Three Kentucky Residents Indicted for $4 Million Warranty Fraud Scheme
CHARLESTON, W.Va. – A federal grand jury has returned an indictment charging three Kentucky residents with ten counts of fraud and identity theft relating to a scheme to defraud a major car company of more than $4 million, announced United States Attorney Mike Stuart.
According to the indictment, James Pinson, 44, Gary Conn, 56, and, Tammy Newsome, 53, of Kentucky organized and participated in a scheme to misuse a car company’s warranty extension program that offered to repurchase certain trucks for 150% of their value, so long as those trucks were owned by individual customers rather than a dealership. Participants in the scheme bought the trucks at wholesale prices at auction through Pinson’s car dealership, Big Blue Motor Sales of Louisa, Kentucky. They then obtained hundreds of copies of Kentucky and West Virginia residents’ driver’s licenses, fraudulently titled the trucks in the name of those residents, and induced the car company to repurchase the trucks at 150% of value.
According to the indictment, the indicted defendants ran 350 trucks through the scheme between 2013 and 2015, causing approximately $4.3 million in losses to the car company. Newsome is also charged with aggravated identity theft. Frank Russo, 68, of North Carolina and Kevin Fluharty, 58, of West Virginia have already been indicted for their role in the same scheme.
If convicted, the three defendants face up to 30 years in prison.
“This is the second indictment setting forth very serious allegations of a long-term warranty fraud scheme,” said United States Attorney Mike Stuart. “Five individuals have now been charged in connection with the alleged fraud scheme that resulted in $4 million in losses.”
The United States Postal Inspection Service, the Federal Bureau of Investigation, the West Virginia State Police, and the West Virginia Office of the Insurance Commissioner conducted the investigation. Assistant United States Attorney Stefan Hasselblad is handling the prosecution.
The indictment can be found here.
Please note: An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.