Manhattan U.S. Attorney Announces Civil Action Seeking Forfeiture Of Four Bank Accounts And 47 Cars Tied To Auto Export Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, and James T. Hayes, Jr., the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”), today announced the filing of a civil complaint seeking the forfeiture of four bank accounts and 47 luxury cars tied to a scheme to purchase new cars for immediate export overseas through a fraud on car dealerships and car insurance companies. The civil forfeiture complaint (the “Complaint”) was filed in Manhattan federal court following the seizure of approximately $3.7 million from the four bank accounts, and the seizure of 20 of the 47 luxury cars, which include BMWs and Mercedes Benzes. The scheme described in the Complaint is alleged to have been carried out by a vehicle broker known as Efans Trading Corporation (“Efans”), which recruited straw buyers to purchase luxury cars that were paid for in full on the date of the sale by cashier’s checks draw on an Efans bank account. The straw buyers, according to the Complaint, did not use, and frequently never even saw, the cars, which were exported by sea immediately after being purchased and netted double or triple their domestic value when sold in overseas markets. The Complaint further alleges that when the cars were purchased, Efans caused materially false statements to be made to the dealerships and insurance companies, in an effort to remove the cars from the dealerships without revealing that they were being purchased for immediate export overseas, rather than for the use of drivers in the United States.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Efans defrauded dealerships, insurance companies, and authorities in its scheme to export luxury automobiles in violation of the law. With this forfeiture complaint, this Office continues its work to protect the markets and consumers from illegal export schemes.”

ICE HSI Special Agent-in-Charge James T. Hayes, Jr. said: “Consumers are the ultimate victims of fraud schemes like the one these perpetrators allegedly carried out. The HSI New York BEST task force brings law enforcement agencies together in New York City to put criminal organizations who seek profit from unlawful cross-border activity out of business.”

According to the allegations in the Complaint:

Automobile manufacturers generally have contractual agreements with their dealerships that new cars made for sale within the United States may not be sold to individuals or companies intending to export the new cars outside the United States. Automobile manufacturers impose this prohibition on exporting new automobiles because unauthorized exports of their new automobiles cause numerous financial problems to the manufacturers by circumventing the manufacturers’ distribution markets, causing market infringement issues, harming franchise dealerships, and complicating the process of vehicle recall registration and service. The contractual agreements between automobile manufacturers and dealerships often carry monetary penalties, commonly called “charge backs,” which automobile manufacturers may assess against dealerships if the manufacturers determine that dealerships are selling new automobiles to purchasers who intend to export them rather than use them in the United States. To avoid the appearance that a car is intended for immediate export, a vehicle broker, such as Efans, will recruit a straw buyer to purchase and title the car. The straw buyers are typically unwitting individuals who receive minimal compensation for their cooperation.

Efans directed the straw buyers it recruited to go to car dealerships and purchase luxury cars, which were paid for in full on the date of the purchase by cashier’s checks drawn on an Efans bank account. The straw buyers purchased the cars, typically without test driving them or negotiating price, and immediately upon the purchase of the cars the straw buyers turned them over to Efans for immediate export from the country. Efans exported the cars from the country, typically to destinations in China, where the cars could be sold for double or triple their domestic value. As part of Efans’ scheme to purchase the cars in this manner, Efans caused materially false statements to be made to the car dealerships concerning the straw buyers’ intended use of the cars. In some cases, for instance, the straw buyer signed a form representing to the dealership that the car would not be exported out of the United States for a period of at least twelve months. Moreover, before the car could leave the dealership, the straw buyer was usually required to show that he or she had purchased insurance for the car. Accordingly, Efans caused an insurance policy for the car to be acquired in the name of the straw buyer, which, typically, was cancelled after the car left the dealership but before any payments were made on the policy. When the insurance policy was acquired, materially false statements were made to the insurance company with respect to the straw buyer’s intended use of the vehicle, for example, that the car would be garaged at the home of the straw buyer, even though the car would never even arrive at the straw buyer’s home. After the cars were purchased and the false statements were made, Efans caused Shippers Export Declarations for the cars to be submitted to U.S. Customs and Border Protection, which furthered the scheme to defraud by concealing the cars’ Vehicle Identification Numbers, thus preventing automobile manufacturers from tracking which cars were leaving the country.

The Complaint seeks the forfeiture of the four bank accounts and the 47 cars on several bases, including that Efans attempted to export the cars from the United States contrary to law, and that the bank accounts were used to facilitate the purchase of, and contain the proceeds of, cars that Efans exported from the United States contrary to law.

Mr. Bharara thanked HSI’s Border Enforcement Security Task Force and the NYPD for their leadership and work on this investigation, which he noted is ongoing. Mr. Bharara also thanked U.S. Customs and Border Protection for its work.

This matter is being handled by the Office’s Asset Forfeiture Unit. Assistant U. S. Attorney Sarah E. Paul is in charge of the case.

Efans Trading Corporation et al. Complaint