Prosecutors Depict Vast Fraud Scheme By L.I. Car Dealer
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But the enormous number of vehicles being financed by Mr. McNamara would have required the dealership to have between $74 million and $244 million of its own on hand, according to the prosecutors. The auditors decided to ask some basic questions. They found that the vehicle identification numbers provided by the dealership did not appear in industry journals, contrary to common practice. Mr. McNamara was supposedly getting the vehicles from Kay Industries, an Indiana company that purportedly upgraded cars and vans produced elsewhere. But industry sources told the auditors that they had never heard of Kay Industries, even though the company supposedly did a high volume of business in a specialized field. In December, G.M.A.C. officials confronted Mr. McNamara with their suspicions. Mr. McNamara responded, according to court documents, that he was surprised he had not been caught sooner. Company in Cyprus After their discussions with Mr. McNamara, the auditors set out to prove that the automobiles did not exist. Kay Industries, they found, had never registered with the United States Department of Transportation, which is required of all vehicle-alteration companies. They found that Kay Industries had vacated its Indianapolis offices in early January, and traced the company back to Mr. McNamara. Further, the auditors could find no record that the McNamara vehicles were exported from United States ports, despite the dealership’s claims that 70,000 vehicles had been sent overseas. And finally, the auditors found that Cydonia Trading Ltd., the Cyprus firm that was thought to have received the exported cars, was registered under the names of Mr. McNamara and an associate. Federal prosecutors said yesterday that Mr. McNamara had been engaged in a Ponzi scheme of a scope and duration they had never before encountered. In such a scheme, old debts are repaid with newly borrowed money. “This is the mother of all kiting schemes,” said Andrew J. Maloney, the United States Attorney for the Eastern District. Source : query.nytimes.com |