Former National Independent Automobile Dealers Association President Andy Gabler faces up to 30 years in prison and a $1 million fine after pleading guilting to fraud conspiracy this week.

The U.S. Attorney’s Office in the Western District of Pennsylvania reported that Gabler, 51, of Harborcreek, Pa. and Chad Bednarski, 49, of Fairview, Pa. pleaded guilty on Sept. 1 to one count of fraud conspiracy before United States District Judge Susan Paradise Baxter.

Gabler, the 2018-2019 NIADA president, who resigned Jan. 31, 2019, after an FBI raid on his three dealerships and home a day earlier.

Andy Gabler
Andy Gabler faces up to 30 years in prision

According to a release from the U.S. Attorney’s Office, Gabler, as the owner of Lakeside Auto Sales and Lakeside Chevrolet, and Bednarski, as the finance manager of Lakeside Chevrolet, engaged in the following illegal activity between January 2015 and January 2019:

- Gabler falsely indicated that customers made down payments and falsified and inflated the income of customers when submitting auto loan applications to financial institutions on their behalf;

- Gabler sold extended warranties to customers buying vehicles at Lakeside Auto Sales and Lakeside Chevrolet and deliberately failed to remit the paperwork and payments to the extended warranty company;

- Gabler and Bednarski falsely reported vehicle sales to General Motors for vehicles that had not been sold in order to obtain expiring incentive rebates, and;

- Gabler and Bednarski did not inform S&T Bank when Lakeside Auto Sales and Lakeside Chevrolet sold a vehicle that the dealerships had purchased using the bank’s floor plan financing, to delay and attempt to avoid the dealerships’ required payment for the sold vehicles.

Judge Baxter scheduled sentencing for January 6, 2021 at 10:00 a.m. for Gabler and 1:30 p.m. for Bednarski. The law provides for a total sentence of 30 years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

Pending sentencing, the court continued Gabler and Bednarski on bond.

 

Carfax Settles Dispute

September 02, 2020

Carfax and Primeritus Financial Services Inc. have amicably resolved their dispute filed in U.S. District Court in Virginia relating to access to data through myCARFAX, according to a press release.

Carfax filed a complaint in U.S. District Court as part of an ongoing effort to stop businesses from illegally accessing its data. Primeritus is one of several companies that Carfax claims has violated its terms and conditions. The myCARFAX service is specifically designed for personal use by individual vehicle owners to help better track their service history and be alerted to open recalls.

“Both feel strongly about their positions and the claims and defenses they have against each other, but decided it was best to resolve this matter at this time,” the release stated. “Both look forward to continuing their long-standing business relationship.”

Virginia Attorney General Mark R. Herring  joined 47 other attorney generals to announce a more than $85 million multi-state settlement with American Honda Motor Co., Inc. and Honda of America Mfg., Inc. over allegations that Honda concealed safety issues related to defects in the frontal airbag systems installed in certain Honda and Acura vehicles sold in the United States. The systems were designed and manufactured by Takata Corporation, a long-time Honda supplier, and were first installed in Honda vehicles in the 2001 model year. Virginia will receive nearly $2 million as its share of the settlement.

 The settlement, reached between 48 state and territorial attorneys general and Honda, concludes a multistate investigation into Honda’s alleged failure to inform regulators and consumers that the frontal airbags posed a significant risk of rupture, which could cause metal fragments to fly into the passenger compartments of many Honda and Acura vehicles. The ruptures have resulted in at least 14 deaths and over 200 injuries in the United States alone.

Herring and his colleagues have alleged that Honda engineers suspected that the airbags’ propellant, ammonium nitrate, could burn aggressively and cause the inflator to burst. Despite these concerns, Honda delayed warning consumers or automobile safety officials, even as it began partial recalls of affected vehicles in 2008 and 2009. Further, Honda continued to represent to consumers that its vehicles, including its airbags, were safe. Since 2008, Honda has recalled approximately 12.9 million Honda and Acura vehicles equipped with the suspect inflators.

A recent odometer law case is atypical in that the car buyer alleged that the dealership that sold him the car overstated the car's mileage, meaning that he ended up with a car with fewer miles than he had been told. In most circumstances, a car buyer would be thrilled to learn that the car he bought had been driven fewer miles than he thought. After all, you usually pay more money for a car with fewer miles. In the end, the dealership won, but not because an overstatement of a car's mileage is not a law violation.

Here's what happened in this unusual case.

Elite Auto Credit, Inc., bought a used Jaguar from another dealership through the auction company Manheim Chicago of Matteson. Manheim stated in documents that the Jaguar had an odometer reading of around 156,000 miles. However, the car's odometer actually read 156,029 kilometers, which is only about 96,952 miles, and the certificate of title that Manheim provided to Elite stated that the car had 96,940 miles.

Elite Auto Credit
Elite Auto Credit won the FOA claim lawsuit 

John Tamburo bought the Jaguar from Elite for $5,266, including taxes and fees. The bill of sale and the odometer statement indicated that the car had 156,028 miles, based on information from Manheim and from AutoCheck.com, not from the Jaguar's odometer. The buyer's guide that Tamburo signed stated that the car had no warranty.

After spending over $4,000 on repairs within a few months after the purchase, Tamburo contacted Elite to demand that, pursuant to Illinois law's implied warranty for vehicles with less than 150,000 miles, Elite pay for some of the repairs. Elite responded that because the odometer exceeded 150,000 miles, it was not required to cover any repairs.

Tamburo sued Elite for violating the Federal Odometer Act and the Illinois Consumer Fraud and Deceptive Business Practices Act. Elite moved for summary judgment.

The U.S. District Court for the Northern District of Illinois noted that in order to establish a violation of the FOA, the buyer must show that the seller provided an inaccurate odometer reading with the intent to defraud. In this case, Tamburo alleged that Elite overstated the mileage in order to avoid the Illinois statutory warranty for cars with mileage under 150,000. The court found that Elite received an overstated mileage number from Manheim and that Elite's employees relied on that number rather than verifying it against the car's odometer. The court noted that the failure to check the odometer may have been negligent, but there was no evidence that Elite acted with intent to defraud Tamburo. Therefore, the court granted summary judgment to Elite on the FOA claim.

Lesson learned : Double check the odometer

Next, the court addressed Tamburo's ICFA claim for failing to provide an implied warranty of merchantability, telling him that the car had no warranties, using an outdated buyer's guide on the car's window, and failing to repair the mechanical defects he discovered. Because the court granted summary judgment on the federal law claim, the statute of limitations had not run on the ICFA claim, the court had not invested substantial resources into the ICFA claim, and the resolution of the ICFA claim was not absolutely clear, the court concluded that it was appropriate to decline to exercise jurisdiction over the state law claim and to dismiss the claim without prejudice to Tamburo's right to refile the claim in state court.

What is there to learn from this case? Overstating a car's mileage can be just as wrong as understating a car's mileage, especially, as in this case, where state law provides fewer protections to buyers of cars with mileage above a certain threshold. Make sure your employees understand that relying on any document to determine a car's mileage is less than perfect. An actual look at the odometer, including whether the odometer reflects miles versus kilometers, should be mandatory.

 

Shelley B. Fowler is a Managing Editor at CounselorLibrary.com, LLC.

CounselorLibrary.com, LLC, provides articles on its website written by attorneys with Hudson Cook, LLP, and by other authors, for information purposes only. CounselorLibrary.com, LLC, and Hudson Cook, LLP, do not warrant the accuracy or completeness of the articles, and have no duty to correct or update information contained on the CounselorLibrary.com website. The views and opinions contained in the articles do not constitute the views and opinions of CounselorLibrary.com, LLC, or Hudson Cook, LLP. Such articles do not constitute legal advice from such authors or from Hudson Cook, LLP, or CounselorLibrary.com, LLC. For legal advice on a matter, one should seek the advice of legal counsel.

 

 

Penske Repays Notes

August 24, 2020

Penske Automotive Group Inc., a diversified international transportation services company, announced the company has repaid in full, at scheduled maturity, its $300 million Senior Subordinated Notes due Aug. 15. The 2020 Notes were repaid using availability under the company's U.S. revolving credit facility, leaving the company with over $800 million in available liquidity under its revolving credit facilities. The Company also completed the issuance of $550 million aggregate principal amount of 3.5 percent Senior Subordinated Notes due 2025, which the Company intends to use to redeem its $550 million 5.75 percent Senior Subordinated Notes due 2022 (on Oct. 1.

"Our diversified transportation services model continues to generate significant cash flow, providing us with the opportunity to repay the 2020 Notes while funding our future growth and acquisition plans,” stated Chair and Chief Executive Roger Penske. “I am also pleased to be able to refinance our existing 2022 Notes at today's attractive rates.”

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