Arizona Auto Dealership Owners Accused of Fraud and Money Laundering
PHOENIX - Attorney General Mark Brnovich announced that a State Grand Jury indicted nine individuals accused of running an illegal operation that produced tens of thousands of titles for vehicles being sold in 42 states. Scott Bandy, James Johnson, Mary Fialko, James Edward Fialko, Lon Chaneyfield, Ivan Valenzuela, Oscar Valenzuela, Tamela Bandy, and Ashley Cwick were charged with Conspiracy, Fraudulent Schemes and Artifices, Money Laundering, Control of an Illegal Enterprise, and Fraudulent Schemes and Practices. Bandy and Johnson were also charged with filing fraudulent Arizona Income Tax Returns.
From 2015 to present, these individuals are accused of conspiring to fraudulently obtain Arizona car dealership licenses, and of consigning those dealership licenses to paying subscribers via an online membership service. The indicted defendants are alleged to have fraudulently presented these subscribers to AuctionACCESS as legitimate dealership employees. AuctionACCESS is an auto auction company that limits auction access to legitimate dealership employees. Over 1,500 subscribers purchased thousands of vehicles in 42 states, and the indicted defendants are accused of fraudulently titling more than 30,000 vehicles during the course of this scheme. The amount of illegal proceeds associated with this scheme is alleged to be at least $6.8 million.
The Arizona Department of Revenue’s Criminal Investigations Unit also examined the income reported on Johnson and Bandy’s Arizona individual income tax returns. It is alleged that in 2017, Bandy earned approximately $247,700 from this illegal enterprise, while only reporting $40,210. In 2018, Bandy allegedly earned $358,366, but only reported $145,252 to the State of Arizona. Similarly in 2017, Johnson is alleged to have earned $891,683 but instead reported $17,989. In 2018, Johnson allegedly earned $787,251 instead of his reported loss of $4,338.
To date, this is the largest operation since the Arizona Curbstone Enforcement Joint Task Force (ACE-TF) was created in 2018. ACE-TF combines the resources of the Arizona Department of Transportation’s Office of Inspector General, Arizona Department of Revenue and Arizona Independent Automobile Dealers Association. Curbstoning involves selling vehicles in a way that violates the parameters set by a dealer’s license. Consumers can file a complaint on an unauthorized automobile dealer online here.
All defendants are presumed innocent until proven guilty in a court of law.
Assistant Attorneys General Maureen Feeney and Kimberly Nye are prosecuting this case.
Copy of indictment here.