By Carolyn Sackariason
Daily Press Staff Writer

DOWNTOWN LA — The parent company that owns Honda of Santa Monica is expected to pay nearly $2 million in restitution, civil penalties and costs for allegedly ripping off customers.

The settlement, which is expected to be announced today by the Los Angeles District Attorney’s Office, is separate from the pending criminal cases of six former Honda of Santa Monica sales representatives who allegedly scammed hundreds of thousands of dollars from customers by tacking on charges of “theft etch” to their contracts without their customers’ knowledge. Theft etch marks a vehicle’s parts with traceable numbers in the event of a theft.

A judgment signed by attorneys representing Kramer Motors Inc., the North Carolina-based company that owns Honda of Santa Monica, and the DA’s office was filed in Los Angeles Superior Court this past Friday.

The judgment states that Kramer Motors will pay $548,000 in civil penalties and costs for violating provisions of the Business and Professions Code. Of that amount, $73,000 is for costs of the investigation, which began in July 2002, as well as the prosecution of the case, which began in October of 2005 and still continues.

Kramer Motors also will reimburse customers who purchased or leased motor vehicles from Honda of Santa Monica between April 7, 2000, and Oct. 31, 2002, that included the theft etch aftermarket product. The judgment orders that Kramer Motors must within 45 days submit to the DA’s office a list of customers who were potentially scammed. And within three months, each customer will be sent a claim so they can be reimbursed.

Los Angeles Deputy District Attorney Dana Aratani, who works in the consumer protection division, said more than $800,000 of theft etch had been sold at Honda of Santa Monica, which would show up on the sales contract as a VT registration charge.

“Essentially they are agreeing to reimburse any customer who had theft etch,” Aratani said. “It’s a blanket reimbursement.”

CRIMINAL INVESTIGATION PROCEEDS TO COURTROOM

Former employees Ali Asghar Hussain, Hamid Reza Khaki, Yaprem Zohrab Yaralian, Ahtamet Uersunthornwattana, Yaser Alkasem and Thomas Holterhoff all face felony counts related to the overcharging of customers, according the DA’s office.

The DA’s office launched an investigation into the dealership in July 2002, after an employee tipped investigators off to the alleged scam. The dealership was raided by investigators, including FBI agents, who seized boxes of files and computers from the finance and sales departments on Sept. 25, 2002.

Ever since, investigators and prosecutors have been sifting through files, computer records and other evidence to build their case.

The informant, James Alexandre, who worked as general manager at Honda of Santa Monica until April of 2002, wrote a letter to the DA’s office detailing the allegations, which was received July 9, 2002. The next day, the investigation was launched.

Alexandre claimed that once he learned that six employees were overcharging customers to pad their own commission sales, he went to Kramer managers to alert them of the scam. But they did nothing, Alexandre claimed.

Alexandre, who argued he was wrongfully terminated, settled with his former employer in an arbitration hearing held in November. Details of the settlement have been sealed and are not public record. Other former Honda of Santa Monica employees who left the dealership after the scam was reported are scheduled to take their cases into arbitration in June, according to Mike Goldstein, a Beverly Hills-based attorney who is representing the employees.

Sales representatives at Honda of Santa Monica also attached overcharges and fake charges for LoJack systems, and what was called a “California tire fee/doc fee,” “Touch of Class,” and “tint.” Wheel locks also were part of the alleged scam, according to the complaint filed by the DA’s Office in October of 2005.

The 25-page complaint details 114 overt acts in which the defendants allegedly took part. There also are 24 additional counts that charge the defendants with grand theft of personal property exceeding $400.

According to the felony complaint, 33 different customers were bilked out of nearly $30,000 between 2001 and 2002, when all of the defendants worked in the finance and sales departments at the dealership. But authorities believe there are many more victims and at least $800,000 was defrauded from customers at the dealership.

CAR DEALERSHIP SCAM BECOMES A CIVIL MATTER

On the same day of the raid in 2002, a class-action lawsuit was filed against the dealership in downtown Los Angeles Superior Court. The suit alleges several customers were ripped off by the dealership, located at 1720 Santa Monica Blvd. That suit has been put on hold until the criminal investigation is complete, said Dan Hoffman, the attorney representing the plaintiffs.

Customers who have signed onto the lawsuit allege they had been given favorable deals in the showroom only to have the dealership’s finance department renegotiate the deals afterwards. Such a practice is forbidden by state law, according to the lawsuit.

It’s unclear how the recent settlement judgment will affect the class-action lawsuit.

The judgment, which is not to be construed as an admission of liability, claims that Kramer violated the Business and Professions Code by making untrue and misleading statements relating to charges of theft etch, describing it as “VT” registration. Kramer also misrepresented prices and quotes that included significant undisclosed charges, which inflated the monthly payments, according to a complaint for injunction filed by the DA’s office on Friday.

The complaint also states that Kramer misrepresented car sales and leases by failing to adequately disclose that charges for the theft etch were included in the gross capitalized cost of the vehicle. The dealership also failed to fully explain to customers that they were being charged for aftermarket, and finance and insurance products.

The second cause of action in the complaint states that Kramer violated the Business and Professions Code with unfair competition practices by lying to customers about their contracts and charges. Kramer made customers sign documents that were blank, or partially completed, which were different than what was orally negotiated. The car dealership also failed to activate the theft etch or honor obligations it made in the agreements, the complaint states.

Under both sections of the Business and Professions Code, Kramer has been assessed $2,500 for each act of misleading or untrue statements.

SALES REPS UNDER FIRE

All six defendants have been released by the court on their own recognizance and are awaiting trial. They have pleaded not guilty.

Hussain, 37, who was director of finance at the dealership from December of 2000 to June 2002, faces 25 counts related to conspiracy to defraud another of property.

Khaki, 38, who was finance manager from December 2000 to July 2002, faces nine counts related to conspiracy to defraud another of property.

Uersunthornwattana, 44, who was finance manager from January 2001 to August 2001, faces seven counts related to conspiracy to defraud another of property.

Yaralian, 39, named as a coconspirator in the complaint, faces five counts related to conspiracy to defraud another of property.

Alkasem, 43, also named as a coconspirator, faces six counts related to conspiracy to defraud another of property.

Holterhoff, 63, another coconspirator, faces two counts related to conspiracy to defraud another of property.