March 27, 2022 • By Dennis Beaver
Lots of people who want to avoid the hassle of buying or selling a vehicle, for business or personal use hire an auto broker — sort of a “middleman” who handles all of the details and negotiations.
Tell them what you want, and for a flat fee that can be a percent of the selling price, they find it for you at a much better price than you can negotiate yourself in many instances. You hand them a check — or sign loan documents — they send everything to the dealer who delivers the car to your home or office.
Also, folks who have, for example, an RV they owe money on and want to sell, might place it with a broker on consignment. So when it sells, the broker pays off the loan from sale proceeds, deducts a commission, gives the title to the new buyer and the remits the balance to the customer. The buyer registers the RV, and everyone is happy.
That’s how dealing with an auto broker is supposed to work and generally does — except when it doesn’t. When an auto broker goes bad, the consequences are millions of dollars lost, scammers sent to jail, and years of grief for trusting customers.
One is 87 year-old Ralph Bush of Arroyo Grande, who had the misfortune of crossing paths in 2017 with the owner of such a company, based in Clovis.
“I had purchased cars from them before and was always dealt with properly,” Bush said, adding, “and, famous last words, I never had nor expected a problem.”
All that would change when he bought a 2017 Toyota Tacoma, from Toyota Scion of Hollywood, through the broker, paying in full $33,000.
Bush would discover that there’s a first for everything, including membership in a special victims of fraud club. Hollywood delivered the Tacoma to Bush, but they never received payment from the Clovis company.
A Scheme to Rip Off Banks and Customers
According to court documents in the $2 million-plus fraud indictment:
“Beginning in January 2016, and continuing through June 2017, Radtke hatched a scheme to defraud banks and customers. He received up-front payments from customers or their banks, but did not give that money to the dealerships. Instead, he spent it on business and personal expenses.
“Additionally, he signed customers’ names on sale documents and loan applications, which led banks to issue loans without the customers’ knowledge or authorization and involved at least 47 vehicles and over two million dollars stolen.”
One California DMV investigator I spoke with referred to the company owner as a “one man crime wave,” facing 98 counts that include forgery, grand theft, identity theft, theft from the elderly, and passing bad checks.
Due to COVID, his trial has been on hold. So much for justice delayed. Guess who is still out on bail?
Prudent to Wait for the Check to Clear
Wondering why he had not promptly received title and registration, Bush phoned the Toyota dealer and was told they had not received payment.
Now, you’ve got to visualize management at Toyota of Hollywood, sitting around a conference table with this sales order to deliver a new 2017 Tacoma to Bush in Arroyo Grande.
Perhaps, Joseph, a new hire says, “But boss, we haven’t been paid for it yet — shouldn’t we wait or contact Mr. Bush to see if he paid using a check that he can stop payment on until this thing is clarified? Something’s wrong! We need to protect ourselves and our customer – this doesn’t feel right!”
“Naw, they always pay us,” replies his manager.
“And that is precisely the problem, as crooked auto brokers typically crater over a few months’ time, dealers relying on a history of ‘always being paid’ as an excuse to avoid the prudent business practice of getting paid! It is common sense, but a lot of car dealers are motivated only by one word: SALES! ” the DMV investigator said.
I asked Damon Culbertson, president/general manager of Mercedes Benz of Bakersfield how he handles these situations:
“With auto brokers, we only release the vehicle when their check actually clears or the finance company has funded the loan and we have our money.”
Who Takes the Loss?
Bush had a car he can insure but not register, and even though this is theft, it is not the kind of loss that his homeowners insurance covered.
I ran the facts by nationally respected Lemon Lawyer Bob Brennan of Los Angeles who replied, “Contractually, you have to ask who must assume the risk of loss by what they failed to do. Here, clearly it is Toyota Scion of Hollywood who released a car without being paid and must have known that Mr. Bush had paid the broker for it.
“This is theft and they might have insurance coverage, but in any event had the ability to eliminate their own loss by refusing to deliver the car. This would have also helped Mr. Bush. All things being equal, I think they need to give him title and registration to the vehicle. He is the most innocent in this situation.”
I wrote Toyota Scion of Hollywood, stating the same thing, and my reader retained a truly compassionate lawyer, Erin Stratte of the Wade Law Group in Los Gatos.
She repeated my analysis in her correspondence to Hollywood Toyota’s attorney and in February 2022 they agreed to give Bush title and registration to his Tacoma.
Five years and how much worry for a guy in his eighties? All of this preventable with less urgency to just make a sale.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.