Attorney General Cuomo Sues Poughkeepsie Auto Dealer For Defrauding Customers

POUGHKEEPSIE, N.Y. (May 1, 2008) - Attorney General Andrew M. Cuomo today announced his office has filed suit against a Poughkeepsie auto dealer that sold non-existent warranties to customers - many times without their knowledge.

The Attorney General’s lawsuit seeks full reimbursement of more than $200,000 to more than 100 consumers who were defrauded, plus $5,000 in penalties for each deceptive act, $2,000 in costs and a required $100,000 performance bond before the owners of Mega Auto Group are permitted to operate a business in New York state.

“Purchasing a vehicle is a huge financial undertaking, and customers should be able to trust that dealers are not forging faulty contracts costing them thousands of dollars,” said Attorney General Cuomo. “My office’s lawsuit aims to make certain that this dealership will not deceptively attempt to profit from Poughkeepsie consumers.”

Jorge Manzanarez and brother Nilson Cortez - both of Mandalay Street in Poughkeepsie - operated Mega Auto Group, Inc. on Main St. since 2006. The dealer offered customers a warranty called SafeChoice, owned by licensor SafeData, as an add-on to a vehicle purchase. However, according to court documents, Manzanarez and Cortez knowingly defrauded customers by selling the $2,000 warranty - many times without the customer’s consent - and then never submitting the money to the warranty company, resulting in the coverage never being activated.

According to court documents, after reviewing 100 sales contracts to which Mega Auto Group attached the $2,000 warranty, the Attorney General’s Office found that Mega Auto Group only submitted 9 contracts to SafeData for warranty activation. The remaining contracts were never filed with the licensor. Instead, the dealer kept the $2,000 per contract and left at least 91 consumers with no warranty coverage for their vehicle. Beyond those acts of fraud, the company engaged in further deceptive practices:

• In one instance, a customer specifically told the dealer she did not want SafeChoice after the details of the warranty were explained to her. Nevertheless, Mega Auto Group disregarded the customer’s decision and still added the cost of SafeChoice to her loan.
• In another case, a consumer decided to purchase a discounted SafeChoice warranty through Mega Auto Group for $800. The Attorney General’s investigation discovered that the dealer actually charged the consumer $2,500 for the warranty.

Attorney General Cuomo’s lawsuit seeks full restitution from Mega Auto Group to consumers who were defrauded, as well as those who may still come forward. The suit also seeks to force the company to pay $5,000 in penalties for each deceptive act, $2,000 in costs and post a $100,000 performance bond before doing business again in New York state. Consumers who believe they have been defrauded by Mega Auto Group are urged to call the Attorney General’s Poughkeepsie Regional Office at 845-485-3900.

The principals are also subject to a related criminal matter being prosecuted by the Dutchess County District Attorney’s Office.

The case is being handled by Assistant Attorney General Nick Garin of the Poughkeepsie Regional Office under the supervision of Acting Assistant Attorney General-In-Charge Barry Kaufman with assistance from Senior Consumer Frauds Representative Mark Hoops.