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Post date: May 26 2004

Lawsuit Seeks To Shut Down Motor Home Dealer

Attorney General Spitzer today announced a lawsuit seeking to permanently shut down a Steuben County motor home dealer accused of defrauding consumers through various illegal financial dealings.

Gordon A. Hakes, owner of Painted Post Car Mart Truck and R.V. Inc., was served with a lawsuit alleging consumer fraud, deceptive business practices, false advertising, and operating without a dealer license.

"This dealer faces serious consequences for the unscrupulous business practices alleged in the complaint," Spitzer said. "My office will prosecute this case to the fullest extent of the law and ensure that justice is served and victims are compensated."

In the past two and a half years, over 30 consumers are alleged to have been defrauded by Hakes. According to the complaint, Hakes has been alleged to have:

  • Failed to deliver motor homes paid for by consumers. These consumers have lost not only their deposits, but are now being dunned to make payments on loans for vehicles not in their possession;
  • Accepted trade-ins as partial payment for the purchase of a new motor home, but failed to pay off the outstanding balance of the trade-in's loan, resulting in threats of debt collection proceedings against the former owner and damaging his/her credit record;
  • Falsely held out for sale certain new motor homes to consumers which could not be delivered because the manufacturer of those motor homes, the MHC Group, Inc., had been defunct for years. The investigation further revealed that Hakes was the owner of the California-based MHC Group, Inc.;
  • Submitted loan applications on behalf of consumers without their knowledge or consent and kept the proceeds of the loan;
  • Convinced individuals to trade-in their vehicles on consignment and then pocketed the proceeds of the sale, forcing consumers to continue to pay on loans for vehicles sold to other customers. In instances where Hakes remitted the proceeds to the consumer/seller, he is alleged to have kept the difference between the established minimum acceptable price and the price paid by the buyer; and
  • Failed to timely submit documentation to the State Department of Motor Vehicles (DMV), forcing consumers to wait months to receive their titles and registrations, resulting in delays in consumers' ability to drive their motor homes. Some consumers have never received their titles or registrations.

It is estimated that Hakes' fraudulent and illegal business practices have cost consumers hundreds of thousands of dollars and may have ruined individuals' credit ratings.

One consumer complained that he contracted with Hakes last spring for the purchase of a new motor home worth over $106,000. It was financed, in part, with a trade-in allowance worth nearly $66,000 for two older trailers and a loan arranged by Hakes for $81,000. Although Hakes received the proceeds for the new loan a year ago, he never delivered the motor home. Likewise, Hakes failed to pay-off the outstanding loan for one traded-in vehicle and greatly delayed payment on the outstanding loan for the other trade-in, damaging the consumer's credit record. To date, this consumer is legally responsible for two loans for motor vehicles he does not possess.

Last summer, this consumer traveled to California seeking information about the motor vehicle's manufacturer only to discover that its factory had been out of business for two years. He later discovered that the vehicle identification number used in the purchase contract for his new motor vehicle was fraudulent.

Spitzer's investigation also revealed that Hakes continues to operate his motor home business and used car dealership even though DMV suspended his license this past January. It has been subsequently revoked.

The Honorable Joseph W. Latham of State Supreme Court in Steuben County signed a restraining order temporarily shutting down Hakes' sales business and set a court date for June 1st.

In filing the lawsuit, Spitzer's office seeks a court order permanently barring Hakes from the motor home and used car sales business. The lawsuit also seeks a full accounting of all transactions related to the purchase or sale of motor homes, trailers, and any other vehicles since January 2002 and to compel Hakes to contact credit bureaus to resolve outstanding loan problems for consumers. In addition, Spitzer seeks full restitution and damages for injured consumers, plus civil penalties for Hakes' numerous violations of law and court costs.

Spitzer acknowledged the cooperation of the Department of Motor Vehicles in the investigation and the assistance of Senior Automotive Facilities Inspector Timothy Furlong and Investigators Roy Wakeman and James Magill.

Individuals with complaints against Hakes are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.

This case is being handled by Assistant Attorney General Michael Danaher of the Binghamton Regional Office and Assistant Attorney General Carlos Rodriguez of the Rochester Regional Office. They have been assisted in the case by Investigator David Martin of the Binghamton Regional Office and Senior Investigator Christopher Holland of the Rochester Regional Office.