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Deception on Engines Charged : ‘Gray Market’ Mercedes Dealer Held

A “gray market” auto dealer from Sherman Oaks has been arrested on perjury and grand theft charges in connection with the sale of Mercedes-Benz cars that the Department of Motor Vehicles alleges were illegally registered, the DMV reported Friday.

Mark Frederick Segal, who had just gotten off a flight from Asia at San Francisco International Airport, was taken into custody Thursday when Customs Service agents checked a national computer registry of outstanding warrants, said Phil Chlopek, senior DMV special investigator for the San Fernando Valley.

The warrant alleged five counts of felony perjury and three of grand theft, Chlopek said.

“Gray market” car dealers sell vehicles, usually built for the European market, which are not manufactured to meet U.S. safety standards and California emission control regulations. It is legal to register such autos in California only if they are modified to meet state and federal standards, often a complicated and expensive task.

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Segal was licensed by the DMV to certify that autos were accurately described on their registration papers. Chlopek said the perjury charges were based on evidence that Segal falsely certified that five gasoline-powered Mercedes-Benz cars--which Segal had purchased used in Europe--had diesel engines, which are exempt from emission control tests.

The deceptions went unnoticed by the DMV while the cars were in the hands of the original buyers, Chlopek said. However, he said, when the autos were resold, the buyers were required to get new exemption certificates, which revealed the discrepancy between the registration papers and the actual engines.

The grand theft charges were based on complaints by buyers of the cars that they had been swindled out of the purchase prices and left with cars that cannot be legally licensed without expensive conversion work, Chlopek said.

Segal was being held in San Francisco on $100,000 bail, awaiting transfer to Los Angeles for arraignment, Chlopek said.

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