A defunct Orange County-based car leasing and sales firm is under investigation by the state Department of Motor Vehicles for allegedly defrauding customers and financial institutions in schemes involving about 40 cars, including Rolls-Royces and other luxury models.
DMV investigators say they are looking into allegations that Western Pacific Auto Leasing Inc., a company formerly located in Orange, took cars in trade without compensating the rightful owners, engaged in credit fraud and sold cars without handing over the title of ownership.
"I haven't seen anything as big. It involves a lot of cars," said Donald B. Smith, supervising special investigator in the DMV's West Los Angeles office. Losses are estimated at more than $1 million.
He said the problems at Western Pacific began last year. Several lawsuits have been filed against the company by former customers.
Barclay Davis, Western Pacific's owner, could not be reached for comment. John Rance, an attorney who has represented Western Pacific, declined to comment.
During a six-month investigation, authorities have served eight search warrants on Western Pacific's former offices in Orange, Santa Monica and Rancho Mirage. The company went out of business earlier this year, Smith said.
The DMV is working in conjunction with the state Department of Justice and other state and federal agencies.
Though no charges have been filed against the company, Smith said he expects the investigation to be completed later this year.
"It's quite a bit of money," said Pat Cooley, a state Justice Department investigator. "Banks have been the victims as well as individuals."
Judy Hicks, a real estate executive from Long Beach, said she went to Western Pacific last year after reading a newspaper advertisement that offered an attractive deal on the lease of a new Acura Legend. She said the company took her 1986 Mercedes 420SEL in trade and gave her a check for $36,500 to pay off the loan on the car. Hicks said the check bounced and the company refused to return the Mercedes to her. Besides $500-a-month payments for the Mercedes, she also had to pay the lease on the Acura.
Hicks said she has spent months contacting the DMV, consumer agencies and lenders. "My credit is ruined. I am an emotional wreck," she wrote in one memorandum to authorities. "I have done everything possible on my own to straighten this out."
Hicks was more fortunate than some other customers who have filed complaints or lawsuits against the company. The bank that had financed the Mercedes finally accepted the loss and the car was eventually recovered.
David and Sharon Jackson of El Toro sued Western Pacific after they went to the agency last year to buy a new $21,700 Nissan. In a lawsuit filed in Orange County Superior Court in July, the Jacksons allege that Western Pacific officials told them that the car was available and waiting on the docks. They took possession of the car and paid by check, but later found out that the car had not come from the docks, but from a Newport Beach auto dealership that had agreed to a standard resale arrangement with Western Pacific. The deal went awry when Western Pacific officials cashed the check and never paid the dealer, leaving them with a car they do not own.
Andrew C. Muzi, a Tustin attorney representing the Jacksons, said the couple has been allowed to use the car while he seeks to secure title to the vehicle in court.