A federal grand jury on Thursday indicted two men who are accused of being part of a scheme that cost a car company $4.5 million.
Frank Russo, 68, of North Carolina, and Kevin Fluharty, 58, of West Virginia, were charged with three counts of wire fraud and nine counts of mail fraud for their parts in the alleged scheme that took place between 2013 and 2015, according to the indictment.
Each man faces up to 30 years in prison, U.S. Attorney Mike Stuart said in a news release.
Four other people are alleged to have participated in the scheme, including one owner of a car dealership in Kentucky, according to the indictment, but they were not charged in the indictment the grand jury handed up Thursday.
As part of the scheme, Assistant U.S. Attorney Stefan Hasselblad said, the participants fraudulently used customers’ driver’s licenses and forged paperwork to cause the car manufacturer to essentially purchase vehicles twice.
At the time, Hasselblad said, the car manufacturer had created a program to repurchase certain defective trucks for 150 percent of their value, as long as the trucks were owned by individual customers and not a dealership.
The car manufacturer had hired an outside company to operate the repurchasing program, according to the indictment.
Participants in the scheme bought the trucks at wholesale prices at auction through the car dealership in Ashland, Kentucky, according to the indictment.
Hasselblad said the participants obtained hundreds of copies of driver’s licenses of West Virginia and Kentucky residents to create fraudulent titles for the trucks in the names of the residents to make it look like the residents owned the vehicles.
Allegedly, they then would induce the dealership in St. Albans to repurchase the trucks through the car manufacturer’s program. The money participants received from the purchase in St. Albans would be deposited into the Kentucky dealership’s bank account, the indictment states.
At the time of the alleged scheme, Russo was the service manager at the car dealership in St. Albans and Fluharty was a notary public who authorized signatures of customers who sold their trucks back to the car manufacturer as part of the program, according to the indictment.
The other people who allegedly participated in the scheme are identified in the indictment only by their initials: J.P., G.C., T.N. and S.C.
J.P. is referred to as being the sole owner and manager of the car dealership in Kentucky, and G.C. was the sales manager at the dealership, according to the indictment. T.N. also was employed at the Kentucky dealership and performed administrative tasks on behalf of J.P., according to the indictment.
S.C. was a transfer agent for the company the car manufacturer hired to operate the repurchase program, the indictment states.
Hasselblad does not identify the car manufacturer or the relevant dealerships in the indictment.
At the time of the alleged scheme, Toyota offered a buyback program for trucks that had their frames rusted out. Toyota’s policy for the buyback was to purchase the affected vehicles for 1½ times their value, based on the Kelley Blue Book calculation for vehicles in “excellent” condition.
In May 2017, U.S. marshals raided and closed Fannin Toyota, in Ashland, Kentucky, to seize property per a court order in a federal civil lawsuit against the dealership that found Fannin owed BB&T more than $17 million, according to a report from The Daily Independent, in Ashland.
The report also indicated that marshals were examining paperwork at the dealership, and the order also included information regarding missing vehicles.
At the time of the events alleged in the indictment, Love Toyota was located in St. Albans.
Fluharty and Russo are to be arraigned before U.S. Magistrate Judge Dwane L. Tinsley on Sept. 19. The case has been assigned to U.S. District Judge Joseph Goodwin.
NOTE: This story has been updated to state the name of a car dealership in St. Albans at the time relevant to the indictment. A previous version stated the name of a dealership that was not located in St. Albans at that time.
Moses Auto Group, the current Toyota dealership in St. Albans, released the following statement Saturday: "Moses Auto Group had no involvement in the activity alleged in the recent indictment relating to the Toyota dealership in St. Albans, West Virginia. Moses Auto Group purchased the dealership in March 2016. The actions alleged in the indictment took place between January 2013 and October 2015, prior to Moses Auto Group’s ownership of the dealership. Moses Auto Group and the Moses Family have been committed to serving our customers and community with honesty and excellence for over 70 years."