Retail

Serra Nissan faces civil suit in U.S. court in Ala.

June 12, 2015 05:00 AM

Serra Nissan in Birmingham, Ala., is facing more legal problems, this time in civil court.

An Alabama couple is suing the dealership alleging it was involved in a criminal enterprise when they bought a car there.

Eight former managers and salespeople have pleaded guilty to criminal charges in a scheme to falsify loan documents.

Also, the U.S. Justice Department this month charged the former general manager, Randy Visser, and controller, Kimberly Branch, of the dealership with cheating on Nissan’s national sales incentive program.

The civil suit, filed June 1 in U.S. District Court in Alabama, seeks designation as a class-action case. The ruling to determine that will not happen until spring 2016, said the plaintiffs’ lawyer.

The suit names Anthony Serra, CEO of Serra Automotive Group, Serra Nissan and Serra Volkswagen as defendants.

‘Pervasive scheme’

“There appears to have been a pervasive scheme at Serra Nissan where people were sold products they didn’t know they were buying and had products added to the price of the car and they didn’t know what they were paying for,” said Jerome Tapley, a principal at Cory Watson in Birmingham, Ala., the law firm representing the plaintiffs.

But Serra’s lawyer said he will “aggressively” defend against the lawsuit’s allegations, in part by using a videotape of the couple’s purchase that contradicts many of the claims.

“Not one shred of evidence suggests Tony Serra was involved in, encouraged or condoned any criminal conduct,” said Jeff Ingram, of Galese & Ingram in Birmingham, Ala., in an email to Automotive News. “The unsupported and false allegations of a law firm trolling for clients do not change that fact.”

The plaintiffs currently seek undetermined punitive and compensatory damages, but Tapley said it appears to be $3,000 to $10,000 in losses per client.

“What we just don’t know at this point is how large the fraudulent scheme is and how many people were impacted,” Tapley said. He added the law firm has talked to “hundreds” of former Serra Nissan customers who may have been impacted by the fraud.

Controlled signing

The lawsuit states that in September 2013, plaintiffs Richard Kemp and Gwendolyn Henderson called Serra Volkswagen looking to buy a car. They gave a salesperson their personal information, including weekly pay stubs showing Kemp made $318.50 a week. Henderson’s income came from her disability compensation of $250 per month.

A few days later, the salesperson invited the couple to test drive a 2011 Toyota Corolla. After the test drive, the couple was immediately taken to a finance manager’s office to sign closing paperwork that had already been completed. The finance manager told them the monthly car payment would be $430.59, the lawsuit said.

The lawsuit said the manager falsely told the couple they could refinance the car after making payments for a year to a lower monthly payment. It also said he failed to let the couple review the documents prior to signing them and he controlled the signing by “exposing only the portions where the plaintiffs need to initial or sign.”

Power booking

The manager further instructed Kemp and Henderson to tell lender Capital One that the car had leather seats, a navigation system and a Bose sound system when it did not. The salesperson “falsely informed” Henderson that it did, the lawsuit stated, and she told Capital One it did.

Some weeks later, two IRS criminal investigators contacted Henderson and Kemp to inform them their personal information submitted to lenders had been altered by Serra Nissan employees, the lawsuit said. The IRS agents also told the couple that the dealership had committed other fraud, such as “power booking” and quoting the couple an inflated monthly payment on the Corolla so that an extended service contract and guaranteed asset protection plan could be added at the end of the transaction without the plaintiffs’ knowing they were paying for them.

Power booking involves submitting false information to lenders about what features are on the vehicle such as leather seats rather than cloth seats. The purpose is to inflate the vehicle’s retail value so that the lender will increase the loan amount.

All employees?

The lawsuit states that Serra Volkswagen, Serra Nissan and all employees at the dealerships “knew of and were complicit in the Serra Enterprise’s fraudulent scheme.”

The lawsuit also says that Serra Enterprise hired private investigators to visit the plaintiffs under false pretenses to convince them that the finance manager and salesperson were solely responsible for any fraud in their car purchase and any legal action should be against only them.

Ingram, Serra’s lawyer, said the company has hired private investigators for many years to investigate claims against it. The company did have investigators speak to Henderson and Kemp, he said, “but they did not misrepresent who they were or offer them anything. It was strictly to get information about what they said happened.”

Ingram also said Serra employees were routinely instructed that criminal conduct would not be tolerated well before there were any investigations. Serra Nissan immediately terminated employees accused of criminal conduct involving customers, voluntarily turned over records to the government, and provided other information to assist in the investigation and prosecution, he said.

Videotape defense

The dealership will continue to cooperate with the government, Ingram said, and, “to the extent that Serra Nissan employees engaged in improper conduct that hurt consumers, Serra Nissan will, as it already has, act to alleviate that injury. It will not however be bullied by lawyers attempting to profit from illegal conduct that Serra Nissan neither encouraged nor condoned.”

Ingram said he can prove many of the allegations in the suit are false, such as the plaintiffs’ claim that the manager who presented the purchase documents to them concealed most of the documents. That’s because the closing was videotaped and the videotape shows that the manager explained the documents, handed the documents to the customers, allowed the customers to review them and ask questions before signing the documents, Ingram said.

Tapley, the plaintiffs’ lawyer, said his clients were at the dealership all day and the videotape is only “minutes long.”

“We don’t know what happened before or after that videotape. There might have been multiple docs signed,” outside of the videotaping, said Tapley.

Serra Automotive Group owns 19 dealerships and ranks No. 120 on the 2015 Automotive News list of the top 150 dealership groups in the United States, with retail sales of 8,528 new vehicles in 2014.

Jail time

The U.S. Department of Justice, local U.S. Attorney’s offices and the Federal Trade Commission have been targeting loan fraud at car dealerships across the nation.

Earlier this year, eight of Serra Nissan’s former sales staffers pleaded guilty to various counts of falsifying loan documents and sales information.

Last month in U.S. District Court for the Northern District of Alabama, the first of the eight employees, former Serra Nissan sales manager Abdul Islam Mughal, was sentenced to 30 months in prison for falsifying loan documents.

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