Three-year investigation reveals Honda of Santa Monica sales reps overcharged customers
DOWNTOWN LA — Investigators on Friday issued felony arrest warrants for five former employees of Honda of Santa Monica who allegedly scammed hundreds of thousands of dollars from customers.
The alleged scam, which investigators say occurred from 2000 to 2002, involved the car dealership’s sales representatives tacking on charges of “theft etch” to customers’ contracts without the customers knowing it. Theft etch marks a vehicle’s parts with traceable numbers in the event of a theft.
“Theft etch would show up on the contract as a VT registration charge,” said Los Angeles Deputy District Attorney Dana Aratani, who works in the consumer protection division. “Based on interviews with people, we know that over $500,000 of theft etch has been sold (at Honda of Santa Monica).”
Ali Asghar Hussain, Hamid Reza Khaki, Yaprem Zohrab Yaralian, Ahtamet Uersunthorn-wattana, Yaser Alkasem and Thomas Holterhoff all face felony counts related to the overcharging of customers, according to the Los Angeles District Attorney’s Office, which filed the felony complaint. Holterhoff is being charged, but an arrest warrant has not been issued for him.
The DA’s office launched an investigation into the dealership, owned by Sonic Automotive, 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 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.
“It was a very heavy investigation, and this is being investigated in conjunction with other dealerships,” Aratani said, adding more charges against additional suspects in unrelated cases are expected in the following weeks. “It makes it a difficult task, but we are trying to get the larger picture.”
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.
“There are a lot more people affected by theft etch, but these are the people we interviewed,” Aratani said.
The informant, James Alexandre, who worked at the dealership 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.
Back in 2002, Hussain, when questioned about overcharging, allegedly told Alexandre that “he was smart enough to cover any of his tracks and that the auditors from Sonic Automotive didn’t know what to look for, even if the evidence was right in front of their eyes.”
Overcharges and fake charges for LoJack systems, and what was called a “California tire fee/doc fee,” and “Touch of Class,” “tint” and wheel locks also were part of the alleged scam, according to the complaint.
The 25-page complaint details 114 overt acts that the defendants allegedly took part in. There also are 24 additional counts that charge the defendants with grand theft of personal property exceeding $400.
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.
Aratani expects three of the defendants to surrender on Monday, one of whom is coming from Arizona while the other two are in the area. The DA’s office is attempting to contact the other three defendants — two of whom are in the area and the other is in San Jose. The three defendants who are expected to surrender will be processed and arraigned in downtown Los Angeles.
On the same day of the raid, 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.
After the raid, all of the defendants were fired. Honda of Santa Monica is owned by North Carolina-based Sonic Automotive, which owns car dealerships across the country. Sonic reportedly bought Honda of Santa Monica in 1999 from Kramer Motors Incorporated, which also is named in the class-action lawsuit.
Honda of Santa Monica officials have said in the past that they have replaced the entire finance and sales departments, and have instituted safeguards to ensure that no more scams will occur.
Originally published in the Santa Monica Daily Press print edition on October 1, 2005. Read the original PDF.