Any of us that have been in the auto lending and collections industry for any significant period of time have encountered “straw buyer” scams and con artists perpetrating them. As obvious a scam as they might seem to us, there are always people out there that fall for this and someone who gets away with it. While, I thought this was a relatively new phenomenon of the past twenty or thirty years, I’d recently found that the first documented case was over 70 years ago!
I always thought Auto Lending Fraud scams were a relatively new phenomenon. After all, white-collar crime has risen as banking and new technologies have emerged over the last 20 years.
Choice Motor Sales
The fraud enterprise, was run by an independent dealer, named Michael Boras of Brooklyn, NY based Choice Motor Sales of 1743 Bushwick Ave., Brooklyn, NY, who recruited a vast array of straw buyers, ranging from street vendors, bartenders, truck drivers and even five NY cops!
For a mere $10-$15, these “straw buyers” would sign on the dotted line for loans on autos, which Boras would convince them would be paid off shortly, while he received his customary $600 dealer commission from the finance companies.
Boras would later sell the vehicles for cash, which he would then use to make payments on the loans and perpetuate the scheme. Basically, a traditional “Ponzi Scheme.”
Keep in mind, this was before WWII!
Alas, like all Ponzi Schemes, it finally came crashing down.
When it All Fell Apart
Twenty loans and two years later, the three defrauded finance companies began to notice the common threads, when the loans defaulted and they eventually discovered that the vehicles were not in possession of the alleged borrowers. $100K in losses later, the District Attorney was brought in and uncovered Bora’s “straw buyer” scheme.
Boras pleaded not guilty of the charges and made bail of $2,500, while the five NYPD officers involved were reprimanded internally for their participation.
The Dealer at 1743 Bushwick
Not surprisingly, the location of Choice Motor Sales is still a car dealership. With obvious new owners, unrelated to the aforementioned Boras, FM Auto Sales now operates from the very same lot.
Facebook Comments