Attorney General Cuomo Announces Indictment Of Auto Loan Business Owners For Stealing $240,000 In Warranty Payments, Customer Loan Pay-offs
BUFFALO, N.Y. (June 4, 2008) – Attorney General Andrew M. Cuomo today announced the indictment of the owners of a Western New York auto loan brokerage company accused of stealing more than $240,000 by selling non-existent warranties to more than 120 consumers and wrongfully taking consumer auto loan payments from a bank.
Attorney General Cuomo also worked with other companies to make sure that innocent consumers who were affected by the thefts had their loans and/or warranties rectified.
In the six-count indictment unsealed today in Erie County Court, a Grand Jury charged Matthew Hunter and John Pazamickas with Grand Larceny in the 2nd and 3rd Degrees (class C and D felonies) and Scheme to Defraud in the 1st Degree (class E felony). The indictment charges that the pair used their Orchard Park business, Hunter-Paz Funding Services, LLC, a/k/a HP Funding, to sell customers non-existent auto warranties, leaving consumers without coverage for their vehicles.
Hunter, 35, of Tracy St. in Buffalo and Pazamickas, 54, of Hawthorne Place in Youngstown, were arrested and arraigned today before Erie County Court Judge Michael L. D’Amico.
“To sell a warranty and not actually provide the product puts consumers in a terrible predicament,” said Attorney General Cuomo. “These individuals were supposed to transfer consumers’ funds to warranty companies. Instead, they allegedly kept them, leaving consumers with unresolved debts and a lack of coverage. My office will hold those who committed the crimes accountable and also make affected consumers whole again.”
According to court proceedings, Hunter and Pazamickas offered to arrange new loans with better terms for consumers with existing auto loans. When the defendants arranged for new loans, they convinced almost all of their clients also to purchase extended service warranties for their vehicles, and added the cost to the new loans. However, they never sent the payments for the warranties to the two companies Hunter-Paz contracted with: Interstate National Dealer Services and Wynn’s Extended Care.
From September 2006 to November 2007, Hunter-Paz received approximately $275,000 from consumers, of which it was supposed to pay the warranty companies approximately $140,000 (the remaining amounts were sales commissions). Instead, Hunter and Pazamickas allegedly made only a few token payments to Interstate and no payments to Wynn’s. In the end, consumers contacted the warranty companies for services or a refund, only to learn that they actually had no warranty coverage.
In January 2007, after Hunter-Paz arranged for a new auto loan for a consumer with Key Bank to pay off the consumer’s outstanding loan with M&T Bank, Key Bank wired Hunter and Pazamickas $56,000 to pay off the M&T loan. Hunter and Pazamickas received the money but allegedly never paid off the consumer’s loan. Similarly, in April 2007, the defendants allegedly stole another $57,000 that Key Bank wired to pay off a consumer’s RV loan with Fifth Third Bank.
Recognizing that consumers should not bear the losses resulting from Hunter’s and Pazamickas’ alleged theft, Attorney General Cuomo’s Office reached an agreement with Key Bank and warranty companies Interstate and Wynn’s to make all affected consumers whole, even though these companies played no role in the thefts. Both companies did enter into contracts with Hunter-Paz, in which they authorized the broker to sell their service contracts to customers. Therefore, the two warranty companies have agreed to service all contracts sold by Hunter-Paz, despite not having received payments from them. The companies also agreed to provide refunds if consumers elect to exercise their rights under the contracts to pro-rated cancellation refunds. Key Bank agreed to write off the two affected consumers’ loans and return any payments they made to the bank prior to this agreement. Attorney General Cuomo thanked Key Bank, Interstate and Wynn’s for protecting the affected consumers.
The case is being prosecuted by Assistant Attorney General Dennis Rosen with the assistance of Senior Investigator Peter Eiss of the Buffalo Regional Office, under the supervision of Russell Ippolito, Assistant Attorney General-In-Charge of the Buffalo Regional Office and Gail Heatherly, Chief of the Attorney General’s Criminal Prosecutions Bureau.
The charges against Hunter and Pazamickas are merely accusations, and the defendants are presumed innocent until and unless proven guilty.