Welcome to Spodek Law Group. Our goal is to give you the reality of what happens when federal agents start investigating your car dealership - not the sanitized version attorneys sometimes present, not the Hollywood fiction where everything works out, but the actual truth about how these investigations unfold and why most dealership owners never see them coming until it is too late.
If you're reading this because you suspect - or know - that federal investigators are looking at your dealership, there's something critical you need to understand immediately. The investigation you just learned about probably didn't start recently. Federal agents from the FBI, IRS Criminal Investigation, and DOJ don't knock on doors at the beginning of an investigation. They knock when they're almost finished.
That's the part nobody tells you. By the time you find out, they've typically spent 18 to 24 months building their case. Every floor plan loan you've drawn. Every title you've processed. Every customer complaint filed with the FTC over the past five years. They've had all of it while you went about your normal life running a dealership.
The Investigation Started Before You Knew
Here is where most dealership owners get this completely wrong. They think federal investigation means someone just filed a complaint, or an auditor noticed something funny, and now there's going to be some back-and-forth where you can explain yourself. That's not how federal cases work. Not even close.
Federal prosecutors operate on a simple principle - they don't bring cases they might lose. The conviction rate for financial crimes handled by IRS Criminal Investigation hovers around 90%. That number isn't luck. It's selection bias. They spend years building overwhelming evidence before anyone knows they're looking. When they finally decide to charge you, they've already won. What happens next is largely ceremony.
Think about what that means for your situation. If agents have contacted you, if you've recieved a target letter, if your bank called about unusual document requests - the investigation isn't starting. It's wrapping up. They've likely already:
- Obtained every bank statement for years
- Subpoenaed your floor plan lender records
- Pulled DMV title histories on hundreds of cars you sold
- Interviewed your employees (more on that in a minute)
- Empaneled a grand jury
- Possibly already obtained a sealed indictment
The sealed indictment part is what keeps defense attorneys up at night. You might already be charged with federal crimes while going about your daily routine. The arrest date is just a question of timing and strategy.
The Federal Charges They Build Against Dealerships
Understanding what federal investigators actually charge helps explain why these cases are so devastating. This is not about one bad transaction. Federal prosecutors layer multiple charges from the same underlying conduct, and each charge carries its own potential prison sentence.
Bank fraud forms the foundation of most dealership cases. Every floor plan loan draws upon a banking relationship. When investigators find discrepancies between your reported inventory and actual sales, between payoff schedules and funds received, between stated vehicle conditions and reality - each misrepresentation to a bank becomes a separate bank fraud count. Maximum penalty: 30 years per count.
Wire fraud captures any fraudulent scheme involving electronic communications. Every email to a lender. Every fax to a floor plan company. Every electronic funds transfer. If prosecutors can tie those communications to fraud, each one becomes its own wire fraud count. Maximum penalty: 20 years per count.
Conspiracy charges allow prosecutors to hold you responsible for everything your employees did, even things you did not personally do or directly authorize. If your finance manager submitted false income statements on loan applications, and prosecutors can show you knew or should have known, conspiracy to commit bank fraud attaches to you. The conspiracy charge itself can carry the same penalty as the underlying crime.
Money laundering applies when profits from fraudulent activity move through your business accounts. The dealership generated revenue. Some of that revenue, prosecutors argue, derived from fraud. When you used those funds - to pay yourself, to buy inventory, to expand the business - you potentially laundered the proceeds of criminal activity. Maximum penalty: 20 years per count.
Tax evasion and making false statements compound everything. If you underreported income, if your tax returns do not match your actual revenue, if you told investigators something that turns out to be untrue - additional charges stack on top.
The math becomes incomprehensible quickly. Fifty questionable deals over three years could theoretically become 50 counts of bank fraud, 50 counts of wire fraud, conspiracy, money laundering, tax charges. Even if sentences run concurrently rather than consecutively, you are looking at exposure measured in decades, not months.
Your Employees Are Already Talking
This is the part that devastates dealership owners when they finally understand it. The employees you promoted, trained, trusted with the keys and the codes and the safe combination - they're often the government's star witnesses by the time you learn about the investigation.
Stop. Let that sink in.
When federal agents build a case against a dealership, they don't just pull documents. They interview everyone who ever worked there. Your finance manager. Your title clerk. The sales guys who processed the deals. And here's the critical thing - those employees are facing the same potential charges you are.
The FBI shows up at your finance manager's house. They explain he's looking at 20 years for bank fraud based on loan applications he processed. Then they offer him a choice. Cooperate, tell us everything about the owner, testify at trial - and maybe you get probation instead of prison. What would you do?
In December 2025, federal prosecutors indicted the executives of Tricolor Holdings, a billion-dollar auto lender based in Irving, Texas. The founder and CEO, Daniel Chu, was arrested on charges carrying potential life imprisonment. But here's what should terrify every dealership owner reading this - the CFO and senior finance director had already pleaded guilty and were cooperating with the government. The founder didnt know his own executives had fliped until it was too late.
At Serra Nissan in Alabama, eight employees entered guilty pleas for their roles in a straw buyer scheme. Eight people from the same dealership all decided that cooperation was better then going down with the ship.
Your employees aren't going to prison for you. They have familys. Kids. Mortgages. When facing federal charges, loyalty evaporates. As Todd Spodek often tells clients - by the time you hire us, your former employees have usualy already given statements that contradict everything your going to say.
How Floor Plan Lenders Trigger Federal Investigations
Most dealership owners think of there floor plan lender as a business partner. Someone who helps finance inventory so the dealership can operate. What they dont realize is that same lender is effectivly a surveillance system feeding directly into federal law enforcement.
Banks are required to file Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network whenever they notice certain patterns. A car gets sold but the floor plan loan doesn't get paid off for an unusualy long time. Multiple vehicles show conflicting payoff records. The audit numbers don't match the inventory. Small discrepencies that you might consider normal business friction - the bank considers potential fraud indicators.
Once that SAR gets filed, it lands on a desk at IRS Criminal Investigation. An agent reviews it. If the pattern looks interesting, they pull more records. They coordinate with the FBI. They start building a case file. All of this happens completly outside your awareness.
Mark Janbakhsh ran Auto Masters in Nashville. He was a succesful auto dealer until bank auditors noticed financial discrepencies in his floor plan lending. That audit triggered an investigation that resulted in his conviction for Conspiracy to Commit Bank Fraud, Bank Fraud, Making False Statements to a Bank, Bankruptcy Fraud, and Making False Statements Under Oath. He now faces up to 30 years in federal prison.
The bank didn't warn him first. They reported him.
When the auditors started asking questions, Janbakhsh directed employees to delete data and emails that would have shown the fraud. That cover-up attempt? It became additional felony charges. His instinct to hide evidence made everything dramaticaly worse.
This is how the pipeline works:
- Floor plan lender notices discrepency
- Bank files SAR with FinCEN
- IRS-CI opens investigation
- 18-24 months of document collection
- Employee interviews and cooperation deals
- Grand jury and sealed indictment
- Morning arrest at your home
By step 7, the case is 90% built. You never had a chance to explain anything becuase you didnt know there was anything to explain.
What a 90% Conviction Rate Actually Means
OK so alot of dealership owners hear that 90% federal conviction rate and think - thats for guilty people. I'm innocent. This is a mistake. Once I explain what actually happened, they'll see it wasnt fraud.
That thinking will destroy you.
Federal prosecutors don't bring cases because they think you might be guilty. They bring cases when they're certain they can convict. The 90% rate exists precisely becuase they only prosecute cases they've already essentially won through overwhelming document evidence and cooperating witnesses.
Here's another way to think about it. If you're under federal investigation, you've already been through a filter. Thousands of SARs get filed. Most go nowhere. The cases that proceed to indictment have been selected specifically because prosecutors believe they're winners.
Your "day in court" is statisticaly predetermined.
And the grand jury system reinforces this. Grand juries have an indictment rate of approximatly 99.99%. Thats not a typo. The grand jury exists to find probable cause to charge you, and they find it basicly every single time. The process is entirely one-sided - prosecutors present there evidence, you don't get to respond, and the jury stamps "indicted."
So when you sit down with your attorney and say "but I'm innocent," what your actualy confronting is a system designed to produce convictions, not determine truth. The determination of your guilt effectivly happened 18 months ago when they decided the case was strong enough to pursue. Everything after that is procedural.
The Sentence Nobody Expects
Most dealership owners facing federal investigation have never been in serious legal trouble. Maybe a speeding ticket. Maybe a civil lawsuit that settled. Their mental framework for "legal problems" involves fines, settlements, community service at worst. Federal prison for a decade or more doesn't seem real.
It's real.
Chris Mayes owned car dealerships in Norman, Oklahoma. He ran what looked like a regular used car operation. U.S. District Judge Stephen Friot sentenced him to serve 130 months in federal prison. That's nearly 11 years. Not 11 months. Eleven years.
Mayes was convicted of wire fraud conspiracy, forgery, identity theft, and obstruction of justice. He was ordered to pay $1,160,825.72 in restitution. He also had to forfeit another $1,018,322.17 in profits from the scheme. Prison plus seven figures in payments. This is what federal auto dealer fraud looks like when it resolves.
In Columbia, Missouri, another car dealer recieved a 10-year federal sentence for auto fraud. Ten years. Serving 85% minimum in federal prison means actually serving most of that time. No early release. No parole. Federal sentences are not like state sentences where good behavior gets you out early.
These aren't unusual sentences. They're typical for dealership fraud convictions.
The federal sentencing guidelines for financial crimes start serious and get worse:
- Bank fraud: up to 30 years per count
- Wire fraud: up to 20 years per count
- Conspiracy: can match the underlying offense
- Money laundering: up to 20 years per count
- Obstruction of justice: additional years stacked on
Each fraudulent transaction can be charged as a seperate count. Sold 50 cars with questionable floor plan practices over 3 years? Thats potentialy 50 counts. The math gets horrifying fast.
And here's what really keeps people awake at 3am - the sentences for financial crimes at dealerships often exceed what violent criminals recieve. The system treats economic fraud extremly seriously. More seriously then many defendants ever imagined possible.
They Take Everything Before You're Convicted
The federal forfeiture system operates on a logic that seems backwards to most people. The government can seize your assets - your business, your home, your bank accounts, your cars - before you're ever convicted of anything. They seize first, then you have to prove the assets weren't connected to the alleged crime to get them back.
For dealership owners facing federal investigation, this means:
- Business accounts frozen
- Floor plan credit terminated
- Dealership effectivley shut down overnight
- Personal accounts seized
- Home liened or seized
- Vehicles taken
Spodek Law Group has seen cases where clients had there entire livlihood dismantled before trial even started. The theory is that the assets themselves are "guilty" (a legal concept called civil asset forfeiture that would take too long to explain fully here). You don't get convicted and then lose your stuff. You lose your stuff and then try to fight to get it back while also fighting criminal charges.
The Tricolor case illustrates this brutaly. The company had 65 locations. 1,500 employees. Generated roughly a billion dollars in revenue. After the indictments came down, none of that mattered. The business collapsed. Thousands of jobs gone. The executives facing prison while everything they built got dismantled.
Asset forfeiture in federal fraud cases isn't theoretical. It's standard practice. Prosecutors view it as both punishment and recovery of allegedly stolen funds. For you, it means fighting a criminal case while simultaneusly having no resources to fund your defense.
What To Do In The First 48 Hours After You Learn
If you're reading this becuase you've just discovered you're under investigation - agents showed up, your lawyer called with bad news, you found out employees were interviewed - the next 48 hours matter enormously.
First, stop talking. Immediately. Do not call employees to ask what they said. Do not contact the agents to "clear things up." Do not give statements to anyone. Everything you say from this moment forward can and will be used against you. Your helpful explanations become prosecution exhibits.
Second, contact a federal criminal defense attorney. Not a general practice lawyer who handles some criminal cases. Not your business attorney who did your corporate structure. A lawyer who specificly handles federal criminal defense, preferably with experience in financial crime cases. Spodek Law Group handles these cases across the country - call us at 212-300-5196 - but whoever you choose, make sure federal criminal defense is what they actually do.
Third, preserve documents but don't alter anything. The cover-up is always worse then the crime in federal cases. Mark Janbakhsh got additional charges specificly becuase he directed employees to delete evidence. If prosecutors can prove you destroyed or altered documents after learning about the investigation, obstruction charges get added to whatever else you're facing.
Fourth, understand that cooperation might be your best option. This is hard to hear. You want to fight. You believe you're innocent. But with a 90% conviction rate and employees already talking, sometimes the smart play is getting to the cooperation table early. Early cooperators get better deals then late ones. That's just how the system works.
As Todd Spodek explains to clients facing federal charges - we're not here to tell you what you want to hear. We're here to tell you what you need to know to make the best decisions possible in a terrible situation. The investigation started before you knew. Your employees are probly already talking. Your bank triggered it. The conviction rate is 90%. The sentences are measured in decades. The assets are already at risk.
The question now is what you do with the time you have left before this resolves. That window is closing.
Fifth, accept that your life has fundamentally changed. This is not a problem that goes away. It does not resolve quietly. Federal investigations of car dealerships end in one of three ways: you cooperate and minimize damage, you fight and likely lose, or prosecutors decide for reasons of their own not to pursue charges. That third option happens less often than people hope. Planning for the first two scenarios is the only rational approach.
The people who navigate this best are the ones who accept reality quickly. Denial costs time. Time is leverage. The earlier you engage with competent counsel, the more options exist. Wait too long and those options narrow to unpleasant certainties.
The clock started when you learned about this. Call Spodek Law Group at 212-300-5196. The investigation is almost over. Your response is just beginning.
