Court Rules Against Rent-to-own Used Car Scheme

Attorney General Spitzer today praised a court order requiring two unlicensed car dealers in Western New York to sign over the titles to more than 30 motor vehicles to consumers without the requirement of further payments.

Justice Frederick J. Marshall of State Supreme Court in Chautauqua County found that Kevin Smith and Jay Shaffer - who operated the Auto Store in Jamestown and Ellicott - misled consumers into believing that they were purchasing vehicles that actually were being leased.

"The injunctive relief obtained by my office will provide much needed relief to consumers already victimized by these two individuals and will bring a halt to their unscrupulous business practices," Spitzer said.

According to Spitzer's lawsuit filed last summer, Smith and Schaffer operated an unlicensed used car dealership and motor vehicle repair shop and substituted lease documents for sales documents. Over 30 consumers complained that they were unable to obtain the titles to their vehicles after being duped into signing "rent-to-own" contracts.

The court decree orders Smith and Shaffer to transfer to consumers who continue to possess the "rent-to-own" vehicles the titles these individuals thought they were acquiring, a value of at least $50,000.

The court order also prohibits Smith and Shaffer from collecting $80,000 in auto repairs they claim are owed to them from dozens of consumers because the two men had failed to obtain a repair shop license from the Department of Motor Vehicles. In addition, the court order bars Smith from collecting on illegal high-interest personal loans he made to consumers.

The court order obtained by Spitzer's office also permanently bars Smith and Shaffer from operating any businesses in New York State unless each files a $250,000 performance bond. In addition, Smith and Shaffer must pay $100,000 into a restitution fund for consumers.

In June, Smith and Shaffer pled guilty to five felonies relating to the operations of the Auto Store. The criminal case - prosecuted by the Chautauqua County Distrct Attorney James P. Subjack - resulted in terms of imprisonment of two-to-six years for Smith and nine months for Shaffer.

This case was handled by Assistant Attorney General James Morrissey of the Buffalo Regional Office.

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