Con artists target soldiers, veterans with 'luxury car' scam

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by Scott Noll / KHOU 11 News

khou.com

Posted on May 7, 2013 at 10:24 PM

Updated Tuesday, May 7 at 10:40 PM

CLEAR LAKE -- The ads offer hundreds of dollars for just a few hours of work.

And the work? That “ain’t” bad either: Driving high-end luxury cars from one place to another.

However, the KHOU 11 News I-Team found that what might sound like a legitimate way of earning money has instead taken advantage of U.S. soldiers and could end up leaving those who serve with a large tax bill and in trouble with the law.

Jim Pelosi came across one of the online ads. A West Point graduate with 27 years of service to his country, he says the ad was clear.

“Transport vehicles from Point A to Point B,” recalled Pelosi, or in this case from Houston to Dallas. The pay was $250 a trip.

In addition, he says the job had another requirement: The driver had to have a USAA insurance policy, something only available to active-duty military, veterans and their families. Pelosi says at first he wasn’t sure why this was a requirement, but says he soon found out.

That’s because he answered the ad and was soon “hired.” However, Pelosi says when he got to the dealership to pick up his first car, the job had changed.

Pelosi said his “boss,” a man named Yifan “Evan” Zhu, handed him paperwork showing he was not going to just drive the car, a BMW SUV, but purchase it in his own name with money provided to him by Zhu.

Then he was just supposed to hand over the keys to Zhu.

It’s a process called “straw buying.”

“That's a giant red flag,” explained Pelosi. He also says the requirement for “drivers” to have a USAA insurance policy suddenly became clear too. USAA policy holders get a discount on new cars that they purchase especially BMWs and Mercedes-Benzes.

In fact, the 11 News I-Team found dozens of job ads, similar to the one Pelosi answered, posted in cities across the country.

“We’ve seen these kinds of schemes before,” explained Roger Morris of the National Insurance Crime Bureau www.nicb.org/. “Most of these are professional rings. Somebody is behind it, and they’re using people as part of their system.”

Morris believes the cars could be targeted for export out of the United States.

He says in countries like China, the luxury SUV’s can carry a whopping price tag of as much as $300,000 a piece.

It’s a practice carmakers have tried to stop.

In a statement to the I-Team, BMW of North America www.bmwusa.com/ stated, “Company policy, as well as the dealer agreement, clearly states that BMWs are to be sold in the U.S. to the end user, are for the U.S. market only, and are not to be brokered or sold for export.”

At Houston-area ports, agents screen nearly 9,000 cars a month leaving the United States.

Officers say unless a vehicle is reported stolen, there’s little to red-flag a car bought through a straw buyer.

“Ninety-five percent of the time, the person purchasing the vehicle is going to be the person on the title document,” explained Roger Baranski, a Supervisory Customs and Border Protection officer. “If you purchased a vehicle on paper through a scheme such as this, you may be listed as the exporter on that going out.”

Take the case of a Virginia veteran who answered one of those ads.

“They tell you, ‘Hey look, it's easy,” he told the I-Team. “It's easier than what you thought. You don't even have to drive.”

Like in Pelosi’s case, what he thought was a job working as a driver, turned out to really be a job purchasing cars in his name and using the company’s money.

But weeks after he bought two BMW X5 SUVs, he says trouble arrived in the mail in the form of two tax notices for the vehicles valued at more than $100,000.

He now believes the cars were never transferred out of his name, something that could make it easier to get the car into another country as foreign customs officials tend to not scrutinize personally-owned vehicles.

“I don't know where the vehicle is,” the veteran explained. “They may be driving it. It may be shipped, I don’t know. I don’t know what they did with it.”

As for Jim Pelosi, he walked away from his deal. The Clear Lake veteran says he’s now determined to protect others, who have risked their lives protecting America.

“When you leave the military where you've been rained on in the tropics, snowed on in northern Europe, you never expect con artists to perpetuate fraud solely for purpose of selfish profiteering,” lamented Pelosi.

The I-Team contacted Zhu at the phone number he originally called Pelosi with. Zhu admitted that he lives in Dallas and runs an automotive company, but denied knowing anything about enlisting USAA members to purchase luxury cars.

Kavasco Corporation, the auto export company that employed the Virginia veteran, referred our questions to their attorney who, a week later, has yet to provide any answers.

A spokesperson from USAA www.usaa.com/ said the company is aware of the situation and has contacted federal authorities.

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