Clean Sheet Day and the Three Fs

Raise your hand if you love clean sheet day! ✋🏻

Please allow me to state this clearly: I. Love. Clean. Sheets.

Who doesn’t love sliding into buttery, soft, clean sheets…(That’s not really a question.) It feels great, right? What day is clean sheet day in your house? For me, it’s FriYaY!

You know what else feels great? When you know you are (1) ready for problems (you have a plan), (2) you are transacting your business in a way to avoid problems to begin with to reduce risk, (3) you have awareness of what issues your insurance policies will and will not cover, and (4) when you are educating your employees on what is right and what isn’t.

As history should guide our actions, here are a few recent enforcement actions which should have our attention.

Nissan of Shelby’s employees face more than four hundred (400) criminal charges as a result of offering vehicles for sale without disclosing their salvage status. The investigation was concluded by the North Carolina Division of Motor Vehicles License and Theft Bureau.¹

The allegations include 137 charges of failure to deliver vehicle titles and 33 charges of failure to disclose vehicle damage.²

Some of the vehicles had been flooded. Some charges were brought because of improper use of temporary tags.

Marty Holman, a spokesperson for the North Carolina Department of Transportation was quoted as saying that the employees charged with crimes were being held responsible based on their “expected duty and specific responsibility.”³

One former employee is facing 110 charges of failing to inspect vehicles offered for sale.⁴

Do you have a clear policy on these issues at your store? Have you educated your employees on topics for which you want to hold them accountable? Have the employees signed a policy showing they clearly understand your company philosophy and structure? If these problems arise at your store, will the regulator come after you because you haven’t been clear? Or your employees? Or both?

Next, in Charleston, South Carolina, at Hoover Mitsubishi, a pair of former employees have plead guilty to federal charges stemming from a scheme where they falsified documents to make customers with bad or no credit appear more favorable to lenders.⁵

Kentrell Davis and Shawn Rustin each pleaded guilty to one count of conspiracy to commit wire fraud, bank fraud, and knowingly making a false statement to a financial institution.⁶

These two (2) employees falsified down payment receipts, bank statements, paycheck stubs, proof of residence, utility bills, and other documents. The two who were charged also created two (2) sales contracts for each vehicle sold. They had a fraudulent contract sent to the lender and one contract which was kept at the dealership.⁷

The FBI stated the fraudulent contracts also contained trade-ins (which did not exist) and fake manufacturer’s rebates.⁸

Is this happening at your store? How would you know? Is anyone auditing your deal jackets and reporting back to you? Having the proper information flow back to you as the decision maker is a keystone of corporate governance.

Third, Automotive News reported Star Chrysler Dodge Jeep Ram in Queens, New York sued a former finance manager for $60,000 in commissions because he had falsely listed accessories that were not on the vehicle.⁹ This practice is also known as “power booking.”

The dealership took David Bernstein to court as a result of his making false misrepresentations to the dealer’s lenders. The lenders discovered the power booking when they repossessed various vehicles from the dealership.

Also, Star sued a former sales manager for “self-dealing” because he bought and sold sixteen (16) vehicles without upper management consent. The self-dealing included selling the vehicles at $500 below what the dealership paid. Subsequently, he traded the vehicles back into the dealership for a profit.¹⁰

So, what should you do about all this negative and unpleasant news?

Start compliance training right now. Use this article as your primer. Make a copy, educate your employees, and ask them to sign an acknowledgement that (1) they understand what happened, (2) they know these practices are both against the law and company policy, (3) they agree not to engage in any of these practices, and (4) they will communicate with upper management if they believe it is happening at your store.

Enforcement activity continues to be robust and is continuing to be pertinent and prevalent in our community.

Consider ongoing, monthly, educational compliance training to begin the process to insulate your company against any allegations that your company willfully violated lender agreements and the law. Then, you’ll feel like you are sliding into clean sheets every day!

¹ Automotive News, “North Carolina Nissan dealership employees face more than 400 criminal charges,” by Paige Hodder, August 18, 2023.
² Automotive News, “North Carolina Nissan dealership employees face more than 400 criminal charges,” by Paige Hodder, August 18, 2023.
³ Automotive News, “North Carolina Nissan dealership employees face more than 400 criminal charges,” by Paige Hodder, August 18, 2023.
⁴ Automotive News, “North Carolina Nissan dealership employees face more than 400 criminal charges,” by Paige Hodder, August 18, 2023.
⁵ ABCNews4.com “Former employees at West Ashley car dealership plead guilty to federal fraud charges,” by Joseph Erickson, August 22, 2023
⁶ ABCNews4.com “Former employees at West Ashley car dealership plead guilty to federal fraud charges,” by Joseph Erickson, August 22, 2023
⁷ ABCNews4.com “Former employees at West Ashley car dealership plead guilty to federal fraud charges,” by Joseph Erickson, August 22, 2023
⁸ ABCNews4.com “Former employees at West Ashley car dealership plead guilty to federal fraud charges,” by Joseph Erickson, August 22, 2023
⁹ Automotive News,, “New York dealership files lawsuit against former special finance manager,” by Eric Freedman, July 26, 2023.
¹⁰ Automotive News,, “New York dealership files lawsuit against former special finance manager,” by Eric Freedman, July 26, 2023.