A former Suzuki dealer, eight dealership employees and a former American Suzuki district manager have been indicted by a federal grand jury on three counts of conspiracy to commit wire fraud.
The group defrauded customers and lenders with false advertising that promised lifetime low payments on new vehicles, forged loan documents and falsified monthly sales reports from 2006-08, according to the indictment filed Sept. 12 in a U.S. District Court in South Carolina.
The former dealer, Paul M. Gibson -- also known as Joe Gibson, according to the indictment -- owned two Joe Gibson’s Suzuki dealerships in Spartanburg and Gaffney, S.C., that were high-volume American Suzuki dealerships when the alleged scheme was active.
Ads promised, among other things, that customers could drive a new Suzuki “for life” for payments of $99 per month or less, according to the indictment. Other ads said that customers could have a new car for six, nine or 12 months for minimal payments, trade in the car after a set term, “and obtain a new car at no cost,” the indictment alleged.
Gibson filed for bankruptcy and closed the dealerships in 2008 after being hit with a flurry of lawsuits from customers and lenders about the alleged scheme. No attorney was listed for Gibson in the criminal case, and attempts to reach him through the offices of two firms listed as his representatives in his bankruptcy case were unsuccessful.
Indicted dealership employees included the general manager and the sales manager responsible for both stores, three managers, a biller and the business development center boss for the Spartanburg store as well as a “funder,” who put together financing packages for customers of the dealerships, according to the indictment.
Also charged was Brian J. Sullivan, the former American Suzuki district sales manager responsible for the Joe Gibson stores. A Suzuki spokesman said Sullivan is no longer employed by Suzuki, though she did not know when Sullivan’s employment ended. The spokeswoman declined to comment on the case, citing policy to not comment on pending litigation, and declined to provide contact information for Sullivan.
According to South Carolina media reports, Sullivan is a resident of Lawrenceville, Ga. Calls to a telephone listing under that name in Lawrenceville went unanswered, as did a fax sent to the same line.
The indictment alleges that the dealerships advertised low monthly payments, while staffers told customers that Suzuki would provide the dealership with funds to pay, on behalf of the customers, the difference between the higher monthly payments listed on retail installment sales contracts and the low promotional rates customers agreed to pay.
The indictment also alleged that the contracts listed vehicle values far in excess of the market values of the cars in question.
When customers asked about the inflated values and corresponding high monthly payments, the defendants told the customers to “totally disregard any of the numbers on the contracts because they would never be obligated to pay anything more than the agreed, low monthly promotional amounts,” the indictment said.
The customers were “convinced by the defendants … that the contracts can be ignored because ‘special programs’ would indefinitely allow the customers to come back to turn the vehicles for new ones,” the indictment said.
But customers trying to trade in their cars after six-, nine- or 12-month terms and start the low payment deal again were not allowed to repeat the process when they returned to the dealership for the trade, the indictment said.
According to the indictment, the defendants also used false, fraudulent and incomplete loan applications to finance the deals. False job and income information was submitted on credit applications, and credit was applied for in the names of relatives of the customers without their permission, the indictment said.
The bogus loans were drawn from a number of auto financing sources, including Wells Fargo, M&T Bank, AmeriCredit and Franklin Capital Corp., according to the indictment.
The indictment also said the dealerships falsified monthly sales reports to the factory to qualify for greater cash bonuses set by factory stair-step incentive programs. Stair-step programs pay dealers escalating bonuses as sales targets are achieved.
The indictment named all 10 defendants on three counts. Each count carries a maximum sentence of 20 years in prison and up to a $250,000 fine, the U.S. attorney's office said.
The defendants are scheduled to be arraigned on Sept. 27, according to the clerk’s office at the federal courthouse in Greenville, S.C.