Top 5 fraud stories in 2019

This year, Powersports Finance has taken an increased interest in covering fraud perpetrated by dealers in the powersports space. From the roads of Delaware to the wilds of Alaska, here are the biggest fraud stories of the year.  

Lithia Motors dealer sued for ‘yo-yo’ scam 

A Lithia Motors dealership in Alaska was sued by Army Specialist Austin Deehan for selling him a Harley-Davidson motorcycle and then backtracking on the financing in a process known as “yo-yo financing,” according to court documents. Deehan initially made a down payment of $2,599 and was told financing was approved through Alaska Federal Credit Union for a 60-month, $10,630 loan, but when the financing paperwork failed to come through, he was told by a sales associate at the dealership that he would forfeit his down payment if he didn’t agree to finance the bike at a higher rate. The Federal Trade Commission has set its sights on this practice as a topic of interest, said Maricela Segura, regional director of the FTC’s Los Angeles office.  

RV dealer arrested for multiple instances of fraud 

The owner of a Laurel, Del.-based dealership, Midway RV & Sales, was arrested by the Delaware State Police on charges of racketeering and theft this summer. Investigations into the dealings of William G. Carey originally began in September 2018 and uncovered that Carey would frequently take sellers’ money without paying off existing liens, submit falsified sales invoices to banks and the Department of Motor Vehicles, and offer extended warranties on purchases but fail to file the paperwork and instead keep the money for himself.  

Canadian boat dealers under investigation 

Breakwater Marine, a Surrey, British Columbia-based boat dealer that sells used and new boats from brands such as Hurricane and Lawson, was put under investigation after the Surrey Royal Canadian Mounted Police (RCMP) received numerous complaints about the dealerships business practices. The RCMP executed a search warrant, seized several boats, and arrested one undisclosed individual. Complaints about the dealership range from failure to provide purchased upgrades or fulfill consignment contracts after selling boats to selling units brought in for repair without the signature or knowledge of the owner.  

Powersports dealer charged with $3.2 million in sales tax fraud 

The co-owner of 61 Marine and Sports, Jeffrey McKenzie, was accused of withholding $3.2 million in sales tax — including penalties and accumulated interest — in a scheme that lasted five years and led to criminal investigation by the Minnesota Department of Revenue and the Washington County sheriff’s office. Based in Cedar Grove, Minn., 61 Marine and Sports sells boats, ATVs, snowmobiles, and boat motors. The dealership carries Polaris brand snowmobiles and ATVs. McKenzie has since pled guilty to the charges.  

Dealer group sued for $2.7 million in loan defaults 

Seattle-based dealership group NobleRush was sued by VW Credit for defaulting on $2.7 million in loans for motorcycles and other equipment. NobleRush consists of five dealerships and sells brands such as Ducati, BMW, Indian Motorcycles, and KTM. Back in May 2018, Crow and several of his companies — Sammamish, Wash.-based Corsa Holdings and dealerships Ducati Seattle and Bellemoto — entered into an agreement with VW Credit to finance a “large volume” of inventory under the conditions that Crow would make scheduled payments to the lender. VW Credit loaned 170 Ducati motorcycles, which ranged in price from $7,000 to around $32,000. After Crow missed several payments and VW Credit was “informed by a third party that the companies were considering, or had already filed for, bankruptcy protection,” VW Credit launched an audit on the dealerships. The lender found that the stores were closed for business and would “remain so for the foreseeable future,” the lawsuit claims. 

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