Flood trucks lead to DeNaples probe

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Trucker Richard Rothstein thought he'd found a bargain.

Rothstein bought a Freightliner Columbia tractor in December 2005 for $75,000 from DeNaples Auto Sales in Dunmore, Lackawanna County. The truck, which typically sold for $125,000 or more, had come from New Orleans, where it was parked when Hurricane Katrina devastated the city in August 2005.

It was one of 30 bought with a check signed by Louis DeNaples, the controversial owner of Mount Airy Casino Resort

Rothstein says he was told by Dunmore Repair, which handled the sale for DeNaples Auto Sales, that floodwaters reached only halfway up the tires and that the vehicle had not been damaged by the storm. The truck came with a full warranty and a clean title. The odometer read 132 miles.

''It was spotless and looked like it was in great condition,'' Rothstein, the owner of Rothy's Inc. near Scranton, said in a recent interview.

But three months after Rothstein bought the truck, its engine caught fire. And when Rothstein brought the rig in for repairs, he learned that his truck and the 29 others had been submerged during Katrina and sold as salvage to DeNaples Auto Sales for $6,000 each by LeasePlan USA of Georgia.

Pennsylvania State Police, acting on a referral from the FBI, began investigating the case early last year as possible ''title washing'' of the Hurricane Katrina trucks, which were purchased with a $180,000 DeNaples Auto Sales check, according to Ralph Periandi, a former deputy commissioner for the state police. A law enforcement source said the investigation remains open.

Title washing, a felony offense, entails dealers buying flood-damaged vehicles, cleaning them and selling them in different states without disclosing the damage on the vehicle's title, as required by law.

State police spokesman Jack Lewis and spokeswoman Cpl. Lynette Quinn did not return calls for comment on the Katrina-related probe.

Thirty years ago, DeNaples pleaded no contest to defrauding the federal government of more than $500,000 for cleanup work associated with another natural disaster, Hurricane Agnes.

DeNaples currently faces four perjury counts for allegedly lying to Pennsylvania gaming regulators to obtain a slots license for Mount Airy in Monroe County. DeNaples has proclaimed his innocence.

The Pennsylvania Gaming Control Board, after learning about DeNaples' involvement with Rothstein and the Katrina trucks from its investigators, referred the matter to the Department of State, which licenses auto dealers. The department concluded there was no fraud in the titling of the trucks. The board then awarded DeNaples a slots license in December 2006.

The trucks were one of several issues involving DeNaples brought before the board before its vote. Among them: allegations of ties to organized crime. The board's duty was to determine whether DeNaples was suitable to hold a slots license, as per state gaming law.

Tad Decker, the former gaming board chairman, said the board looked ''thoroughly'' at the Katrina truck matter. ''We had suspicions it might be something,'' Decker said, ''but it turned out not to be an issue.''

A DeNaples spokesman, Kevin Feeley, said ''a considerable amount of evidence was presented to the gaming board and they concluded, correctly, that there is no basis for any claim that these trucks were bought or sold in any improper way or titled in any improper way.''

Feeley also insisted that the trucks were not ''salvage vehicles, no matter what is said.''

The trucks were leased by Air Products and Chemicals of Trexlertown, and they were parked at an Air Products facility in New Orleans when Katrina struck. The trucks were submerged in the subsequent flooding that devastated New Orleans, so the leasing company, LeasePlan USA, asked Air Products to help find someone to buy them as salvage.

''We have a fleet of trucks, and we know people out there who are interested in buying [damaged] trucks, and we contacted them. Our sales documents clearly identified the trucks as being water-damaged,'' said Art George, an Air Products spokesman.

One of those contacted was Louis DeNaples, who offered $180,000 for the trucks, said George Astraukas, a LeasePlan USA vice president. DeNaples first wrote a check from Keystone Landfill Inc., which DeNaples owns. But that check was rejected because it had to come from a licensed auto dealer, said Astraukas, so DeNaples issued and signed a check from DeNaples Auto Sales.

After buying the trucks, DeNaples was required to report them to the Pennsylvania Department of Transportation as ''water-damaged,'' Astraukas said. PennDOT brands such vehicles with a ''W'' on state titles. The title on Rothstein's truck, obtained by The Morning Call, shows no such ''W.''

''We thought [he] would sell them as salvage,'' said Astraukas, confirming that all 30 trucks had been under water. ''But he didn't, apparently.''

The truck drove ''beautifully'' the first few months, Rothstein said, but after Rothstein developed a cough, he hired a driver to cover him while he traveled to Florida to convalesce.

''I planned to take a month off,'' he said, ''but then I got a call that the truck caught fire and came back.''

Rothstein said he took the truck to a repair shop and was told the ''full warranty'' given by Dunmore Repair had been voided long before he bought the vehicle. Air Products had sent a letter to the manufacturer, Freightliner, noting the vehicle's damaged condition when it was sold to DeNaples, said George, the Air Products spokesman, and Freightliner subsequently had voided the warranty.

Without the warranty, Rothstein said his insurance company agreed to pay the $5,000 in repairs. But when mechanics removed the dashboard, Rothstein said they found dead salamanders and dried mud. They also found mold throughout the cabin.

''They did a mold test and there was mold everywhere,'' Rothstein said.

Irate, Rothstein said he threatened to sue, and Dunmore Repair repurchased the truck for $68,000. Rothstein's truck along with other flood trucks are parked in a trucking company lot off Interstate 81 near Pittston, Luzerne County.

After learning of the truck, investigators for the Gaming Control Board subpoenaed and deposed Rothstein in summer 2006, months before the board awarded DeNaples a slots license. Along with his testimony, Rothstein supplied the investigators with documentation showing his truck was sold with a full warranty from Dunmore Repair and clear title from DeNaples Auto Sales. The title was signed by DeNaples' brother Dominick.

Former gaming board chairman Decker said the board referred the matter in fall 2006 to the Department of State. The gaming board dismissed the incident, he said, after the department reported it ''didn't have any proof there was anything illegal.''

The department responded to The Morning Call's questions with a statement issued by spokeswoman Catherine Ennis:

''The positive evidence uncovered by the department indicated that there were no fraudulent representations by either the DeNaples Brothers or Dunmore Repair. The purchasers were aware that the vehicles were damaged in a flood. The DeNaples brothers were not involved directly in the sale of the vehicles to the complainants.''

Ennis declined further comment, referring questions to PennDOT, which handles vehicle titling. A PennDOT spokeswoman, Danielle Klinger, said PennDOT ''does not comment on individual cases.''

The FBI investigated, interviewing Rothstein, Air Products and LeasePlan USA before determining there were no federal criminal violations. Vehicle titling is a state function.

''We did look at the 'exploding Katrina truck' and had the Northern District of New York take a look at it and they issued a declaration based on the lack of federal venue since it involvedÂ…titling,'' said Jerria Williams, an FBI spokeswoman in Philadelphia.

Williams said the U.S. attorney in Binghamton, N.Y., was assigned the case because of a conflict involving Thomas M. Marino, the former U.S. attorney in Scranton. Marino had recused himself after notifying the Department of Justice that he was a reference on DeNaples' slots application. Marino resigned in October and now works as an in-house attorney for DeNaples.

DeNaples' attorney, Richard Sprague of Philadelphia, said he ''never even knew'' the FBI investigated the Katrina truck incident. ''We never got an inquiry from the FBI or any indication of interest,'' Sprague said.

The FBI referred the case to the state police, after which PennDOT finally branded the truck a ''flood vehicle'' in May 2007.

There are roughly 500,000 certified flood vehicles from Hurricanes Katrina and Rita, said Frank Scafidi, a spokesman for the National Insurance Crime Bureau, a nonprofit agency operated by the insurance industry.

A flood vehicle is identified as being ''completely or partially submerged in water to the extent that its body, engine transmission or other mechanical component parts have been damaged,'' according to the crime bureau. Because of the flooding, many of the vehicles eventually develop electrical problems and catch fire, as Rothstein's truck did, said Scafidi.

''We recognize that the opportunity for this kind of title washing is bigger than it's ever been,'' Scafidi said. ''But it's not a federal crime. More often than not these are state violations regarding misrepresentation of a title.''

More than two years after buying the truck, Rothstein says he's suffering from a number of health issues, including an ever-present cough, which he blames on the mold in the truck.

''Right before I spoke to the FBI, I called Air Products and spoke to their chief mechanic, who said he traveled to Louisiana right after the hurricane and was floating around the trucks in a rowboat,'' Rothstein said. ''He said they were submerged in toxic water.''

Reporters Kevin Amerman and Christina Gostomski contributed to this story.

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