CINCINNATI — Owners and salespeople at six Cincinnati-area used-car dealerships were indicted in what federal prosecutors described as a widespread fraud scheme involving phony loan applications for overvalued cars that were actually salvaged vehicles.
A 22-count federal indictment unsealed this week accuses seven Cincinnati men — Daniel Seifu, Christopher Deveaux, Caleb Seifu, Timothy McCandless, Johwanda Leary, Ahaduab Begashaw, Jeremy Anderson and North Dakota resident Jolly Ata Pepper — of conspiracy, wire fraud and bank fraud.
The alleged conspiracy centers around six used car dealerships: Conquer Auto at 2350 Reading Road; Mega Auto Sales at 7310 Vine St.; 513 Motors at 5140 Dixie Highway, Fairfield; Dreams Motors at 6014 Hamilton Ave.; 3A Auto Sales at 7310 Vine St.; and D28 Motors at 429 S. Limestone St., Springfield, according to the indictment.
Bob Guth, who is manager of 3A Auto Sales, said his business had nothing to do with the alleged fraud scheme and no one who works for him was charged with a crime. His business had shared a common address with Mega Auto Sales on Vine Street until it went out of business last year. He said he's not sure why 3A was listed in the federal indictment and put in a call to federal agents to find out why.
"We had nothing to do with this. None of us," Guth said. "It has nothing to do with 3A."
The indictment accuses seven Cincinnati men of obtaining vehicles without proper titles or with fraudulent titles in multiple ways.
“They) were able to circumvent the inspection process and fraudulently obtain multiple previously salvaged automobile titles when needed by submitting automobiles that were wrecked and had a 'salvaged' car title to Jolly Ata Pepper in North Dakota to be inspected and repaired," the indictment states.
Pepper then returned new titles for the cars without ever inspecting or repairing them, according to the indictment. The cars were then sold at inflated prices to unsuspecting buyers.
The indictment claims that when buyers couldn’t get loans due to lack of credit or employment, the defendants would submit false work records and proof of a phony down payment. Many buyers were unaware these documents had been included with their loan applications.
Daneile Seifu is accused of submitting those loan applications to Kemba Credit Union, General Electric Credit Union, Westlake Financial Services, Wright Patterson Credit Union, JP Morgan Chase and Credit Acceptance Corporation, a private loan company in Michigan.
“If the lending institution refused to approve any loan applied for by defendant … (he) would use another dealership not associated with his name to secure fictitious loans using the same scheme,” according to the indictment.
Seifu deposited the sales money into Conquer Auto’s account and collected a fee back from the dealership, according to the indictment.
It also alleges that buyers often stopped making payments on the cars, causing the loans to default, so many lenders refused to issue checks to the auto dealerships until they received several months of loan payments from buyers in advance.
“Daniel Seifu then began applying payments to a few of these loans to make it appear to the lending institution that the buyer was legitimate and had the ability to pay for the car,” according to the indictment. “Defendants … would change the names of the automobile dealerships periodically to prevent the victim lending institutions from knowing the true owners of the car dealerships and to thus keep the scheme going.”
The scheme took place from August 2016 until August 2018, according to the indictment.
A grand jury handed down the indictment on May 1 but it was sealed until Pepper was arrested in North Dakota and arrived in U.S. District Court in Cincinnati for his first court hearing last week.
The men are free on bond awaiting trial on June 27.