Car Buyers Bilked of $2 Million, DMV Says

Two San Fernando Valley men raked in $2 million through an elaborate scam involving the sale of at least 225 used cars with false mileage readings and titles obtained through forged documents, Department of Motor Vehicles authorities charged Thursday.

Richard Centman, 41, of Van Nuys, was arrested Thursday and charged with 25 counts of grand theft and 25 counts of forging or counterfeiting documents. He pleaded not guilty at his arraignment in San Fernando Municipal Court and is being held at Los Angeles County Jail in lieu of $100,000 bond. The charges carry a maximum six-year sentence.

Carl Schwartz, 52, of Chatsworth, who authorities called the scam’s ringleader, will be charged with 25 counts of grand theft and 25 counts of submitting forged documents to the DMV, said Gary Naylor, supervising special investigator of the DMV’s Arleta office. Schwartz is serving a 32-month sentence at Norco Correctional Center on a grand-theft conviction for illegally buying and selling used cars. Investigators will arrest Schwartz on May 1, the day he is due to be released, Naylor said.

Officials said the arrests are the result of an 18-month DMV investigation. “This type of scam is not new,” Naylor said. “But the magnitude of this one is very large.”

Dealers Suspected in Scheme

Three licensed Los Angeles County dealers also participated in the scheme, according to Naylor. Charges have been filed against one, and the other two may be charged as the investigation continues, authorities said. None of the three currently are selling cars.

Robert David Wayne, 60, of Sherman Oaks was arrested Jan. 13 and charged with permitting Centman to act as a licensed salesman and dealer by using Wayne’s documents and license number. Centman is not licensed. All of the charges involved are misdemeanors.

Wayne said Thursday he plans to plead not guilty at his April 21 arraignment, but declined to discuss the matter further.

Schwartz and Centman’s alleged victims included numerous individuals and dealerships who unwittingly purchased cars with odometers that had been turned back and with invalid titles obtained with forged documents. Other victims included dealers who sold cars to Schwartz and Centman but did not receive payment, authorities said.

Cadillac Sold for $21,000

The transactions averaged more than $8,000 a car. However, they ranged as high as $21,000 for a Cadillac that authorities said Schwartz leased and then sold after he obtained a duplicate title with forged documents.

Authorities said they do not know where the proceeds from the alleged scam are. The money was “channeled through different bank accounts and laundered through different people,” said DMV investigator Phil Chlopek.

Schwartz and Centman sold cars throughout Los Angeles, Orange, Ventura and Riverside counties, Chlopek said. Authorities had “real good information” that at least another 25 cars were sold in San Diego County, he said.

Chlopek emphasized that the total was undoubtedly higher than the 225 cars authorities have identified. “This is just the tip of the iceberg,” he said. “We only know about the people who have complained.

‘A Hell of a Talker’

He described Schwartz as a personable man whose otherwise unexceptional life style included a weekly golf trip to Phoenix, Ariz. “He’s a con man from the word go,” said Chlopek. “He has a nice personality and he’s a hell of a talker.”

Authorities were alerted to the bunco operation when they received complaints from 25 Southland auto dealers. Some of the dealers said they had sold cars to Schwartz and Centman but were unable to collect payment; others purchased cars from the pair but were unable to sell them when the state stopped all transfers of titles obtained with forged documents, officials said.

Authorities said the pair operated as follows:

Schwartz and Centman paid up to $200 to a licensed dealer to use the dealer’s license number and documents to purchase a used car from an unsuspecting second dealer. A car was obtained with a “purchase draft”--a promissory note that can be exchanged for cash at the purchaser’s bank. This is common practice in the car wholesaling business.

The seller, in turn, would mail the car’s title, bill of sale and applications for registration--the documents needed to transfer the car--to the buyer’s bank. Customarily, these documents are picked up by the purchasing dealership when the purchase draft is cashed.

Instead, officials said, Schwartz and Centman would apply for a duplicate title at DMV by forging the signatures of the previous registered owner or the dealership that sold them the car. A duplicate title may be obtained without the car’s registration if the owner claims that both documents have been lost. The two also made copies of dealerships’ stamps to indicate on applications for new titles that the dealerships no longer owned the cars.

This permitted Schwartz and Centman to sell the car--either to another dealership or directly to a consumer--without picking up the legal documents or paying for the purchase drafts, authorities said.

The men generally greeted calls from angry dealers with feigned surprise and promises to make good on the deal, investigators said, but if the dealer persisted, Schwartz would pay them.

Odometers Turned Back

Before the cars were sold to another dealership or individual, Schwartz’s mechanic at a lot on Reseda Boulevard in Reseda would turn back the odometers to increase the car’s value, Chlopek said. The mechanic, whose name was not disclosed, reportedly told authorities he received $25 per odometer. He is expected to be a witness in the case, Chlopek said.

When Schwartz and Centman sold the cars to the dealers who allegedly participated in the scheme, the dealers knew that the odometers had been changed, investigators said, but would then sell the cars without informing buyers.

DMV officials said they will notify the cars’ buyers shortly. They said it is uncertain what will happen to the cars, since the dealers who sold them to Schwartz and Centman retain the legal title.

“You’ve got all these people out there who have bought cars and have titles that have been obtained through fictitious documents,” said Naylor, “and who also don’t know their odometers have been turned back.”