Erie, PA – 16 January 2019 – A federal fraud case against an Erie car dealership for it’s part in a large “Straw Buyer” fraud case has settled under the terms that the business’s owner, Adam J. Weaver, to give up his leadership role with the company, and pay over $500,000 in restitution.
Under a new agreement with federal prosecutors, Weaver, who pleaded guilty in the case and served four months in federal prison, can return to, but he won’t be allowed to supervise other employees or participate in car sales.
The agreement with the U.S. Attorney’s Office in Erie will also pause the prosecution against the Rick Weaver dealership, which was indicted as a corporate defendant in the fraud case.
The charges against the dealership will be dropped if the company successfully completes a three-year pretrial diversion program. Details of the agreement were filed Tuesday in U.S. District Court in Erie, formalizing a plan that has been in the works for months.
“The dealership is pleased with the cooperation from the government in arriving at an agreement that addresses the issues that were raised in the case,” said the dealership’s lawyer, Michael Agresti. “The dealership has already taken all of the steps outlined in the agreement and has been basically acting under the agreement for the last six months, even before it was finalized with the U.S. Attorney’s Office.”
The dealership is the sole remaining defendant in the complex case, which charged that Adam Weaver, 42, and two co-defendants used “straw buyers” to inflate the price of vehicles sold at the business. The buyers defaulted on the loans and left banks with repossessed vehicles worth much less than their sales price.
By entering the pretrial diversion program, Rick Weaver Buick GMC can avoid a conviction, which would have disqualified it as a GMC dealership. The business remains open at 714 W. 12th St. in Erie.
Under the agreement with the government, the dealership must undergo an annual audit by an independent accounting firm and adopt “remedial policies” to prevent fraud in the future. All supervisory employees must attend ethics training, according to the agreement.
The company has already paid a $400,000 penalty and $143,794 in restitution to five banks as part of the deal, according to the agreement.
The conditions also prohibit the dealership from employing anyone in a supervisory position who has “engaged in illegal or fraudulent activities or other conduct inconsistent with the compliance and ethics program required by and set forth in this agreement.”
The agreement specifically allows the company to employ Adam Weaver, who was formerly the dealership’s president. Weaver had to step down as president and divest his ownership stake in the company when he pleaded guilty to a felony count of conspiracy to commit wire fraud in October 2017. Agresti said after Weaver’s plea hearing that GMC prohibits a felon from owning a dealership.
Adam Weaver’s sister, Beth Weaver, now owns the business, Agresti said Wednesday. Adam Weaver’s father, Rick Weaver, is now the company’s president, Agresti said.
“The owner, Beth Weaver, greatly appreciates all the loyalty of her employees and the customers through this time,” Agresti said.
Adam Weaver may return to the dealership as a fixed operations specialist, according to the dealership’s agreement with prosecutors. His job description, which is detailed in an appendix to the agreement, may include assisting in the business’s body shop, attending auctions to buy and sell wholesale vehicles, helping with trade-in vehicle evaluations and assisting with marketing and advertising strategies.
Weaver cannot participate in new or used car sales, communicate with customers about vehicles or loans or have any involvement with the sales or finance departments of the company, under the agreement.
He can have “no supervisory role over any employee of the company. No power to hire or fire any employee or to direct how his or her work is done,” according to the job description filed in court.
Weaver’s two co-defendants in the fraud case, Douglas Grooms and Adam B. Coover, each pleaded guilty to one count of conspiracy to commit wire fraud and 12 counts of wire fraud. Grooms, the dealership’s former general manager, received 11 months in federal prison for the loan scheme and a separate bankruptcy fraud case. Coover, whom prosecutors said initiated the scheme, received two years in federal prison in July. He also pleaded guilty to involvement in a separate but similar fraud case involving vehicle sales.
Assistant U.S. Attorney Christian Trabold wrote in a court filing that Coover proposed the loan scheme involving the Rick Weaver dealership to Grooms in July 2015. Coover would use a straw buyer to purchase a vehicle from Rick Weaver that he would then sell at his now-defunct business, Infinity Automotive LLC, in the 2400 block of State Street, according to the court filing.
Adam Weaver knew about the scheme and became more involved after Coover became indebted to the Rick Weaver dealership in September 2015, Trabold wrote.
Coover proposed using a second straw buyer to purchase two vehicles so that the profit from those deals could be used to pay down the debt, according to the filing. Weaver agreed and the purchase was made in January 2016, Trabold wrote.
Weaver served four months in federal prison for his role in the scam. He was released from prison Sept. 21, according to the Bureau of Prisons.
Source: GoErie.com
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