Wednesday, January 07, 2015
A Queens, New York, man and his Israeli brother were charged in indictments unsealed today in federal courts in Philadelphia and Brooklyn, New York, with offenses related to a long-running odometer tampering and money laundering scheme, the Justice Department and the U.S. Attorney's Office for the Eastern District of New York announced.
Chaim Gali aka Mike Gali and John Triculy, 40, of Queens Village, New York, and Shmuel Gali aka Sam Gali, 42, of Israel, are charged in a 15-count indictment in the Eastern District of Pennsylvania (EDPA) with conspiracy, securities fraud and false odometer statements. The Galis are also charged in a related two-count indictment in the Eastern District of New York (EDNY) with mail and wire fraud conspiracy, and money laundering conspiracy. If convicted of the charges in the EDPA indictment, the defendants face a statutory maximum of five years in prison on the conspiracy charge; a statutory maximum of 10 years in prison for each securities fraud charge and up to three years in prison for each false odometer statement charge. If convicted of the charges in the EDNY indictment, they face a statutory maximum of 20 years in prison for each of the charges.
"Mileage is one of the most important factors in a consumer's decision to purchase a used car," said Acting Assistant Attorney General Joyce R. Branda for the Justice Department's Civil Division. "Misrepresenting the mileage on a used car fraudulently induces a consumer to pay more money for less value, and it hides necessary information that will affect how a consumer maintains and repairs that vehicle."
The indictments allege that the Galis devised a scheme to defraud buyers of used motor vehicles by misrepresenting the mileage of approximately 690 vehicles they sold beginning as early as 2006 and through at least 2011. The indictments charge that the Galis used fictitious dealer names to purchase high-mileage, used motor vehicles from a national vehicle leasing company. The defendants are charged with conspiring to alter the odometers in these vehicles, which they purchased in Florida, Maryland, Missouri and elsewhere, to reflect false lower mileages. The indictments allege that the Galis then fraudulently altered the motor vehicle titles to reflect the false lower mileages and as a result, the commonwealth of Pennsylvania issued motor vehicle titles reflecting the altered mileages.
The defendants subsequently sold the vehicles at wholesale automobile auctions in Pennsylvania and New Jersey using various dealerships, including Chase Auto Center and Conestoga City Autos. At the auctions, the Galis provided the buyers with Pennsylvania vehicle titles bearing the false lower mileages. The EDPA indictment alleges that in some instances, the title indicated mileage more than 100,000 miles less than the true mileage of the vehicle and as a result, the defendants received inflated sales prices for the vehicles they sold.
The defendants deposited the proceeds of the sales of the rolled-back vehicles into various bank accounts, mainly in Brooklyn. Among other things, the defendants then used this money to purchase additional used vehicles and continue their fraud scheme.
"As alleged, the defendants created an elaborate odometer tampering and money laundering scheme to con would-be buyers into purchasing used cars at inflated prices," said U.S. Attorney Loretta E. Lynch for the EDNY. "They then used the proceeds of their crimes to continue their fraud against additional unsuspecting consumers. This case demonstrates our commitment to protect consumers from fraud."
Acting Assistant Attorney General Branda and U.S. Attorney Lynch commended the investigative efforts of the Internal Revenue Service-Criminal Investigation and the U.S. Department of Transportation National Highway Traffic Safety Administration's (NHTSA) Office of Odometer Fraud Investigation.
Chaim Gali was arrested today in New York. Shmuel Gali is in Israel and the government will seek his extradition.
The case is being prosecuted by Trial Attorney Kathryn Drenning and Senior Litigation Counsel Linda I. Marks of the Civil Division's Consumer Protection Branch, and Assistant U.S. Attorney Catherine M. Mirabile of the Eastern District of New York.
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