> ## Content Index
> Fetch the complete content index at: https://www.smdp.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# Bilked Honda buyers best get move on
- URL: https://www.smdp.com/bilked-honda-buyers-best-get-move-on/
- Published: 2006-06-27T15:00:00.000Z
- Updated: 2026-10-23T18:33:18.000Z
- Author: Carolyn Sackariason
- Tags: Education, Santa Monica, #archive-import

*Honda fraud victims have choice to make*

Consumers who believe they were bilked out of money when they purchased vehicles from a local dealership have little more than a month to become eligible for reimbursement, according to a settlement reached between the Los Angeles District Attorney’s Office and the parent company of Honda of Santa Monica.

The dealership, which was owned by Kramer Motors Inc. when the fraud occurred and is now owned by Sonic Automotive Inc., has already paid close to $400,000 to nearly 700 customers who were ripped off by former employees of Honda of Santa Monica between 2000 and 2002, according Los Angeles Deputy District Attorney Dana Aratani.

Investigators are trying to contact an additional 250 customers who are eligible for reimbursement from the dealership, located at 1720 Santa Monica Boulevard.

“A lot (of notices) are being sent back with wrong addresses and we are doing everything we can to get the correct addresses for them,” Aratani said.

The settlement is separate from the criminal cases levied against six former Honda of Santa Monica sales representatives who scammed customers by tacking on charges of “theft etch” to their contracts without their knowledge. Theft etch marks a vehicle’s parts with traceable numbers in the event of a theft. On some contracts, the feature was represented as a DMV fee or VT registration charge, which doesn’t exist, prosecutors said.

Sonic Automotive Inc. has agreed to hire an outside firm to serve as an administrator in handling the reimbursements, which will determine how much each customer will receive. Aratani said the reimbursements range from $100 to $1,000, with the average claim around $400\. It’s estimated that Sonic Automotive Inc. will ultimately pay back about $829,000 in reimbursements to approximately 1,500 customers.

By signing the claim and receiving a reimbursement check, customers are waiving their right to pursue further litigation and cannot receive additional damages in the future.

That could potentially affect a pending class-action lawsuit that was filed on behalf of several customers on Sept. 25, 2002 — the same day the dealership was raided by investigators and FBI agents. The DA’s office launched its investigation into the dealership two months prior, after an employee tipped investigators off to the alleged scam.

Dan Hoffman, the attorney representing the plaintiffs in the class action, said he plans to meet with co-counsel later this week to discuss how the reimbursement claims will affect the lawsuit, which alleges that the dealership defrauded its customers by adding false state taxes and fees, lying to customers about interest rates, and tricking customers into making extra payments on vehicles they wanted to buy or lease.

If signing the notice of claim does, in fact, mean that customers waive their right to pursue future litigation, it could severely impact Hoffman’s suit.

“It could reduce the size of the class exponentially,” he said.

One of those customers who has signed onto the class action is Brett Fung, who along with his brother, purchased five cars at Honda of Santa Monica and was allegedly bilked out of thousands of dollars. He said he won’t sign the notice of claim that he received a month ago. The letter suggested he was owed $576 for the fraudulent theft etch tacked onto his sales contract for one vehicle.

“We purchased five cars and only got one letter. As soon as I saw that I would be giving up my rights, I wouldn’t sign it,” he said. “It leads me to believe that their process of doing things is not quite right.”

Fung had allegedly been given favorable deals in the showroom only to have the dealership’s finance department renegotiate them afterwards — a practice forbidden under state law, according to the lawsuit.

Fung, an Encino resident, said of the five cars he bought at Honda of Santa Monica, the deals changed each time they went from the showroom floor to the finance department.

In one instance, Fung said he was told he would have to agree to an extended service contract in order to be approved for the loan because he had “shaky credit.” In total, the service contracts added more than $4,000 to the sales price of the vehicles. Extended service contracts and additional accessories directly benefit Honda of Santa Monica and its employees through commissions and revenue for the company.

Upon further review, Fung realized that there were two separate contracts for the same vehicle, with different figures. The price of the extended service contract would be lower on one contract than on the other. But on the second contract, the one with the lower price, the interest rate on the loan would be jacked up so the bottom line would remain the same.

On a loan for one vehicle, he was charged 7.75 percent interest, but for another vehicle he purchased months later, he was charged more than 11 percent interest. Banks peg interest rates on credit ratings, not vehicles, Fung said. He said he should have qualified for the same interest rate for both loans because his credit rating had not changed.

And for all of the alleged scams Fung believes occurred while the team of sales and finance representatives were employed, and have been subsequently convicted of in court, he feels he is owed much more than $576\. “$576 is one of those token things when they are getting away with murder and getting a slap on the wrist,” Fung said. “I was teed off by the whole thing. I just find it very sleazy.”

The three-year criminal investigation by the DA’s Office resulted in six of the dealership’s former sales representatives plea bargaining. Multiple felony counts of grand theft were reduced to misdemeanors for negligence. Four defendants who settled in March were required to pay nearly $10,000 in fines and are on probation. The other two employees, who played minor roles in the scam, in April pleaded no contest to misdemeanor counts. They have been ordered to pay $100 in restitution fines and are on probation.

As a result of the civil settlement, the North Carolina-based automotive company sent a check to the DA’s office for $548,000\. That’s for civil penalties and costs associated with violating provisions of the Business and Professions Code. Of that amount, $73,000 is for costs of the criminal investigation.

The DMV has placed the dealership’s license on probation for five years. Under terms of the settlement agreement between the dealership and the DA’s Office, Honda of Santa Monica also has paid the DMV $75,000 in penalties. In addition, the dealership will undergo six audits by DMV investigators over the next five years to ensure customers are not being ripped off.

Also as part of the settlement, Honda of Santa Monica must create business practices that will ensure sales personnel who have binding authority with new car contracts have checks and balances to make sure that similar violations don’t happen again. Those practices could involve several employees up and down the chain of command reviewing contracts before they’re signed or ensuring that sales people review contracts line by line to be sure that customers are aware of the fees they’re paying.

Those who might still be eligible for restitution are customers who purchased or leased a vehicle from the Mid-City dealership between April 7, 2000 and Oct. 31, 2002\. Earlier this year, Sonic Automotive Inc. turned over a list of eligible customers to the DA’s office, which was checked against its own internal list of names that stemmed from investigators’ probe into the dealership, Aratani said.

Sonic Automotive Inc. had until mid-May to notify customers that they are eligible for reimbursement. Customers must fill out the notice and release, and send it back within six months of the Feb. 8 judgment in order to be eligible. Once the claim has been sent in by the customer, Sonic Automotive Inc. has 30 days to send the reimbursement check, according to the settlement agreement.

If customers believe they might be eligible for a reimbursement, but have not received a notice of claim from Sonic Automotive Inc., they should contact John Yacorone, an investigator in the DA’s Office at (213) 580-3273.

*Originally published in the Santa Monica Daily Press print edition on June 27, 2006.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/062706.pdf?ref=smdp.com)