenders

You can download and read the full indictment here. They targeted scores of lenders in the scheme including Ally, American Credit Acceptance, BBVA, Consumer Portfolio Services, Crescent, Encore, Exeter, FinancePoint, First Investors, Flagship, Global Lending Services, Peak Acceptance, Prestige, Santander, and Tinker Federal Credit Union.

Read the indictment here.

The Case Involved MultiMillions of Dollars in Fraud and Bribery

The indictment against the now-convicted fraudsters is pretty damming. It alleges that the trio made materially false statements and omissions to lenders about the type, source, and amount of borrowers’ down payments or vehicle trade-ins, and bribed at least one loan officer.

They Targeted Subprime Borrowers, Some of Whom Testified Against Them

At trial, the jury heard testimony that the Big Red Dealerships used advertisements to target potential customers with poor credit and that Mayes, Gooch, and Wells then fraudulently induced lenders to approve loans for such customers by documenting that the customers provided cash down payments and/or trade-in vehicles when that was untrue. 

Twelve different Big Red Dealership customers testified about their experiences buying cars at the Big Red Dealerships, along with several former employees and representatives of several lenders. 

In some circumstances, the purported cash down payment was simply fictitious, and the Big Red Dealerships referred to those cash down payments as “King Cash” on internal documents.  The jury also heard testimony that in late 2014, one lender discovered these fake cash down payments, and Mayes emailed threats to the CEO of that lender in an effort to stop the lender from further investigating the Big Red Dealerships.

They Went So Far As To Setup A Fake Pawnshop To Create Ghost Down Payments To Lenders – 519 In Total

Evidence at trial also showed that from February 2015 until late 2017, the Big Red Dealerships continued to document fictitious cash-down payments for lenders. 

During that time period, for at least 519 customers, the down payment was purportedly based on a pawned item provided to Norman Pawn & Gun, a pawn shop owned by Gooch and located in a building owned by Mayes, although it was never open for business and never had any employees. 

After loan proceeds were received from lenders, Big Red Dealership employees generated checks to the customers, forged the customers’ signatures on the backs, deposited the checks in Big Red Dealership accounts, and fully reimbursed Norman Pawn & Gun for the purported down payments. 

They Faked Trade-In’s On The Loan And Sold Cars Back To Borrowers for $1

The jury also heard that the Big Red Dealerships falsely documented vehicle trade-ins for lenders to approve loans.  On at least 542 occasions, the vehicle was never provided to the Big Red Dealerships and a separate transaction was documented—unbeknownst to the lender—in which the trade-in vehicle was resold to the customer for a dollar.

Finally, the jury heard testimony that at least one lender approved questionable loans—for up to two to three times’ the value of vehicles being purchased—after a Big Red Dealership manager gave cash bribes to a loan officer and the Big Red Dealerships provided fake invoices to justify the inflated prices.

They Now Face Up to 20 Years in Prison

The jury convicted all three defendants of conspiring to commit wire fraud, alleged as Count 1 of the indictment. The jury convicted Mayes and Gooch with 12 counts of wire fraud based on false information sent to lenders for 12 specific customers, as alleged in Counts 2-13.  The jury convicted Wells of six of those counts of wire fraud.  For each conviction charged as Counts 1-13, each defendant faces up to 20 years in prison and a $250,000.00 fine. 

The jury convicted all three defendants of six counts of uttering forged securities based on Norman Pawn & Gun checks forged by Big Red Dealership employees, as alleged in Counts 14-19 of the indictment.  For Counts 14-19, each defendant faces up to 10 years in prison and a $250,000 fine.

The jury convicted all three defendants of six counts of aggravated identity theft, as alleged in Counts 20-25 of the indictment, for using the signatures of six customers without lawful authority.  For Counts 20-25, each defendant faces a mandatory term of imprisonment of two years to run consecutive to any other term of imprisonment and a $250,000 fine.  Sentencing will take place in approximately 90 days. 

I am Frank McKenna, a fraud expert from San Diego. The views and opinions expressed here are entirely my own and do not reflect those of Point Predictive.