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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

gil@gvo3.com