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Bank Fraud in Automotive Dealerships . ACFE Computer Crimes and Fraud Seminar May 11, 2010. gvo3 . & Associates. Gil Van Over . President of gvo3 & Associates AFIP Certified Mentor Associate Member of NADC Member of DealerTrack’s Compliance Advisory Counsel

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bank fraud in automotive dealerships

Bank Fraud in Automotive Dealerships

ACFE Computer Crimes and Fraud Seminar

May 11, 2010

gil van over

gvo3

& Associates

Gil Van Over
  • President of gvo3 & Associates
  • AFIP Certified Mentor
  • Associate Member of NADC
  • Member of DealerTrack’s Compliance Advisory Counsel
  • Writes for Dealer Magazine and Dixon Hughes’ Strategic Newsletter
bank fraud
Bank Fraud
  • Falsifying Credit Applications
  • Power booking
  • Falsifying Down Payment
  • Forgery
  • Employee Theft
case study 1
Case Study #1
  • Sarasota 500 LLC - owns dealerships in Florida
    • Seven cases dating back 10 years
    • Forged customer signatures
    • Altered credit applications
    • Falsified down payments
    • Power booking
case study 2
Case Study #2
  • Alan Vester Auto Group – owns dealerships in North Carolina
    • Class Action Lawsuit
    • Case involves customers who purchased used cars since 2002
    • Falsified down payments
case study 3
Case Study #3
  • Al Long Ford, Inc - Michigan
    • Case filed by Lender – Michigan First Credit Union
    • Falsified down payment
    • Falsified income and employment on credit application
    • Plaintiff was awarded $361,000 for Fraud and Breach of Contract
case study 4
Case Study #4
  • Hargrove and Toadvine – Owners of Car Connection – South Carolina
    • Falsified income
    • Power booking
    • Defendants pled guilty to conspiracy to commit bank fraud - serving 40 months in prison and ordered to pay $421,000 in restitution
gvo3 audit findings
gvo3 Audit Findings
  • Falsified down payments
    • Review notes in deal jacket of possible fraudulent activity
    • Review receipts and rebate forms for proof of down payment
  • Falsified credit applications
    • Compare information provided on written credit application to information provided in electronic programs such as DealerTrack or Route One
gvo3 audit findings1
gvo3 Audit Findings
  • Falsified credit applications
    • Compare information given on credit application to proof of income stips
    • Review proof of income stips to ensure they are not fraudulent
  • Forged signatures
    • Compare signatures of all deal jacket documents looking for consistency
    • Review notes in deal jacket indicating documents need signature
gvo3 audit findings2
gvo3 Audit Findings
  • Fraudulent paystubs
    • Review paystubs for authenticity and accuracy
    • Validate income
    • Call employer for proof of employment
    • Audit dealer employee desktop looking for payroll programs
  • Power booking
    • Compare book out sheets confirming the options and mileage are correct
case study 5
Case Study #5
  • Hernandez and Gutierrez-Bonilla Owners of Downey Motorcars - California
    • Investigation dates back to 2005
    • Fraudulent credit applications
    • Identity theft
    • Owners double financed the same vehicles with multiple lenders
case study 6
Case Study #6
  • Michael Holley – Owner of multiple dealerships in Florida
    • Defrauded customers by failing to payoff trade-ins
    • Defendant pled no contest to grand theft - serving 2 years in prison, 43 years probation and ordered to pay $167,000 in restitution
case study 7
Case Study #7
  • Dayton Diaz – Sales Manager for Rick Case Acura – Florida
    • Identity Theft
      • Sold personal customer information
    • Defendant pled guilty to mail fraud conspiracy – possible 2-3 year prison sentence
case study 8
Case Study #8
  • Davina Smith - Employee at Drive Time Auto Sales - Florida
    • Identity Theft
      • Stole over 200 social security numbers from customers
    • Smith facing fraud and identity theft charges in Florida
      • Smith facing similar charges in Georgia
case study 9
Case Study #9
  • Shawn McDonald - Salesman for Hub City Ford – Florida
    • Identity Theft
      • Stole over 30 customer’s identities
      • Charged with grand theft and personal use of information
case study 10
Case Study #10
  • Melissa O’Donnell – Accountant for Faulkner Auto - Pennsylvania
    • Used company funds to pay for personal debt
    • O’Donnell was sentenced to 6 to 23 months, 5 years probation and ordered to pay over $116, 000 in restitution
gvo3 audit findings3
gvo3 Audit Findings
  • When conducting a walk-through, look for suspicious activity that could result in employee identity theft
best practices to avoid bank fraud
Best Practices to Avoid Bank Fraud
  • Conduct background checks on potential new hires
  • Implement policies and procedures that forbids bank fraud
  • Train employees on policies
  • Require employees to sign acknowledgement form regarding policies
  • Immediate termination for any employee who does not comply with policies
best practices to avoid bank fraud1
Best Practices to Avoid Bank Fraud
  • Require that all stips sent to a lender be retained in the deal jacket
  • Make a manager sign the book out sheet confirming the options and mileage are correct
  • Periodically verify that the credit application information on the paper document is consistent with the information provided to the lenders via DealerTrack, Route One and/or CUDL
  • Do not permit any consumer to sign a blank document, including credit applications and contracts
  • Conduct periodic audits of deal jackets to ensure compliance
consequences for committing bank fraud
Consequences for Committing Bank Fraud
  • Fines and Restitution
  • Federal Prison
  • Suspicious Activity Report filed by lending institutions
questions

Questions?

www.gvo3.com

312.962.9065

[email protected]

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