Illinois Attorney General Kwame Raoul filed a lawsuit against Skokie Motor Sales Inc. operating as Sherman Dodge, for allegedly engaging in unfair and deceptive advertising and business practices. Sherman Dodge’s advertisements allegedly violated motor vehicle advertising regulations relating to sales events, trade-in values, discount substantiation, and advertised prices.

“Sherman Dodge knowingly and repeatedly took advantage of people through deceptive advertising – even after entering into an agreement with the Attorney General’s office to stop using unlawful practices,” Raoul said. “I am committed to seeking enforcement against business and others who violate the law to take advantage of Illinois consumers.”

In October 2014, the Attorney General’s office opened an investigation into Sherman Dodge after receiving complaints from consumers who were unable to purchase vehicles advertised by the dealer. Following the investigation, Sherman Dodge entered into an Assurance of Voluntary Compliance (AVC) with the Attorney General’s office in February 2016. Under the AVC, Sherman Dodge agreed to not sell a vehicle for more than the advertised price, advertise a vehicle that it has already sold or leased, guarantee a specific value for a trade-in vehicle, advertise a sale without reducing the selling price of vehicles listed in an advertisement by at least 5 percent, or include limited rebates in an advertised price.

Raoul’s lawsuit alleges that Sherman Dodge has violated the AVC by continuing to engage in the illegal and deceptive activities prohibited by the AVC.

In the lawsuit, Raoul is seeking to prohibit Sherman Dodge from engaging in acts or practices that violate the law, rescind all contracts entered into between Sherman Dodge and consumers by use of unlawful methods and require Sherman Dodge to pay full restitution to consumers. Raoul is also seeking a civil penalty of $50,000 per deceptive act or practice, with an additional $50,000 for each act or practice committed with the intent to defraud and an additional $10,000 for each act committed against a person 65 years of age or older.

The Federal Trade Commission has issued an administrative complaint against a marketer, Traffic Jam Events, LLC, and its owner, David J. Jeansonne II, charging multiple counts of deceptive conduct.

The scam involved drawing consumers to a car dealership for fake prizes or stimulus benefits. The administrative complaint alleges that the respondents have deceived consumers with mailers supposedly directing them to obtain federal COVID-19 stimulus benefits. The complaint also alleges that, in addition to the misleading COVID-19 mailers, respondents sent flyers to consumers containing matching numbers indicating that consumers had won a valuable prize. Consumers were then told they had to go to a car dealership to “claim” the prize, but the small print on the back of the mailer revealed that there was only a 1-in-52,000 chance the consumer had actually won the prize specified.

In addition to FTC Act violations alleged related to the COVID-19 and prize mailers, the FTC’s complaint claims the respondents violated the Truth In Lending Act and Regulation Z for failing to clearly disclose required credit information in their advertising.

Wolters Kluwer’s Lien Solutions business is hosting an informational webinar, Auto Repossessions Avalanche is Coming: Are You Ready? to share insights with lenders on managing their motor vehicle liens in preparation for higher loan defaults and car repossessions. This event will focus on how lenders can effectively mitigate these risks in the current economic environment and takes place from 1-1:45 p.m. CDT on Aug. 19.

As lenders assess the impact of COVID-19 to their lending portfolios, they expect a higher-than-expected volume of loan defaults and car repossessions. This trend is expected to continue for many months, presenting substantial risks to lenders who have not prepared across all jurisdictions in which they have loan interests.

Webinar participants include McGlinchey Stafford Attorney Mark S. Edelman, who provides guidance to banks, finance companies, and online lenders on regulatory compliance matters in the arena of consumer financial services; Rick Vanko, senior product manager for iLien Motor Vehicle in Wolters Kluwer’s Lien Solutions business who supports a portfolio of automated lien and risk management products; and Marina Hardy, marketing associate director for Wolters Kluwer Lien Solutions’ iLien Motor Vehicle business, who will also serve as a moderator for this event.

The 45-minute event will look at economic drivers of repossessions, jurisdictional guidelines on repossession restrictions, challenges of processing titles with departments of motor vehicles, and general considerations for lenders faced with properly interpreting federal, state, and local laws and regulations for auto repossessions and repossession titling in an evolving environment.

A Florida man was recently arrested and charged with fraudulently obtaining $3.9 million in Paycheck Protection Program (PPP) loans and using those funds, in part, to purchase a sports car for himself. Authorities seized a $318,000 sports car and $3.4 million from bank accounts at the time of arrest.

David T. Hines, 29, of Miami, Fla., was charged by criminal complaint, unsealed recently upon his initial appearance before U.S. Chief Magistrate Judge John O’Sullivan in the Southern District of Florida, with one count of bank fraud, one count of making false statements to a financial institution and one count of engaging in transactions in unlawful proceeds.

The complaint alleges that Hines sought approximately $13.5 million in PPP loans through applications to an insured financial institution on behalf of different companies. The complaint alleges that Hines caused to be submitted fraudulent loan applications that made numerous false and misleading statements about the companies’ respective payroll expenses. The financial institution approved and funded approximately $3.9 million in loans.

Within days of receiving the PPP funds, Hines purchased a 2020 Lamborghini Huracan sports car for approximately $318,000, which he registered jointly in his name and the name of one of his companies. In the days and weeks following the disbursement of PPP funds, the complaint alleges that Hines did not make payroll payments that he claimed on his loan applications. He did, however, make purchases at luxury retailers and resorts in Miami Beach.

The Federal Trade Commission filed a complaint against Yellowstone Capital, Fundry, founder and CEO Yitzhak Stern, and president Jeffrey Reece, alleging they unlawfully withdrew millions of dollars in excess payments from their customers’ accounts, and to the extent they provided refunds, sometimes took weeks or even months to provide them.

The provider of merchant cash advances used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed, according to a Federal Trade Commission lawsuit.

Fundry President Jeff Reece, Kiva Manager of Development Jessica Feingold, and Fundry CEO Isaac
Fundry President Jeff Reece, on the left and Fundry CEO Yitzhak Stern on the right. 

“Small businesses are struggling right now and need responsible sources of financing,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Making sure that lenders and funders don’t deceive business borrowers or engage in servicing abuses is a big priority for the FTC.”

Merchant cash advances are a form of financing in which the defendants provide money to a small business up front in exchange for a larger amount repaid through daily automatic payments.

According to the FTC’s complaint, Yellowstone has regularly withdrawn hundreds or thousands of dollars from businesses’ accounts for days after customers had repaid the full amounts owed in their contracts. In some cases, Yellowstone would only refund this money when businesses complained, and even then the refunds could take weeks or months, leaving small businesses without needed cash on hand. The complaint also cites examples of businesses being left with bank overdraft fees as a result of the unauthorized withdrawals.

In addition, the complaint alleges that for years Yellowstone deceived potential customers about the amount of money they would receive, with the amount shown on the contract not reflecting additional fees that would be deducted.

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