Working to protect people around the country from fraud involving used cars, Arizona state investigators have broken up a major criminal operation based in the state’s East Valley that illegally produced tens of thousands of titles for vehicles being sold in 42 states.

The Arizona Department of Transportation and Department of Revenue reported that, with seven arrests made on Feb. 19,
“this is by far the largest operation broken up since Gov. Doug Ducey signed legislation in 2018 creating the Arizona Curbstone Enforcement Joint Task Force.”

The task force combines the resources of ADOT’s Office of Inspector General, Arizona Department of Revenue and Arizona Independent Automobile Dealers Association.

The case involves a scheme in which individuals allegedly subscribed to one of several websites identified by investigators to obtain wholesale and retail dealer license credentials from the suspects, rather than the state, for a monthly fee, usually in the hundreds of dollars. These credentials allowed about 1,500 individuals to attend and bid on vehicles at wholesale auctions in their states, according to investigators. Scott Bandy, James Johnson, Oscar Valenzuela, James Edward Fialko and Lon Isaiah Chaneyfield were named in the criminal complaint.

The state reported the operation also altered vehicle titles from these subscribers for about $100 per title to make it appear as though the individuals bought the vehicles from one of the suspects’ 31 operations with dealer licenses. More than 31,000 titles were processed this way over the past couple of years, and many of the vehicles involved were never in Arizona.

The operation has generated around $7 million fraudulently over the past couple of years. ADOT detectives and Department of Revenue investigators, joined by special agents with the Arizona Attorney General’s Office, served search warrants at six locations, including homes in Chandler and Gilbert and at a storefront in Mesa, arresting the suspects and searching for further evidence. Each suspect is facing multiple charges, including the felonies of fraudulent schemes and artifices, money laundering and tax evasion.