Wednesday, May 8, 2013

SCAM ALERT: Straw Buyer Scam Targeting Immigrants and Auto Dealers

Deutsch: Audi Autohaus in Dresden
Deutsch: Audi Autohaus in Dresden (Photo credit: Wikipedia)
A new variation on a straw buyer scam is targeting immigrants and auto dealers in Southern California.
In this version, straw buyers are recruited through friends, churches, schools, Internet forums, and so on.

The general story is friend of a friend (of a friend) was in the US and recently returned to China and got really really rich, and really really wants to buy one of the luxury imports (we're talking 75K or higher cars, like high-end Audi, exotic Lambo and Mercedes AMG, Bently, Jaguar, and so on)  in the US, because the same car in China costs about twice as much due to heavy import tax. However, not being US residents they can't buy a car off local dealership, AND there are export restrictions. If any one wants to... help out this rich guy buy a car the local buyer can pocket $1000 to $2000 dollars as "commission". In one variation, they will even provide a fake license so the paperwork is straight (i.e. buy the car in my name, your name appears nowhere, I'll make the payments).

Sounds easy, right? Turns out it's anything but. Apparently several people in the San Gabriel Valley (near Los Angeles) fell for the scam.

This is how it actually happened. The local guy agreed, and a social security number and a fake driver's license is provided. The local guy walks into dealership, hands over the license and social security number for ID check, signs the paperwork, hands over the check. Credit checks out. Dealership noticed something's not right with the driver's license, blamed some "computer error" and told the local guy to come back tomorrow. Next day, the guy's back, and right behind him was the local police fraud squad. They pulled up the license info... The license is fake, as expected. So the local guy's in jail for identity fraud (fake license) AND attempted grand theft auto (defrauding dealership). That's a couple MONTHS in jail.

Ah, but you say, what if I just use my REAL identity instead of using a fake license?

Not that simple, Sherlock. You see, there's this thing called "1 year export ban" from car maker to dealership.

Here's a fact you don't know... new vehicles just off the dealer lot are NOT supposed to be exported until 1 year after the sale date.

So this is what happens. Straw buyer buys the car locally using his own identity, then turns around and sells the car to this shady outfit that wanted the car. The shady outfit paid the full price, plus $1000 commission. Simple transaction, and the straw buyer is happy. The shady outfit then puts the car in a container and shipped it to China or wherever. On the way out, Customers / Border Patrol recorded the VIN. The VIN was cross-checked eventually and it's less than a year old by the manufacturer, so the dealership gets a fine  from manufacturer for violating the 1 year rule. Dealership pulls file, sees the straw buyer's name on the paperwork, and sues the straw buyer for the amount of the fine (which is obviously more than $1000) as there's a piece of paper called "non-export policy" that says you shall not export this car for 12 months signed by the straw buyer.

This scam relies on the immigrant being ignorant of the law, that they don't know about this 1-year export ban, and think that using a fake license is not that big of a deal if it kept the paperwork straight. Chinese newspapers covered this, reported multiple arrests in the SoCal area. (Link is in Chinese)

Of course, there are variations on this scheme. There was a recent report of someone walking into a MB dealership, pluck down 40K cash, and a check for the rest, provided ID, did all the paperwork, and drove off in a $160K MB AMG SLK. The ID checked out at first, credit history is fine. Next day, the check bounced, then they realized the ID's fake, but based on a real person. By this time, the tracking device had been disconnected and the vehicle's in a container out of the country.

Fortunately, the perp don't always get away with it. New Hampshire recently sentenced two ringleaders in a multi-state illegal car export ring. They used many of the tactics listed above, including disabling the GPS tracker, and one of the cars was a Ferrari (no model specified). Police tracked the vehicle's last known location to a warehouse near the harbor and found several cars there being prepped, but the Ferrari's already gone.

This scheme relies on the straw buyers, i.e. victims being ignorant of the law, and concentrating on the reward (the $1000 or $2000) instead of potential problems, such as jail time for fraud or being sued by dealership, all for "helping someone out".

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  1. Where is the proof anyone has been sued by a dealership? I've searched online and can find none.

    1. It's far more likely they were settled out of court before it ever got in front of the charge.

      From the Chinese link provided:


      "the dealership that was fined checked their paperwork, which was signed by Mr. Xu, so they sued Mr. Xu, asking for the amount of the fine."

      Also keep in mind that newspaper may have conflated a "demand letter" for a lawsuit. Demand letter is "intent to sue to recover damage".