Auto Sales Fraud Case

"Don't be Taken for a Ride"

Auto Sales Fraud Case Focuses On 2 Dealers
By MARK DOUGLAS [email protected]
Published: Mar 22, 2002 TAMPA TRIBUNE

Investigators with the Florida Attorney General's Office say a number of Tampa Bay area car purchasers have good reason for buyers' remorse.

Sonic Automotive Inc., one of the nation's largest car retailers, is the target of a state investigation. It is suspected of defrauding at least 165 customers at Clearwater Mitsubishi and Clearwater Toyota.

Sonic also faces two lawsuits in connection with car deals.

A Pinellas County lawsuit alleges as many as 10,000 customers at the two Sonic dealerships may have been illegally overcharged as much as $10 million. Lawyers in that case have asked the suit be certified as a class action.

A racketeering lawsuit filed on behalf of 17 Pinellas car buyers says some of Sonic's top executives orchestrated a scheme to falsify loan applications, overcharge for warranties and forge customers' signatures on sales documents.

The attorney general is looking into car sales at the two dealerships dating from March 1998 to present. The two lawsuits include deals that took place at Clearwater Mitsubishi as early as September 1997, when the business was under different ownership.

"I'd been taken, but I really didn't know where to go with it," said Minnie Sparks, a Mitsubishi customer who is a racketeering lawsuit plaintiff.

WFLA, News Channel 8, launched an investigation of fraud allegations at Clearwater Mitsubishi more than a year ago based on questions surrounding Sparks' purchase and a number of other deals.

The Florida Attorney General's Office is investigating business practices at the Mitsubishi and Toyota dealerships.

Both are owned by Sonic Automotive Inc., one of the nation's largest auto retailers with nearly 200 dealerships, including three along U.S. 19 in Clearwater and one in Tampa.

Freedom Ford in Clearwater and Volvo of Tampa are owned by Sonic but are not part of the attorney general's investigation or customer lawsuits.

Sonic attorney Steven Burton won't talk about specific cases but says the dealerships are conducting their own investigations.

Mitsubishi Employee Terminated
"Clearwater Mitsubishi has confirmed one instance of misconduct in relation to a customer, which was addressed in January of 1999 with the termination of the employee in question," Burton said.

Besides the attorney general's inquiry, Sonic is fending off several civil suits alleging fraud or racketeering filed by customers, such as Sparks.

Sparks said she negotiated and signed a car loan contract at 11 percent interest, with monthly payments of $431. But when her first bill came a month later, the interest rate had jumped to 17 percent with a monthly payment of $520.

"I've had to let other things go at times just to meet that obligation to keep my car," said Sparks.

Sparks said she does not recall signing the loan document for the higher interest rate. Dealership records subpoenaed by the attorney general do not reflect such a document signed by Sparks. Mitsubishi Motors Credit of America says all documents are in order.

Sparks ended up paying the higher interest rate, even though it adds $2,800 to her financing costs.

Investigators with the attorney general's office say they have examined 780 car deals made in January 1999 and June 2000 at Clearwater Mitsubishi and Clearwater Toyota and uncovered overpriced warranties and hidden costs in more than 21 percent of the deals.

Investigators said they chose those sample months to see if there was a pattern of fraud.

For example, Sparks agreed to pay $1,695 for an Optional Mechanical Protection Plan.

But an internal accounting record used by the Sonic dealers, called a "wash out sheet," showed that $1,148 of the money Sparks thought she paid for that warranty went for such things as oil changes, air filters and tire rotations that Sparks thought were free.

Ex-Employee Is Talking
A key source of the allegations is Duane Overholt, Clearwater Mitsubishi's former finance and insurance manager. Overholt says he knows that dealership defrauded hundreds of customers "because I did it also."

Overholt made similar claims in a sworn affidavit filed in federal district court as part of a lawsuit over his firing that included whistleblower allegations.

Overholt claimed his former boss at Clearwater Mitsubishi told him to "crush" customers by stuffing back-end products into deals and then found a reason to get rid of him after learning that Overholt was cooperating with federal agents.

By coincidence, Overholt's firing happened the same month Sparks purchased her car.

Overholt told News Channel 8 that federal prosecutors granted him immunity for his cooperation in an ongoing bank fraud investigation of car sales at Clearwater Mitsubishi

He said that his own conscience led him to contact a News Channel 8 reporter.

"You simply make a decision to stand up and tell the truth - it was wrong and I was wrong," Overholt said. Attorneys representing the plaintiffs are paying Overholt for consulting services.

One of the customers named as a victim in the racketeering lawsuit is Mac Williams Jr., who purchased a used Honda Civic from Clearwater Mitsubishi in November 1997.

"On one of the documents they had even misspelled my name, which sort of upset me," Williams said. "If you're gonna forge my name, at least spell it right."

Williams said the dealership charged him $975 for an extended warranty that should have cost $467 and added in a car maintenance product to cover the difference.

He said he did not ask for the maintenance product.

Another plaintiff in the racketeering suit, Sean Kennedy, said he trusted Clearwater Mitsubishi so much based on a prior purchase that he bought a used Mustang without signing a single document. "They had even written on the contract that my signature was on file so they didn't need it for that contract," he said.

Sales records obtained by News Channel 8 show Kennedy's signature 17 times. "I've come to find out my signature appeared all over the place, and I didn't sign nothing whatsoever," Kennedy said.

In response to all the allegations, Sonic attorney Burton stated: "In reviewing subsequent dealership practices, neither Clearwater Mitsubishi nor Clearwater Toyota has found any wrongdoing, and both are confident that their current finance and insurance sales practices are conducted with the highest degree of integrity."

Kennedy is convinced Clearwater Mitsubishi took advantage of him. "I will never ever go to a car dealer again and buy a car," he said.

WFLA, News Channel 8, reporter Mark Douglas can be reached at (813) 221-1112.

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