Zurik: Car dealer co-op fraud could draw federal investigators - WSFA.com: News Weather and Sports for Montgomery, AL.

Lee Zurik Investigation: Car dealer co-op fraud could draw federal investigators

Updated:
Allen Krake, president of Supreme Automotive Group Allen Krake, president of Supreme Automotive Group
NEW ORLEANS, LA (WVUE) -

The documents we obtained look like typical invoices. One appeared to be a perfectly legitimate invoice to a local car dealer for Google ads - the total cost was $3,500.

That legitimate-looking invoice and the others we received are fakes.

"It seems as if there's clearly fraud issues here," says FOX 8 legal analyst Joe Raspanti, basing his comment on a letter sent to us by the car dealer that addresses "non-authentic invoices" submitted to General Motors and Ford.

Most car dealerships take part in co-op programs. Most of the time, that means if the dealership spends money on advertising, the manufacturer will also spend money. For example, if you buy a $20,000 car, $100 from your purchase may go into a co-op advertising fund. The manufacturer may match 80 percent of that money, which adds $80 to the advertising pot - that $100 becomes $180. And with each additional car purchase, that advertising pot grows.

After local dealers buy advertising, they can recoup their money through this co-op program. In our example, if a dealer spends $180 on advertising, they send the car manufacturer, such as GM, an invoice for $180, and they get paid back that money from the co-op fund.

The question in this story: Who created fraudulent invoices that allowed the dealership to get the money without ever buying advertising?

Supreme Automotive took part in co-op programs with Ford and GM. Supreme has dealerships in Slidell, LaPlace, Plaquemine and Gonzales. They used to operate a store in Hammond, too.

That takes us back to that invoice from the beginning of the story, an invoice for "co-op advertising." The documents obtained by FOX 8 News include many more just like it - invoices Supreme now calls "non-authentic," or fake.

We requested an interview with the president of Supreme Automotive Group, Allen Krake. Instead, we heard from the attorney, David Loeb. We spoke to him by phone, and last week he sent us a statement. He writes, "Some non-authentic invoices were submitted for advertising reimbursements." He says that was done by Raymond C. Reggie, "on behalf of some of the auto dealerships in the Supreme Automotive Group."

Raymond Reggie, the man Supreme says submitted the fake invoices, did advertising work for the car dealer as an outside vendor. But Reggie's attorney says he didn't create or submit the invoices.

"I believe that he was in charge overall as the, you know, provider of the services, to determine the amount of advertising and how it was placed," attorney Richard Tomeny says, "and I would say [he] oversaw the placement of Internet advertising, along with other advertising, print and television and radio. So he oversaw the whole operation."

Tomeny gave us the documents, which appear to show a Supreme Automotive employee - not Reggie - uploaded the invoices to the manufacturers. He insists that Reggie had no control of uploading invoices.

"That was done by Supreme employees," says Tomeny, who maintains that his client received no money for the invoices.

Reggie's attorney says they found more co-op fraud after Reggie stopped doing work for Supreme. "It's disingenuous for them to say that Mr. Reggie was involved in this co op fraud when it continued to occur after he severed the relationship with them."

Supreme has yet to provide us with any documents to show who created and submitted the co-op invoices. Supreme says it's limited in what it can say because of other, separate allegations they've made against Reggie, including theft against Supreme - he's been charged in Baton Rouge and St. Tammany Parish in connection with those allegations. The company says, until those cases are resolved, they can't say much.

Supreme admits Ford and GM were sent those non-authentic or fake invoices, during the same time that taxpayers were bailing out GM.

"Because it's a big company like General Motors, all that really means is that their own attorneys, probably beating on the door of the U.S. attorney's office, saying, ‘Please investigate,'" says Raspanti. "They want their money. I know they were being held by the U.S. government there for a while, but at the end of the day, it's a fraud that occurred to an entity and they are going to investigate it."

Supreme says they've determined Ford paid them at least $3,400 from non-authentic invoices and GM paid almost $57,000. But Reggie's attorney says those are low estimates.

"We have records from Supreme that indicate that the actual amount of co-op fraud was, in the limited records that we have, over $200,000 for just a year and a half," says Tomeny.

In the attorney's statement, Supreme says neither Ford nor GM "was harmed in any way by the false invoices... only Supreme was harmed."

It's still unclear why these invoices were submitted or who created them. Our legal analyst says the feds will likely want to know, and it shouldn't be difficult to find out.

Raspanti says, "What we have is two people pointing at each other. I guess the old saying, ‘You need to follow the money' - see where it goes. Who had a motive to defraud someone for profit?"

In the statement, Supreme said it notified Ford and GM about the fake invoices. Supreme says they had plenty of available advertising that qualified for co-op reimbursements, but they didn't get reimbursed for it. The statement says that shows the company had no reason to create any fake invoices.

In addition to the criminal matters, Supreme also has a civil suit against Reggie. All of the documents FOX 8 News obtained for this story were handed over as part of that civil suit.

 

Copyright WVUE. All rights reserved.

FOX 8 News received this statement in mid-April from Supreme Automotive Group attorney David Loeb in response to our inquiries about co-op fraud connected to Supreme.
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