LAWRENCE, Kan. — A major bank has suspended taking loan applications from a local car dealer.
Wells Fargo Auto is also investigating its business relationship with Lawrence Kia-Mitsubishi.
This action comes after the 41 Action News I-Team reported Monday that dealership may have submitted hundreds of falsified applications to lenders.
"I've been pretty distressed, this is stressful," Sasha Jefferson, a past Lawrence Kia customer, told the I-Team in March.
She found out last fall the dealership inflated her monthly income from $3,103 to $4,403 on her car loan application.
Her lender, Wells Fargo Auto, sent her a letter Dec. 5 verifying her complaint.
The letter states, in part, "We want to assure you that this experience will be shared with the appropriate parties, and this will be addressed appropriately,"
Jefferson still had concerns when the I-Team spoke to her in March.
"If my application would've been audited, it would've looked like I lied. It would've looked like I committed fraud," she said.
Now more than six months after Jefferson received her letter and after the I-Team sent questions to Wells Fargo this week, the bank responded.
An email from Wells Fargo representative Julie Fogerson states, in part, "Our investigation into this situation is ongoing, and we have suspended accepting applications from this dealership."
Fogerson also wrote, “It is important to us that the consumers whose auto loans we service have good experiences at the dealerships where they purchase their vehicles. Anytime we receive feedback from a consumer suggesting that’s not the case, we will investigate, and may suspend doing business with the dealership until our investigation is complete. If we determine the dealership is acting out of accordance with our dealer relationship agreement, we will work with the dealership to make things right for the consumer and, in some cases, no longer do business with that dealership."
Longtime criminal defense attorney and former prosecutor James Spies said Jefferson's complaint should've raised awareness to a potential problem for Wells Fargo months ago.
"If they recognize there is a problem and they are investigating, they are certainly taking the responsible step to stop accepting loans from this dealership," Spies said.
Herb Vance experienced a similar issue in his dealings with Lawrence Kia, only with a different bank.
The retiree reported his monthly income was $2,000.
But the dealer told his lender, Santander Consumer, it was $9,961, resulting in a nearly $1,000 monthly payment for his pickup truck.
Vance told the I-Team in March he complained to a Santander representative.
Vance said he specifically questioned that representative about the grossly inflated income on his application.
"You still have a document with my name on it that's fraudulent and it was like, 'Oh well,'" Vance said.
The I-Team found Santander Consumer has had previous issues with car loans.
In 2017, the Massachusetts Attorney General announced a $22 million settlement with Santander Consumer for what she called "unfair and unaffordable auto loans for more than 2,000 Massachusetts residents."
The news release said in part, "In fact, Santander predicted that many of the loans would default, and allegedly knew that the reported incomes, which were used to support the loan applications submitted to the company by car dealers, were incorrect and often inflated."
"You can't help but look at past behavior and ask yourself is this simply the same thing taking place now three years later in a different state," Spies said.
The I-Team first reached out to Santander for comment on Wednesday.
Santander Consumer representative Annette Rogers, in an email Friday afternoon, said she was working on getting comment and wrote, "Our offices are observing the Juneteenth holiday today, so I may not be able to get back to you in a timely manner."
So far, Rogers has not been able to get that comment.
Mark Kavanaugh, a former Lawrence Kia employee who left the dealership in April, said its business practices were adversely affecting his reputation.
Kavanaugh said he believes lenders do have some responsibility in accepting what he claims were hundreds of falsified deals.
"If the banks ever ask for proof of income, which most of them do not do, if you've got marginally good credit, they're going to approve you and they're going to take for word whatever the dealership sends over for income," Kavanaugh said.
In the I-Team's Tuesday report, Kavanaugh claimed falsified documents were slipped past unsuspecting customers for their signatures and initials.
He also said banks' lack of curiosity about income proof is especially true for retirees such as Vance.
"Someone is retired, usually the bank does not ask for any proof of that. It's too much paperwork, social security letters, retirement accounts and all that," Kavanaugh said.
"I feel like they took advantage of everybody, especially if you're an older person," Vance said.
The I-Team asked Fogerson for Wells Fargo's policy on requesting proof of income on vehicle loans.
Fogerson said it's only required in "certain situations".
"As a responsible lender, we make loans to customers who have the ability to repay the loan. We will require proof-of-income be submitted with the loan application in certain situations, for example if the customer’s credit shows they’ve recently missed payments on other loans," Fogerson wrote.
The I-Team also reached out to Ally Bank about its dealings with Lawrence Kia-Mitsubishi.
"Ally takes allegations of inappropriate consumer finance practices seriously. We follow rigorous policies and procedures to adhere to federal and state regulations and requirements for auto financing.
As a trusted financial services provider, we encourage any customer who has concerns about their Ally account to contact us directly at 1-888-925-2559," Ally spokeswoman Brenda Rios stated.
The I-Team also sent an email to Lawrence Kia-Mitsubishi's attorney, Alyssa Brockert, for updated comment on the actions taken by Wells Fargo Auto.
As of Friday evening, there had been no response.
Spies said he hopes the Kansas Attorney General's Office and the United States government both investigate Lawrence Kia-Mitsubishi.
"You certainly have a real possibility of both state and federal crimes occurring here," Spies said.
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