The FBI-IRS fraud investigation was conducted from August 2010 to October 2013. It uncovered a scheme at Serra aimed at increasing sales and commissions for Serra Nissan and certain employees by creating and submitting bogus loan documents to lending institutions and misleading innocent banks and buyers concerning the value of vehicles being purchased.
According to reports filed by AL.com, the eight conspired in varying degrees to defraud Serra Nissan customers, Nissan North America, as well as the financial institutions. Published reports also indicate several of the former employees’ plea agreements contain statements that the scheme to create and submit bogus paperwork was well-known among the Serra Nissan employees. The defendants were indicted for criminal conspiracy, wire fraud, bank fraud and aggravated identify theft. All the defendants have pled guilty to criminal conspiracy, and some of the guilty pleas include other fraud charges.
According to the indictments, the defendants are accused of:
• Inflating income of customers in paperwork submitted to financial institutions - a practice known as “fluffing.”
• Substituting qualified buyers’ information for that of actual buyers who have insufficient credit.
• Instructing employees to create and submit false information to banks.
• “Power booking,” i.e., falsely charging for vehicle equipment and accessories to inflate loan amounts.
• Raising loan payments by charging customers for additional hidden warranties and insurance policies
On the conspiracy count, the maximum prison sentence for each former Serra employees is 5 years and the maximum fine is $250,000 The maximum sentence for aggravated identify theft is two years in prison and the maximum penalty for bank fraud is 30 years in prison and a $1 million fine.
The investigation at the Serra Nissan dealership was referenced in an article in the New York Times last year and highlighted by AL.com. The Times story stated this type of fraudulent practice is common.
U.S. Attorney Joyce White Vance has likened the “predatory practices in providing auto loans to people with credit problems or insufficient income” to fraudulent practices in sub-prime mortgage lending.
In an FBI press release, Vance said, “As managers and salesmen in a car dealership, these defendants falsified customer information used to make loans, defrauding the banks who trusted the dealership to present truthful information during the vehicle financing process, and harming customers by fraudulently inflating the value of the vehicles they purchased."
“This type of fraud is the auto-industry equivalent of the mortgage fraud that contributed to the financial meltdown, and could threaten the security of our financial markets,” Vance said.
The Serra Automotive Group sells new vehicles through Serra Nissan, Serra Visser Nissan, Serra Volkswagen, Serra Mazda, Serra Toyota, Serra Mazda, Serra Kia, Serra Chevrolet, Serra Honda, Serra Hyundai, Serra Kia, and Serra Mitsubishi. The company sells pre-owned vehicles through its Serra Market Direct dealership in Vestavia Hills, Birmingham, Montgomery, Mobile and Tuscaloosa areas. Serra Market Direct is also known as Serra Independence Automotive.
If you purchased a vehicle from Serra Nissan or other dealerships and believe that you may be a victim of fraud, please contact us at 1-877-562-0000 or click the Contact Us button below.