Auto Loan Scams Stopped

A diagram of the suspects in one of two auto loan fraud schemes busted last week. Eighteen individuals and three corporations have been indicted for their alleged roles in two massive automobile loan fraud schemes that resulted in nearly $2 million dollars in losses to 18 financial institutions on 47 loans.

Twelve of the suspects are charged with conspiring with one another to purchase on credit various high-end vehicles, such as Maseratis, BMWs, Porsches, Lexus, Cadillac Escalades and Mercedes-Benzes between July 1, 2008, and Mar. 30, 2010.

In carrying out their scheme, the defendants are alleged to have used “straw borrowers” with good credit scores to take out $1.9 million in loans in exchange for kickbacks and other incentives. Once the vehicles were turned over to various members of the criminal enterprise, the vehicles were then allegedly either sold or rented out on the black market to individuals engaged in criminal activity or the vehicles’ titles were “washed” out of state and sold to dealers or at auction.

The Ndaula fraud ring is shown in this diagram. In a variation on the first scheme, nine other suspects are charged with conspiring with one another to commit loan fraud by recruiting straw borrowers to take out bank loans—allegedly to purchase used vehicles or for some other purpose, such as performing home improvements. It is alleged that, in actuality, no vehicles were purchased and no home repairs were made. As a result, the defendants are accused of obtaining more than $180,000 in fraudulent loans funds.

In both schemes, it is alleged that the perpetrators would make a few monthly payments on the loans before defaulting. In automobile funding, the car dealer and the funding institution often have a contractual arrangement which provides that should the loan default within the initial three payments, the dealer was responsible for repaying the loan to the bank.

Since the continuity of the suspects’ alleged scheme depended upon the willingness of the car dealerships to do business with them, the defendants typically ensured that several payments were made on the vehicle loans before defaulting, thus leaving the straw borrowers and lending institutions liable for the losses.

According to Queens District Attorney Richard A. Brown and Police Commissioner Raymond Kelly, 16 of the indicted individuals were arraigned last week in Queens County

-SEE FRAUD ON PG. 70- Supreme Court on two multi-count indictments, charging 165 pattern acts. The two remaining individual defendants are presently being sought, and the corporate defendants will be arraigned on Dec. 14, the next court date for all suspects.

“The charges are the result of a three-year undercover investigation by the New York City Police Department’s Auto Crime Division and my Auto Crime and Insurance Fraud Unit,” District Attorney Brown said in announcing the charges last Thursday, Dec. 1. “This was a highly complex and sophisticated financial fraud scheme in which individuals with good credit agreed to ‘lend’ their identity and credit scores to the defendants in return for monetary kickbacks, as well as a general assurance that engaging in the activity would boost their credit score. Unfortunately, these individuals wound up with ruined credit, multiple banks suing them for money, and suspended driver’s licenses for unpaid parking tickets on vehicles they allegedly ‘own.’”

“Straw purchasers were assured that the suspects would pay off the car loans in full and they would be left with even better credit histories in addition to a $2,000 fee. If you think that was too good to be true, you’re right,” added Commissioner Kelly. “In fact, the suspects would stop making payments after three installments and then rent or sell these high-end vehicles, often to other criminals, in various neighborhoods in Queens and Brooklyn, leaving the straw purchasers holding the bag.”

Arrests and arraignments

The defendants are variously charged with enterprise corruption under New York State’s Organized Crime Control Act, second- and third-degree grand larceny, secondand third-degree criminal possession of stolen property, first-degree falsifying business records, second-degree criminal possession of a forged instrument and fifth-degree conspiracy.

If convicted, the individual defendants face up to 25 years in prison and the corporate defendants each face fines of up to $10,000 or twice the amount of the illicit gain, whichever is greater.

The suspects are identified (in alphabetical order) as follows:

 Quate Alexander, 35, of Park Place in Crown Heights, who is presently being sought;

 Duane Box, 26, of 222nd Street in Queens Village, who was released on his own recognizance;

 Danien Brown, 35, of 149th Avenue in Rosedale, who is presently being sought;

 Ernest Butler, 40, of 133rd Avenue in South Ozone Park, who was released on his own recognizance;

 Andre Dickenson, 31, of East 103rd Street in Canarsie, who was ordered held on $100,000 bond/cash pending a bail sufficiency hearing;

 Alain Galette, 26, of East Eighth Street in Kensington, who was ordered held on $10,000 bond/$5,000 cash bail;

 Natasha Green, 28, of Miller Avenue in Cypress Hills, who was released on her own recognizance;

 Maurice Hayes, 35, of Royce Street in Bergen Beach, who was released on his own recognizance;

 Marvin Jackson, 33, of 110th Street in Ozone Park, who was ordered held on $25,000 bond/$15,000 cash pending a bail sufficiency hearing;

 Christopher Lewis, 37, of 144th Street in South Jamaica, who was ordered held on $10,000 bond/$5,000 cash bail;

 Yusebek Makhamadaliev, 45, of Bay 37th Street in Bath Beach, who was released on his own recognizance;

 Alexander Ndaula, 30, of Stillwell Avenue in Gravesend, who was ordered held on $50,000 bond/cash pending a bail sufficiency hearing;

 Ronda Richardson, 49, of Stillwell Avenue in Gravesend, who was released on her own recognizance;

 Luis Santiago, 33, of Ocean Parkway in Midwood, who was ordered held on $5,000 cash/bond pending a bail sufficiency hearing;

 Alain Saint Phard, 26, of Flatlands Sixth Street in Flatlands, who was released on his own recognizance;

 Adrian Sylvester, 28, of Royce Street in Bergen Beach, who was ordered held on $10,000 bond/$5,000 cash pending a bail sufficiency hearing;

 Carl Tappin, 39, whose last known address is 130th Street in South Ozone Park, was ordered held on $15,000 bond/cash pending a bail sufficiency hearing; and

 Christopher Vincent, 26, of 136th Avenue in Rosedale, who was ordered held on $15,000 bond/cash.

The corporate defendants were identified as Quiet Money Realty LLC, d.b.a. EZ Approval Auto Sales and Leasing LLC, located at 2546 Stillwell Ave. in Gravesend; Rear Guard Enterprises, also at 2546 Stillwell Ave. in Gravesend; and Silver Arrow Auto Sales, located at 430 Industrial Ave. in Teterboro, N.J.

The ‘Dickenson scheme’

According to the charges in one of the indictments, it is alleged that Dickenson was the leader of a fraud ring that involved 11 other defendants. Reportedly, he obtained vehicles purchased on credit through straw buyers—who would qualify for loans on high-end vehicles and were recruited by Box, Brown and Galette either directly or were introduced to them by friends and relatives who were themselves straw purchasers.

The recruiters allegedly would tell the straw buyers that if they were successful in financing a vehicle, they would receive a cash kickback and that the loan payments would be made in full (if not, then the recruiter would use a spare key or Lojack to “repossess” the vehicle). Additionally, the straw buyers were told that the scheme would improve their credit score for the future.

It is alleged that the straw buyers typically had their initial meetings with the recruiters at ABC Auto Sales (a.k.a. United Brothers Auto Sales), a used-car dealership located at 98-04 Springfield Blvd. in Queens Village. The buyers are alleged to have either signed for their cars at ABC or were taken to other dealerships in New York City, Long Island or New Jersey.

In most cases, it is alleged, the vehicle was physically sold by one dealership but financed by another, which is known as “fraud financing” in the used-vehicle industry.

According to the charges, because the buyers needed to buy the vehicles on credit, which could not be obtained from ABC, an “established” dealership, such as Hillside Honda, was needed to formally apply for the financing on behalf of the buyer. In order to get the financing, it is alleged that the established dealership could not reveal to the financing institution that another, less established dealership, such as ABC, was the one actually selling the vehicle.

Therefore, on the day of purchase, ABC would allegedly wholesale the vehicle over to the established dealership, which would then create the paperwork for the bank to make it appear as if the vehicle was sold off of their own lot.

Crucial to financing the vehicle purchase was a credit application signed by the straw buyer. n almost every case, it is alleged that the applications falsely inflated the vehicle buyer’s salary, job title, and length of employment.

It is alleged that defendants Lewis, Vincent and Butler falsified multiple loan applications in order to obtain vehicles for the criminal enterprise. If the lender required proof of income, on many occasions, false employee pay stubs were allegedly created and submitted.

It is further alleged that if a straw buyer needed to go to the dealership, they were accompanied by their recruiter who conducted all discussions with the sales and finance people. Reportedly, most of the straw buyers never saw the vehicles that they had purchased.

Some of the recruiters also were allegedly capable of arranging car sales themselves. For instance, is charged that Box, who was known to work at ABC Auto Sales, arranged deals with defendants Sylvester, of Hillside Honda, and Jackson, a Queens “bird dog” car dealer. A “bird dog” is considered a person who is not officially employed by a car dealership but who makes his living by bringing car deals to dealerships and would receive a fee for each completed transaction.

In this instance, Jackson allegedly would take straw deals arranged by recruiters and attempt to obtain the vehicles through various area dealerships.

Once the vehicles were obtained, Jackson would allegedly broker the vehicles to the defendant Dickenson or to associates, such as Hayes and Tappin.

It is further alleged that the members of the enterprise would use the vehicles for their own personal use or would sell or rent the vehicles to other individuals who were themselves engaged in criminal activity and wanted a vehicle that could not be traced back to them. In other instances, Dickenson allegedly had other people, such as defendant Green, “wash” or retitle the vehicles in their names and re-sell the vehicles in Florida through a dealer or at auction.

It is alleged, for instance, that Green would retitle the vehicles in her own name prior to the sales, and then launder the proceeds through her bank accounts. Green allegedly would then make withdrawals of cash and surreptitiously transfer the cash to Dickenson.

The ‘Ndaula scheme’

During the investigation of the alleged Dickenson enterprise, authorities allegedly discovered a second criminal enterprise run by Ndaula, a South African national, who was conspiring with Dickenson and other members of his enterprise to “bust out” automobile loans.

It is alleged that Ndaula and associates— Santiago and Alexander—recruited straw borrowers such as defendants Saint Phard and Makhmadaliev to take out bank loans allegedly to purchase used cars. In reality, no vehicles were being purchased.

In carrying out the scheme, false credit statements were allegedly supplied by Ndaula and Santiago to the bank to induce the loans, and that Ndaula would usually pose as the borrower on the telephone to the lending institutions. When it was time to pick up the loan check, the straw borrower allegedly would be sent to the bank branch to obtain the funds. The funds were then allegedly laundered through the borrower’s bank account.

Withdrawals of large sums of cash were then allegedly made, which were then handed over to Ndaula. It is alleged that the borrower typically received a portion of the loan proceeds for his or her participation in the scheme.

Silver Arrow Auto Sales, Inc. reportedly falsified the paperwork that was given to the banks in order to make it appear as if an individual was buying a car from the dealership. The loan checks allegedly would then be issued to Silver Arrow, which would launder the loan proceeds through its business account and then wire structured amounts to the business accounts of Ndaula’s wife, Richardson, an employee of the U.S. Department of the Treasury’s Office of Inspector General.

In multiple instances, it is alleged that Richardson took out bank loans in her name using fraudulent documents. In other instances, Richardson allegedly laundered illegally obtained loan proceeds through the corporate bank accounts of Quiet Money Realty Services LLC (a.k.a. EZ Approval Auto Sales and Leasing LLC) and Rear Guard Enterprises, businesses she incorporated to aid her husband, Ndaula, in his criminal enterprise.

The investigation was conducted by Detectives Richard Straus and Robert Loughman (now retired), of the NYPD Auto Crime Division, under the supervision of Sgt. Joseph Ricotta, Lt. Emanuel Dermitzakis, Capt. Joseph Veneziano and Deputy Inspector Joseph Kenny, the commanding officer of the Auto Crime Division, and the overall supervision of Deputy Chief Kevin Ward and, Chief Anthony Izzo, of the NYPD’s Organized Crime Control Bureau.

Assistance in the investigation was also provided by Special Agent Thomas Kim, of the U.S. Department of the Treasury, Office of the Inspector General; Ed Carlson of the National Insurance Crime Bureau; Senior Investigator Gerard Harrison, of the New York State Department of Motor Vehicles; and by the Florida Department of Highway Safety and Motor Vehicles.

Assistant District Attorney Mary M. Lowenburg, chief of the District Attorney’s Auto Crime and Insurance Fraud Unit, with the assistance of Assistant District Attorney Frances Impellizzeri, are prosecuting the cases, under the supervision of Assistant District Attorneys Gerard A. Brave, chief of the Organized Crime and Rackets Bureau, and Mark L. Katz, deputy bureau chief, and the overall supervision of Executive Assistant District Attorney for Investigations Peter A. Crusco and Deputy Executive Assistant District Attorney for Investigation Linda M. Cantoni.

It was noted that an indictment is merely an accusation and that defendants are presumed innocent until proven guilty.