The final defendant has pleaded guilty in the federal fraud case against 13 people who worked for or held themselves out to be the owners of the Joe Florek auto dealership.
Christopher L. Stromberg, 42, pleaded guilty Friday to one count of conspiracy to commit fraud and mail fraud, according to information released by the U.S. Attorney's Office in Flagstaff. He has agreed to spend a minimum of 21 months in prison.
Stromberg was a manager at the dealership and falsified information of customers in order for them to qualify for car loans, court documents state.
The Florek dealership was raided by local, state and federal authorities in October 2000. Thousands of documents were seized in the raid, but only a few arrests were made at the time on unrelated drug charges.
There were 13 employees named in a 38-count indictment, which was handed down by a federal grand jury in January.
The indictment — with counts of wire, mail and bank fraud, and conspiracy — outlined a systematic plan by the men named between January 1998 and October 2000 to defraud banks, warranty companies, auto auction companies and the general public.
Two men who held themselves out to be co-owners of the business accepted plea agreements in the case earlier this year.
Steven J. Fiorentino, 49, pleaded guilty to one count of mail fraud and one count of conspiracy to commit fraud. Jay J. Wigdore, 45, pleaded guilty to conspiracy and mail fraud. Wigdore will receive four years, nine months in prison for electing to cooperate with prosecutors if the case went to trial.
Defendants Russ L. Alexander, 35, and Dale J. Bruemmer, 42, pleaded guilty Oct. 17 to conspiracy to commit fraud.
The remaining defendants who pleaded guilty to varying counts of conspiracy to commit fraud, wire fraud, mail fraud or bank fraud were: Jason M. Hibbard, 28; Clayton S. Adams, 45; James E. Stephenson, 57; Robert L. Canfield, 43; Leonard P. Cardone, 32; Brandon M. Fiorentino, 24; Jeff B. Heimann, 41; and Phil J. Macaluso, 55.
A conviction for conspiracy to commit fraud, mail fraud and bank fraud carries a maximum prison term of five years and a $250,000 fine for each charge.
Prosecutors stated in the indictment that it was the goal of the employees named that all potential customers be sold a car regardless of the car's physical state or the customers' financial ability to pay.
According to prosecutors, the dealership defrauded customers by:
Lying about the physical state and mechanical soundness of cars being sold.
Selling extended repair warranties the dealership would not pay for.
Accepting trade-in vehicles with liens, and not paying the liens.
Selling vehicles that did not have a clear title. Many of the vehicles the business sold, it had bought from auction companies with bogus checks. Although they had the cars, they did not have the titles. They sold the cars anyway.
Targeting Native Americans with little formal education and limited ability to speak English because they were easier to defraud.
Falsifying customer loan applications to make sure the customers got financed.
More than 15 lending institutions were listed as victims of fraud. And prosecutors say the dealership defrauded lending institutions by:
Lying about the borrower's income, employment status and credit bureau scores.
Attaching forged documents — W2s, bank records, references, income tax returns — to loan applications.
Lying about the value of trade-in vehicles.
Saying down payments had been made when they had not.
Most of the crimes were done through the mail or by telephone.
All 13 now await sentencing on Feb. 23 in front of U.S. District Court Judge Mary Murguia in Phoenix.
Assistant U.S. Attorney Mark Aspey said a restitution hearing has been set for Jan. 9. At that hearing, it will be determined what restitution is owed by each of the defendants and to whom.
Reporter Larry Hendricks can be reached at firstname.lastname@example.org or 556-2262.
— Arizona Daily Sun