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Used cars, drug dealers and money laundering

If you have to search for a salesperson on a used car lot, a mental trigger should go off that something is amiss

Ever wondered where the all the salespeople were on a used car lot? No, this is not the beginning of an elaborate 800-word joke. Thanks to ultra-cheesy television commercials, the used car salesman inhabits a dark and dirty place in American hearts. When we visit a used car lot, we expect the rigmarole, and even plan for it. That’s why, if you have to find a salesperson to show you a vehicle, a mental trigger should go off that something is amiss.

And it just might be money laundering — a crime happening almost daily in the United States. If you pay attention to the news, you know that used car lots have now emerged as one of America’s most popular money washing venues. In a typical scenario, a criminal approaches a car dealer and offers to provide the cash to purchase vehicles, typically at a price above the sticker so the dealer can cash in, too.

This type of money laundering chain is complicated and relies on trust. That is a big ask in any criminal activity, particularly in the car business. The majority of used car lot owners are simply not financially or criminally savvy enough to generate much profit from these associations, and as a result, they end up taking a fall for some measly scraps. Here is a quick round-up of the worst money laundering cases involving used car dealers:

1. Ex-sports car dealer gets prison in San Diego money laundering case — John Frank Mussari of San Diego looks like the kind of guy that would anchor your weekend golf foursome…not the type that would hang out with drug dealers, launder their money and defraud his own customers. Mussari is a great example of a used car dealer that started his criminal ways by laundering large amounts of cash for others, but then struck out on his own. In addition to the money laundering , he pled guilty to eight counts of fraud for purchasing luxury cars, reselling them and failing to reimburse the original owners.
2. Fairfield car dealer pleads guilty to money laundering — Bryan Barbarawi, of West Chester, OH faces up to 20 years in prison and a $250,000 fine for money laundering. Unlike Mussari, Barbarawi has no criminal chops since he was busted for not disclosing the identity of a customer buying a car in cash, nor the source of that customer’s funds. The customer was actually an undercover FBI agent who had proactively told the owner that his funds were derived from drug deals. Rather than conduct his due diligence, Barbarawi tried to make a quick buck and got popped for it.
3. Rossford car dealer indicted for money laundering — James Jacob Bernard of Bowling Green, OH, was recently indicted on five counts of money laundering, three counts of aggravated theft, and one count of engaging in a pattern of corrupt activity. Bernard sold vehicles and then either did not provide a valid title or didn’t produce the vehicle at all. How he managed to get away with the latter with customers on-site we’ll never know, but he was certainly brazen in his crimes. He was implicated in over 100 different transactions.
4. Three brothers in Licking County auto dealership face fraud, money laundering charges — Phillip C. Clark Jr., David Clark and Christopher Clark of Newark, OH, recently plead guilty to charges of bank fraud and money laundering in connection with their former used car dealership, Clark Motor Co. According to court documents, the brothers made deposits and took withdrawals from two local banks (structuring) to make it appear as if they had $7.4 million when in reality the brothers owed the banks $1 million. In addition, Clark Motor Co. routinely failed to deliver titles to customers within the mandated 40-day window. As a result, each of the Clark brothers are facing up to 40 years in prison and $1.25 million in fines.
5. Tampa used car dealer pleads guilty to money laundering scheme — Raymond Rodriguez of Tampa, FL, like Bernard, knowingly took money from drug dealers and thieves at his used car lot, Rodriguez Auto Wholesale, and then failed to provide the proper disclosures to the government. He and his co-conspirators are charged with laundering over $1.7 million in proceeds from the sale of 87 vehicles. Certainly somewhere along the way, Rodriguez must have realized he was getting the short end of the stick? Apparently not, and now he faces 20 years in prison.

The next time you visit a used car lot, observe the amount of attention you receive as a customer. If you are left standing on the lot alone for more than ten minutes, I’d say the chances are good you are at a dealership that is actively participating in financial fraud and money laundering. As for the banks working with used car dealers, this is a classic case of Know Your Customer (KYC). Banks should know who they are doing business with in order to halt illegal activities, but as we have discussed in other posts, KYC programs aren’t that easy to implement.