A Charleston car dealership is being investigated for allegedly defrauding several banks by submitting doctored applications for automobile loans, enabling the company to sell more vehicles and allowing the employees to rake in extra money.
FBI agents raided Hoover Mitsubishi on Savannah Highway in West Ashley last week and seized computers, records and vehicle loan applications, according to a filing in U.S. District Court.
The search warrant was requested after two confidential witnesses told the FBI that three employees at the dealership submitted false information to at least eight federally insured banks and other lending institutions.
The dealership employees allegedly altered the loan applications they submitted for car buyers with bad credit.
The scheme convinced the lenders to unwittingly provide so-called sub-prime auto loans to borrowers who wouldn't have been able to qualify for financing otherwise.
Mark Hoover, who was identified in a court document as the owner of the Mitsubishi dealership, said he became aware of "irregularities and inconsistencies" in some of the dealership's contracts last year, but the dealership hasn't experienced any further problems with loan applications since.
“Hoover Mitsubishi has been cooperating with the investigation and will continue to do so," he said. "It would be inappropriate for us to discuss the matter any further since it’s an active, ongoing investigation."
No one has been charged in the case.
An affidavit from the FBI laid out how the employees allegedly falsified the loan applications. There were several strategies.
According to the allegations from the informants, employees reported that car buyers traded in another vehicle or provided a down payment when they actually didn't. They altered pay stubs from car buyers to inflate their incomes. And they created fake electricity bills to make it look like co-signers on a loan lived together.
All of those changes made it more likely for the banks to extend credit to the car buyers who were more likely to default or fall behind on payments.
According to the affidavit from the FBI, the alleged scheme went on for roughly six years, from 2012 to 2018.
Over that period, the FBI witnesses estimated the dealership sold an estimated 50 to 60 vehicles per month. They estimated that as many as 30 of those loan applications each month were falsified in some way.
The alleged fraud directly benefited the employees and the dealership, according to the two witnesses.
By doctoring the applications, the company would help car buyers get a lower interest rate whle keeping part of those savings for itself.
A salesman for the company would also get extra money from Mitsubishi for selling a set number of cars at the dealership each month.
The banks that worked with the dealership did catch on in several instances, according to the FBI affidavit.
In 2015, BB&T checked on an auto loan for a Mitsubishi Outlander and found out that the pay stub that was submitted was wrong.
PNC Bank caught another example in 2016 after a car buyer reported the dealership doubled his income level on the loan application.
The dealership reportedly kept two separate applications for the loans it doctored, according to the FBI witnesses.
One they sent to the banks. The other they kept in filing cabinets. which the FBI searched at the dealership last week.