AUTOS

Anti-Subleasing Appeal: A bid by the former operator of an Orange County-based auto subleasing agency to have the state’s 1988 anti-subleasing law overturned has been rejected.

In a Nov. 30 decision, the state Court of Appeal denied Thomas C. Carter’s appeal of his 1993 conviction on seven counts of illegal subleasing.

Carter, who now faces three years in state prison, had operated a business that arranged to find sublessees for people who could not keep up with the payments on their vehicles and couldn’t sell them for as much as they owed. The sublessees typically were people who needed cars but couldn’t qualify for a loan.

Carter’s business took an advance fee of $1,500 to $3,000 from the sublessees and promised to find them permanent financing within six months so they could buy the cars. In the seven cases in which Carter was charged with illegal subleasing, none of the sublessees ever got that financing or a refund of their money. In each case, the original loan prohibited subleasing without the bank’s permission--permission Carter’s company never obtained.

In his appeal, Carter, a Lake Forest resident, argued that the law didn’t apply to his business because his company was just a middleman and didn’t sign any of the paperwork or actually transfer any of the vehicles from one purchaser or lessee to another.

The appeal court, however, said that Carter’s argument “would frustrate the Legislature’s intent (in passing the law) because it would absolve those who promote and assist parties . . . in unlawful or fraudulent activities that they could not do themselves.”

The upshot, said Rande King, the Irvine-based investigator for the Department of Motor Vehicles who spent several years building cases against Carter and several other subleasing company operators, is that it remains a felony in California to charge a fee to arrange a sublease of an automobile if you were not a party to the original financing agreement and if the lender who still holds title to the vehicle has not approved the deal.

King found that Orange County was a hot spot for subleasing operations like Carter’s in the late 1980s. In most cases, he said, the leasing agents never provided the financing they promised and simply pocketed the fees. That left the original buyer on the hook for a car someone else was driving, and it left the sublessees in possession of cars they could never own, even if they continued making the monthly payments.