Massive ESC Fraud Conviction. Wow!

Former Ford dealer pleads to fraud charges
Wednesday, December 05, 2007
By John S. Hausman

Tony Allen Nielsen will avoid state prison under a sentencing commitment Tuesday by 14th Circuit Judge Timothy G. Hicks. That still leaves the option of a county jail term of up to a year when Nielsen is sentenced at 8:30 a.m. Jan. 11. Hicks allowed Nielsen to remain free on bond until sentencing.

Nielsen also is expected to be socked with a huge restitution tab. Prosecutors say he has already paid back more than $300,000 that authorities say he stole by defrauding hundreds of customers.

Nielsen, 43, now of Wayland, pleaded to three counts of larceny by conversion of more than $1,000 but less than $20,000. A no-contest plea is not an admission of guilt but results in conviction, and judges treat it as a guilty plea at sentencing. It's allowed when a defendant faces civil liability, as in Nielsen's case.

The criminal charges against Nielsen were the outcome of a complicated, yearlong investigation that included repeated interviews with more than 400 victims allegedly defrauded in an extended warranty scam and failure to pay off loans on trade-in cars. Investigators also painstakingly scrutinized reams of financial documents.

At the time of the fraud -- from April 2005 through August 2006 -- Nielsen owned and operated Discovery Ford at 3001 W. Holton-Whitehall.

The dealership has had a new owner since November 2006 and a new name, Whitehall Ford. Nielsen has no connection with the current dealership.

State Police in August 2006 began investigating Discovery Ford after police were contacted by a customer who had taken a vehicle to another Ford dealership and found out the car never was registered for an extended warranty.

Investigators quickly found that the dealership had allegedly failed to forward money paid by customers for extended warranties. In many cases, the payment was $2,000.

The investigation soon spread. Authorities believe Nielsen defrauded hundreds of customers and kept hundreds of thousands of dollars that should have been forwarded to insurers and lenders.

Only three charges were filed because additional counts would not have increased Nielsen's possible sentence exposure, Prosecutor Tony Tague said earlier.

All the convictions relate to the extended warranty issue. In each count, the theft victim is listed as Vehicle One Warranty Service. That's because that insurance company ended up paying for the extended warranties.

The other broad area of fraud -- involving some 25 victims -- involved lenders' liens on customers' cars. Discovery Ford allegedly failed to pay off existing loans on vehicles traded in by customers for new vehicles. The dealership also allegedly failed to forward customers' payments for "gap insurance" to cover the difference between the value of a car totaled in an accident and the amount owed on a new car.

Prosecutors and police met several times with those victims and wound up with an arrangement under which Nielsen paid off all of the loans and gap insurance.