The federal government accuses the former president of the National Independent Automobile Dealers Association of defrauding four banks and credit unions as well as General Motors by using fake vehicle sales and fraudulent loan applications to pocket millions of dollars in a four-year scheme.
Andrew Gabler, 50, of Harborcreek, Pa., who owned the now-closed Lakeside Chevrolet-Buick in Erie County, Pa., and Lakeside Auto Sales, which had operated as two used-only stores, was named with his former finance manager Chad Bednarski, 48, of Fairview, Pa., in a 17-count federal indictment last week. A grand jury charged the pair with conspiracy, bank fraud and wire fraud, the Department of Justice and the U.S. attorney for the Western District of Pennsylvania announced.
The plot, which ran from about January 2015 until January of this year, led to losses of nearly $1.9 million to S&T Bank, an Indiana, Pa., lender that provided vehicle floorplan financing to the dealerships, federal prosecutors said. It also led to undisclosed losses with other financial institutions, according to court records.
Gabler and Bednarski are accused of failing to notify and repay S&T Bank when they sold a vehicle financed by funds from the bank. The practice of selling vehicles but not repaying lenders for floorplan loans is known in the industry as selling out of trust. The two also are accused of submitting fake buyers' orders to S&T Bank during audits on six occasions in 2016 and 2017. The orders contained sales dates that were later than when the actual sales happened in an effort to justify the late repayment or nonrepayment on vehicles, according to court records.
The indictment also lists four instances in which Gabler and Bednarski are accused of reporting fake vehicle sales electronically to GM to get expiring incentive rebates: on Nov. 30, 2017, for a $3,000 rebate on a 2017 Chevrolet Corvette and three submissions on July 17, 2018 — two for $4,000 rebates on 2017 Buick LaCrosses and the other for a $4,000 rebate on an undisclosed 2017 Buick model.
In addition, Gabler is accused of falsely indicating customers made a down payment and of inflating their income to banks, as well as taking money from customers and lenders for service contracts and then not sending the paperwork and payment to the vendor. The customers were unaware they didn't have the coverage they paid for, the indictment alleged.
Gabler is charged with, in 2018, submitting and being paid on three auto loan applications with Capital One, one with Erie, Pa., credit union Widget Financial and another with Tendto Credit Union, also in Erie, for service contracts for customers that the dealership never paid for. In another instance with Widget in 2018, Gabler is accused of submitting and receiving funding on an auto loan for a service contract and guaranteed asset protection insurance that the dealership didn't pay for.
Gabler could not be reached for comment. Messages seeking comment were left with lawyers representing Gabler and Bednarski. The two are slated for arraignment in federal court in Erie on Aug. 26.
If convicted, Gabler faces up to 510 years in prison and a fine of $17 million, while Bednarski faces 330 years in prison and an $11 million fine, though actual sentences would depend on the seriousness of the crimes and prior criminal history, according to the U.S. Attorney's Office.
The accusations follow FBI search warrant executions in late January at Gabler's dealerships and a nearby home believed to be his residence. Gabler on Jan. 31 abruptly resigned his post as president of NIADA, which represents more than 20,000 U.S. used-vehicle dealers.
Gabler and the Lakeside stores also are facing lawsuits by S&T Bank on the accusations of out-of-trust sales, according to the newspaper website GoErie.com. The bank sued Lakeside and Gabler in late 2018 and in 2019 for more than $5.6 million, according to the Erie County Court. Gabler and/or Lakeside also face several lawsuits by First National Bank, filed in July, seeking more than $3.1 million, according to the court.
A receiver for Gabler's dealerships in the S&T cases was appointed in January and liquidated Lakeside Auto's assets, according to GoErie.com. The receiver was able to raise nearly $3 million for the bank, the newspaper said.
A GM spokeswoman confirmed that Lakeside Chevrolet-Buick is now closed.
"The dealership, which was owned and operated independently of GM, was in receivership since January 2019," a GM spokeswoman wrote in an email to Automotive News. "GM formally terminated the dealership agreement, effective August 5, for reasons unrelated to the pending criminal investigation. Due to the pending criminal investigation, we have no further comment."
The FBI and Pennsylvania State Police led the investigation.
Messages seeking comment were left with Capital One, First National Bank and the two credit unions. S&T Bank declined to comment.
Jackie Charniga contributed to this report.