Dec 02 2008
If you get a call offering extended coverage, hang up and then complain
By Herb Weisbaum
msnbc.com contributor | ConsumerMan
One of the most obnoxious and deceptive marketing campaigns I have ever seen is taking place right now. It uses postcards, letters, and phone calls to sell outrageously priced extended warranties. Read the complete Auto warranty company launch sleazy scam story.
Jun 26 2008
These are the stories of dealer fraud victims of former Whitehall Discovery Ford owner/manager Tony Nielsen, sentenced to jail for felony fraud.
Nielsen has confessed to defrauding hundreds of customers of more than $300,000 through an extended warranty scam and failure to pay off loans on traded-in cars. He pleaded no contest last month to three counts of larceny by conversion of more than $1,000 but less than $20,000.
Prosecutors said more charges would not have lengthened his sentence.
Judge ordered Nielsen to jail for 10 months, with eligibility for work release — but only for 48 hours a week, if he gets one. The judge vetoed a defense request that Nielsen, 43, now of Wayland, either get extra time off jail to work at an existing job in that area, 100 miles from here; or continue his current trade of flying around the country conducting “tent sales” for days at a time.
Judge also placed Nielsen on probation for 30 months, ordered him to perform 100 hours of community service in the County, and ordered him to pay full restitution to his victims.
Much of that has already been paid — more than $300,000 worth, authorities say. Judge also ordered Nielsen to pay another $78,052 to Universal Warranty, the insurance company that covered the extended warranties. Additional restitution to other victims will be determined later.
Authorities say Nielsen began keeping customers’ payments for extended warranties without buying the policies, and failing to pay off the outstanding loans on traded-in cars, so he could pay his own creditors’ bills when his business began to falter about three years ago.
The dealership also failed to forward customers’ payments for “gap insurance” to cover the difference between the value of a car totaled in an accident and the amount owed on a new car.
At the time of the frauds, from April 2005 through August 2006, Nielsen owned and operated Discovery Ford at 3001 W. Holton-Whitehall in Whitehall Township. The dealership has had a new owner since November 2006 and a new name, Whitehall Ford. Nielsen has no connection to the current dealership.
The criminal case was the outcome of a complicated, yearlong investigation by the state police that included repeated interviews with more than 400 people. Investigators also painstakingly scrutinized reams of financial documents.
The investigation began in August 2006 after police were contacted by a customer who had taken a vehicle to another Ford dealer for service and learned the car never was registered for an extended warranty. Investigators quickly found Nielsen’s dealership had failed to forward money paid by customers for the warranties. In many cases, the payment was $2,000.
Nielsen’s victims say his criminal actions ruined their credit ratings and, at least for a time, their lives.
The consequences for some included garnisheed paychecks, daily calls from creditors and the inability to borrow money — all because they were innocent victims of a crime.
“He robbed us of our credit-worthiness,” said victim Cindy Guerrero. “He robbed us of our life … Our creditors, they’re hounding us all the time.”
Guerrero and fellow victim Mary Beth McDonald spoke to Judge in court before sentencing. Both bought vehicles from Discovery Ford; both traded in their old vehicles to the dealership; and both — like some two dozen other customers — were burned when Nielsen failed to pay off the liens on the old cars.
Like other victims of the crooked dealer, Guerrero and McDonald found their lives turned upside down soon after buying vehicles from him.
McDonald told a financial and emotional horror story in court.
The young Fremont resident, now 27, was five months pregnant with her fourth child when she bought a minivan from Discovery Ford in April 2006 because she needed more car seats for her growing family.
Within two weeks, she got a letter from the credit union that had the lien on the smaller car she had traded in: She was past due on a payment for a car she no longer owned.
“So I called Discovery Ford,” she said. “They said, ‘The check’s in the mail.’”
It wasn’t.
After considerable back-and-forth, none of which got the loan paid or satisfied the credit union, she and her husband, Nick — both names were on the old loan — were sued. Eventually the credit union won a default judgment because McDonald missed a court date — she says she wasn’t notified of the hearing — and by December 2006 her paychecks were being garnisheed. She hired a lawyer. It didn’t solve the problem but added a new $880 bill.
In the meantime, she got a surprise. On the very day in August 2006 that she entered the hospital for the birth of her son, Travis, she heard the news: Discovery Ford was being criminally investigated. Soon she was telling her story to investigators.
But it didn’t ease the McDonalds’ plight.
Because of the judgment, their credit rating was ruined. Recently they submitted to credit agencies a letter from a County Prosecutor, provided to all of Nielsen’s victims, attesting that they were victims of a crime.
Mary Beth McDonald hopes that succeeds, “so that I’ll be able to apply for loans.”
McDonald, Guerrero and other individual victims also will be awarded restitution after the correct amount is decided. Hicks ordered that determination to be made by Feb. 15.
In court, Senior Assistant Prosecutor argued passionately for the toughest possible sentence — in this case, a year in jail, which would have been above sentencing guidelines.
“These innocent individuals are still fighting with their credit reports, and they didn’t do anything wrong,” Hilson said. “These folks’ trusts were violated. They got screwed.”
Nielsen declined the opportunity to speak. Defense attorney argued for leniency, given the ex-dealer’s ongoing efforts to pay complete restitution once he was caught.
The judge said restitution “doesn’t wash away the crime.” Hicks said when Nielsen’s business faced tough times, the car dealer responded by turning to criminal acts that victimized others.
“You exported the hurt to people who are less able to bear it,” Judge said.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
Jun 25 2008
General Motors (GM) has been asked by the Consumer Commission to pay Rs three lakh in compensation to the widow of an advocate, who was sold a defective car, drawing him into a legal hassle till his death.
Ruling that the manufacturer is liable for sale of defective goods, the Commission presided by Justice J D Kapoor asked the GM’s subsidiary to pay damages to the widow of G L Sanghi, whose car malfunctioned from the day of purchase itself.
Sanghi was not even delivered the original keys of his brand new car which he had purchased on December two, 1996 from GM’s local dealer Regent Automobiles in New Delhi, forcing him to send repeated requests for it. He received the original key only after eight months, the complaint had said.
Sanghi, a south-Delhi resident, also found a number of defects in his car, including low mileage and engine overheating, which made driving uncomfortable, it said.
As many as 16 letters were sent by Sanghi to the automaker and the dealer enumerating the defects in the car, but the defects were not rectified.
Sanghi had filed a consumer case in 1998 but after his death in January 2006, his family members sold the car.
GM denied any manufacturing defect in its car and contended the troubles experienced by Sanghi were owing to his driving style.
The Commission also comprising Members G D Dhanuka and Rumnita Mittal, however, found no substance in automaker’s claim and held it guilty of deficiency in service for manufacturing and selling a defective vehicle.
It asked GM to pay damages for the loss suffered in the value of the car, mental agony due to sale of defective car.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
Jun 24 2008
Two local auto-dealerships have agreed to pay 250-thousand dollars for deceptive advertising and other illegal practices. The settlement is the result of a civil lawsuit filed by the Pennsylvania Attorney General against Value Kia on Essington Avenue in Southwest Philadelphia and the Value Kia on East Lincoln Highway in Coatesville.
Investigators said the dealerships made false promises to entice customers.
“Free Vehicle with any vehicle purchase”
“Up to $12,000 off new cars”
“YOU CHOOSE! $1,500 cash with any vehicle purchase or 60″ color projection television just $1 with any vehicle purchase.”
Other ads offered consumers a five carat diamond tennis bracelet, up to 60% off new cars, and free gas for one-full-year with every new and used vehicle sold.
These ads were designed to lure prospective car buyers to their showrooms with promises of great deals and prizes, however the defendants failed to make good on many of the sales incentives. Consumers arrived at the dealerships expecting to receive the free gifts or deals only to be told that they had to meet a host of conditions to qualify for the offers. Very rarely, if ever, were car buyers able to meet all or even some of the conditions to purchase the cars and trucks as advertised. In fact, some of the rebates that the defendants combined to reach the advertised price were neutrally exclusive, such as ‘buyer loyalty’ (second-time KIA buyer) and ‘first-time buyer.
The lawsuit also said the dealerships sold defective cars and did not pay off balances on trade-ins.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
Jun 23 2008
A family bought an SUV from a new car dealership. They expected to get a good price, because it was last year’s model and it had 225 miles on it. Everything they were told indicated that the car was “brand new” and it had been taken for a few test drives, which accounted for the miles. Unhappy with having to return the vehicle to the dealership for repeated major repairs, the owner finally took it to an independent mechanic to check a routine problem. The mechanic advised that the vehicle had been involved in a major rollover accident prior to it’s purchase. Investigation revealed that not only had the vehicle been involved in an accident, the vehicle had been stolen and was still listed in the crime computer as a stolen vehicle. The Defendant dealership contested the definition of “new vehicle”, stating that the fact that the vehicle had never been titled, constituted the vehicle as “new”.
Result: Trial Verdict: $250,000 Punitive and $27,000 Compensatory
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
Jun 13 2008
Thomas Gerow Gales, the owner of Gerow’s Auto Sales in Deposit, has agreed to pay a judgment of over $101,000, including consumer restitution, civil penalties and court costs. The settlement - pending court approval in Broome County State Supreme Court - also bars Gerow Gales from owning an auto sales business in New York State unless he posts a $200,000 performance bond.
According to the legal papers, Gerow Gales must pay at least 27 consumers approximately $96,000 in refunds. An investigation revealed that the auto dealership would accept a trade-in vehicle as partial payment toward the purchase of a vehicle, but would fail to repay the trade-in’s outstanding loan, as promised. Gerow Auto Sales then resold many of the traded-in vehicles to other consumers. Without clear title, however, the vehicle’s new owner would be unable to register it with the Department of Motor Vehicles and thus, could not legally drive the car on New York roads.
Other consumers complained that they had paid fees to Gerow Auto Sales - sometimes more than $1,600 - for extended warranties that the dealership never remitted to the warranty company. As a result, many consumers were left without warranty coverage for which they had paid.
Three financial institutions, NBT Bank, Partners Trust and Sidney Federal Credit Union, have issued lien releases valued at a total of almost $74,000 on six vehicles.
The settlement agreement requires Gerow Gales to provide a full accounting to an Attorney’s office of all monies received by consumers since January 2003, and to pay $5,000 in civil penalties and costs.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
Jun 10 2008
A Warsaw couple was recently charged with multiple counts of theft, odometer fraud and forgery arising out of the purchase and sale of luxury automobiles over the Internet. Police say that Chad and Karen Gottshalk would buy high mileage high-end cars off of E-Bay, replace or roll back the odometer, and sell the vehicles for $10-15,000 or more. Most of the vehicles were apparently sold to out-of-state Internet purchasers.
The couple attracted law enforcement attention a year ago because of paperwork submitted to the Indiana Bureau of Motor Vehicles. An investigation spanned the past year.
Interestingly, Chad Gottshalk was arrested several years ago for doing the same thing at a Warsaw dealership he owned.
The bottom line is that there is a lot of money in cars. As a result, there will always be a dishonest few who will cheat to make a profit. Be warned.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
May 14 2008
Within the last week, the Associated Press reported that a lady who won a car on the game show “The Price is Right” had filed a lawsuit against the game show on CBS Broadcasting and the auto dealer who sold her the car. Back in 2004, she won a new 2004 Pontiac GTO Coupe while appearing on the show. She had the car for approximately a year when she took it in for service and learned that it had been wrecked and repaired before it was delivered to her as a “new” car.
This lawsuit has garnered publicity simply because of the connection with “The Price is Right.” A car dealer took a car that they knew had been wrecked, repaired it and passed it off to this contest winner, ripping her off for potentially thousands of dollars. Then the contest winner somehow finds out about it and sues. This happens every day all over the United States.
Car consumers don’t realize how much money is involved in buying and selling cars in the U.S., or how competitive the market is, or how greedy automobile dealers can be, or how people who work in the industry, for whatever reason, get to a place where misleading consumers and taking advantage of them isn’t seen as wrong but as a legitimate way to do business.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
May 14 2008
The former owner of Whitehall Township’s Discovery Ford dealership has pleaded no contest as charged to three felony fraud charges.
Tony Allen Nielsen will avoid state prison under a sentencing commitment. That still leaves the option of a county jail term of up to a year when Nielsen is sentenced at 8:30 a.m. Jan. 11. Judge allowed Nielsen to remain free on bond until sentencing.
Nielsen also is expected to be socked with a huge restitution tab. Prosecutors say he has already paid back more than $300,000 that authorities say he stole by defrauding hundreds of customers.
Nielsen, 43, now of Wayland, pleaded to three counts of larceny by conversion of more than $1,000 but less than $20,000. A no-contest plea is not an admission of guilt but results in conviction, and judges treat it as a guilty plea at sentencing. It’s allowed when a defendant faces civil liability, as in Nielsen’s case.
The criminal charges against Nielsen were the outcome of a complicated, yearlong investigation that included repeated interviews with more than 400 victims allegedly defrauded in an extended warranty scam and failure to pay off loans on trade-in cars. Investigators also painstakingly scrutinized reams of financial documents.At the time of the fraud — from April 2005 through August 2006 — Nielsen owned and operated Discovery Ford at 3001 W. Holton-Whitehall.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at
May 14 2008
A Haverhill chiropractor charged in the ongoing auto insurance fraud probe can’t be faulted for what his clients do, his lawyer said.
Dr. Troy Wheelwright, 40, of Amesbury pleaded not guilty to fraud and conspiracy charges at his arraignment in court yesterday. He is the owner of Haverhill Family Chiropractic at 606 Broadway in Haverhill.
The state attorney general’s office alleges Wheelwright participated in the auto fraud scheme by treating people involved in staged car accidents and then submitting false insurance claims for money.
Wheelwright was indicted earlier this month along with a North Andover chiropractor, two local lawyers and three other men. Those men are scheduled to be arraigned tomorrow in Court.
In September 2004, a grand jury initiated by District Attorney culminated in the indictments of 16 people — including three lawyers and four chiropractors — who were charged with being part of a “network of fraud” that helped drive up auto insurance rates across the state. That probe focused on a cottage industry of crime where middlemen known as “runners” get paid to steer accident victims to lawyers and chiropractors for cash.
Wheelwright was indicted on two counts of making a false motor vehicle insurance claim, two counts of larceny over $250, two counts of attempting to commit a crime, and four counts of conspiracy.
Because he surrendered his passport, Wheelwright will remain free until his trial and must appear at police station to be booked on the charges.
The Judge also warned Wheelwright if he failed to comply with any of the conditions of his release or committed another crime while his case was pending, he could be held in jail without bail for up to 60 days.
Police Chief said yesterday that information developed during the multiple auto insurance fraud investigations showed that in 2003 there were 23 chiropractic offices, that together billed insurance companies for $8 million, but by 2007, there were only four chiropractic offices that together billed insurers $700,000.
“One would have to think the efforts of the task force certainly had a significant impact on chiropractic services,” said he, who assembled the special task force after the September 2003 death of Altagracia Arias, who had been soliciting participants for a staged crash just hours before her death.
“That statistic shows that what we were able to expose was just the tip of the iceberg; that’s why the investigations will continue,” he said.
He said speaking generally, that in insurance fraud cases, the people who stand to make the most money are the medical and legal professionals.
“There are many fine chiropractors and lawyers who are a credit to their professions. In the course of a continual four-year investigation into insurance fraud, there are some who are not,” he said.Two lawyers have all served jail sentences after their convictions of auto insurance fraud-related charges.
__________________________________________________
[ To Learn more our services and areas of practice, please visit our website at