Federal Investigation of My Car Dealership
The federal investigation into your dealership started before you knew about it. Months ago. Maybe years. The floor plan auditor who kept asking questions? The irregularity the lender flagged last quarter? That wasnt routine compliance. That was evidence collection.
By the time most dealers realize there under federal investigation, the government has already built the case. There just gathering a few more pieces. Welcome to Spodek Law Group. We handle federal auto dealer defense - and we understand exactly how these cases unfold.
Here's something practitioners know that dealers dont: You're not fighting one investigation. Your fighting five. FBI handles the wire fraud allegations. IRS Criminal Investigation looks at unreported income. DOT Office of Inspector General tracks odometer and title issues. Secret Service gets involved in financial crimes. And your state DMV is feeding them evidence about every title transaction you've processed for the past decade.
The Paper Trail You Created Is Now the Prosecution's Roadmap
You kept good records. Every invoice. Every odometer disclosure. Every floor plan draw request. Every payoff confirmation. You did this becuase thats what legitimate dealers do. You were proving you ran a clean operation.
And now every single document becomes a prosecution exhibit.
The federal government dosent build cases on testimony alone. They build cases on paper. Your paper. The meticulous documentation you created thinking it showed compliance - prosecutors will use that same documentation to show exactly when you knew what, who approved what, and how the scheme worked.
This is the trap dealers fall into. Mitchell Simpson ran a used car operation in Georgia. Floor plan fraud - double flooring and triple flooring vehicles, using the same car as collateral for multiple loans. The evidence? His own records. The loan applications he signed. The title documents he submitted. The explanations he gave to auditors. All of it became the government's case. He got three years and five months in federal prison.
Mark Janbakhsh owned Auto Masters in Nashville. When bank auditors started asking uncomfortable questions, he told employees to delete data, emails, company records. He thought he was protecting himself. Instead he created an obstruction case on top of the fraud case. The deletion itself became evidence of consciousness of guilt. He faces up to 30 years.
The lesson practitioners understand: Your defense started the moment the first document was created. Everything you've done since then - every explanation, every audit response, every conversation with lenders - its already in the government's file. We get it. Its terrifying. But understanding this is the first step toward mounting an actual defense.
Look, the floor plan lender who seemed like your business partner? The moment they suspect fraud, there incentives flip completly. They become a victim. And victims cooperate with federal prosecutors. They turn over everything - every communication, every audit finding, every internal memo about your account. The relationship you thought you had? It dosent exist anymore.
The Numbers That Should Keep You Up at Night
Federal auto dealer fraud sentencing isnt proportional in the way most people expect. The statutes stack. Each count carries its own potential sentence. And prosecutors charge aggressively.
- Wire fraud: 20 years per count. If the fraud affected a financial institution, 30 years per count.
- Bank fraud: 30 years per count.
- Odometer tampering: 3 years per vehicle under 49 USC 32703.
- Mail fraud: 20 years per count.
Now do the math. A dealer who sold 50 cars with rolled back odometers, financing each through wire transfers to banks - thats potentially 50 wire fraud counts, 50 odometer counts, maybe mail fraud counts too. Theoretical exposure reaching into centuries.
Nobody gets sentenced to centuries. But heres what happens in practice. Prosecutors use that exposure as leverage. You plead to something. You cooperate. Or you go to trial facing numbers that make rational defense impossible.
Russell Ott ran motorcycle and RV dealerships in Illinois. His scheme involved $75.9 million in fraudulent financing. Fabricated tax documents. Fake VINs. Double-floored vehicles. Eighteen lenders lost $58.8 million. He got 13 and a half years.
The recent Tricolor case is even bigger. Daniel Chu, the founder, faces charges for allegedly double-pledging $800 million in loan collateral. Major banks - JPMorgan, Barclays, Fifth Third - lost hundreds of millions. Two executives already pled guilty and are cooperating. This is what happens when floor plan fraud reaches institutional scale.
And odometer fraud is surging. CARFAX reports 2.45 million cars on the road right now have rolled-back odometers. Thats 14 percent more then last year. NHTSA estimates odometer fraud costs consumers $1 billion annually. The federal government has unlimited targets. They pick dealers who leave evidence trails.
Maybe you left an evidence trail without even realizing it. Maybe an employee made decisions you didnt authorize. Maybe the scheme happened years ago and you thought it was behind you. None of that matters once the investigation starts. What matters is having counsel who understands how these cases actually work - not how dealers think they work.
What Actually Triggers Federal Attention
Federal investigators dont just stumble onto auto dealer fraud. Something triggers there attention. Understanding what that something was in your case matters enormously for defense strategy.
Floor plan audits are the most common trigger. When a lender audits and finds vehicles missing, titles not matching VINs on record, or the same car pledged to multiple lenders - they dont just write it off. They file suspicious activity reports with FinCEN. Those reports go into federal databases. And investigators start pulling strings.
The National Motor Vehicle Title Information System tracks every title transaction in the country. When odometers decrease between title transfers. When salvage brands disappear as vehicles cross state lines. When ownership patterns suggest washing operations. NMVTIS flags it. And those flags become federal evidence.
Customer complaints can trigger investigations too. One buyer who discovers there odometer was rolled back, files a complaint with NHTSA, hires a lawyer - that complaint joins others. Patterns emerge. And pattern evidence is what prosecutors love.
Sometimes the trigger is a disgruntled employee. Someone who knows were the bodies are buried. They go to the FBI or the IRS. They provide the roadmap. And investigators follow it.
Sometimes its a co-defendant. Another dealer in your network. A wholesaler you bought from. Someone gets caught, cooperates, and names everyone they worked with. Including you.
The Tricolor case shows how this works at scale. Two executives - Jerome Kollar and Ameryn Seibold - already pled guilty and are cooperating with investigators. There testimony will be used against the founder and COO. The cooperating defendants become the government's witnesses. And there motivation to tell prosecutors what they want to hear is enormous.
If your under investigation - or if you think you might be - understanding the trigger matters. It tells us were the evidence is. It tells us who the cooperating witnesses might be. It tells us what the government thinks happened. We've seen these cases unfold dozens of times. The earlier you understand the trigger, the more options exist for response.
Heres what makes auto dealer cases particularly dangerous. The evidence exists in multiple places you dont control. Lender records. DMV databases. NMVTIS. FinCEN. Title companies. Auction houses. You cant make it disappear. Trying to makes everything worse. The only path forward is understanding what they have and building a defense around that reality.
Right now, your probably wondering what you should do. Stop talking. Thats the first rule. Stop talking to auditors, lenders, employees, anyone - until you have counsel. Everything you say becomes evidence. Everything you write becomes evidence. Every explanation you offer gets compared to documents you cant see yet.
The federal criminal defense attorneys at Spodek Law Group have handled auto dealer fraud cases in federal courts across the country. Floor plan fraud. Odometer tampering. Title washing. Bank fraud. Wire fraud. The full spectrum. We understand how these investigations develop, were the pressure points are, and what realistic defense options look like.
If you've recieved a target letter, been contacted by federal agents, had a floor plan lender escalate issues to investigators, or simply have reason to beleive something is coming - call us at 212-300-5196. The consultation is confidential and free.
Todd Spodek has built a practice around federal criminal defense. We understand dealership operations. We understand floor plan financing. We understand how what looks like business irregularities becomes federal charges. And we understand how to defend against those charges - or negotiate resolutions that minimize the damage.
The investigation is already underway. The question is what you do next.
