The hearing has dragged on for two days of testimony from police officers, a special-education teacher and Division of Motor Vehicles investigators. Now it's time for yet another expert witness: a forensic document examiner who's been trained by the FBI. He explains how to use infrared lasers to analyze handwriting, and he proudly mentions that he's worked on the JonBenet Ramsey murder investigation.
Outside, a young lawyer in a black trench coat talks frantically on his cell phone, trying to reach an out-of-court settlement in an upcoming case. Every few minutes an assistant attorney general steps outside to check on his progress.
Back on the stand, the handwriting expert finishes his testimony and the prosecution and defense give their closing statements. The man presiding over the case looks tired. His reading glasses perch precariously on the end of his nose, the top of the frame underlining the dark circles under his eyes. Dwayne Dodd raps his gavel on the table and excuses both parties so deliberations can begin.
It may look and sound like a courtroom, but--can it be?--the "judge" is really a used-car dealer from Grand Junction. Is this justice? Some people say so. It's a hearing conducted by the Colorado Motor Vehicle Dealer Board.
Sitting around the conference table nestled deep in a warren of Department of Revenue offices are five other car dealers besides Dodd, along with two members of the public. It's up to them to decide whether Tri-State Auto Leasing of Denver forged Brush resident Tyrone Whipple's signature on a promissory note for a 1995 Mitsubishi.
Tri-State's rather unbelievable defense is that Whipple intentionally disguised his signature when he bought the car so as to extort the dealer at a later date. Whipple, represented by an assistant attorney general who works with the board to provide consumers with legal counsel, claims that Tri-State forged his signature so as to get the deal done at a higher percentage rate, necessary because of Whipple's abysmal credit history. Whipple testifies that when he confronted Tri-State with the alleged forgery, the dealership tried to buy him off with $4,000, part of which was to be paid in cash. Tri-State says it offered the four grand as an act of "goodwill."
After the lawyers and witnesses have cleared the room, the board holds a roundtable discussion. Ron Rakowsky, who occupies one of the board's "used-car dealer" spots as general manager of CU Leasing Corporation, is skep-tical about Tri-State's defense. "Goodwill?" scoffs Rakowsky, a newcomer to the board. "That's awfully big money for goodwill. And how many times have you or I paid out in cash? That sort of behavior puts me on notice."
Harry Dowson of Empire Oldsmobile/Honda agrees. "No dealer in his right mind would offer anyone $4,000 to sign an affidavit saying a document wasn't forged," says Dowson, who bears a striking resemblance to legendary basketball coach John Wooden.
After a few more minutes of discussion, Rakowsky motions for Tri-State's dealer license to be revoked. That would put the dealer out of business. Clair Villano, who fills one of the board's "public" spots, seconds the motion. Some of the dealers, however, balk at this death sentence. In the end, they hand down one of the stiffest sentences the board has ever doled out--they decide to close down Tri-State for two consecutive working days, give it two years' probation and slap the dealership with a $20,000 fine. Whipple, the board decides, can try to recoup his financial losses in his pending civil trial or by making a claim on the $30,000 bond required by the board of all licensed dealerships.
The nine-member board consists of six dealers and three public members. However, one of the public members is a politician, Jefferson County Clerk and Recorder Joan Fitz-Gerald, and one of the public seats has been vacant for seven months.
When consumers feel they've been used and abused by dealers, they are referred to the dealer board by the board's newspaper advertisements and by local consumer-assistance agencies. Despite this, the board insists that its main function is not to sort through consumer complaints.
"Our jurisdiction is to make dealers function within the State of Colorado's laws," says Fitz-Gerald, "not give redress to consumers."
And that's one of the things that burns people who think that the board isn't doing its job. Despite the fact that disgruntled consumers are pointed in the board's direction with their complaints (vehicle repair gripes are handled by district attorneys), the board contends that its role is geared more to "maintaining order" among dealers.
"It's like the fox guarding the chicken coop--it is totally non-consumer-oriented," says Robert Marquardt, an attorney who has brought a consumer grievance before the board in the past. He represents two people who are peppering the board with faxes and phone calls complaining that the board is screwing consumers. The situation has become so intense that the Attorney General's Office has warned one of Marquardt's clients to stop sending the faxes and lay off the phone calls or face harassment charges.
But perhaps the most noteworthy criticism of the board came last October, when the Colorado Department of Regulatory Agencies (DORA) released its sunset review of the board's activities. That review questioned whether the dealer board--which in 1997 investigated 2,406 complaints, 56 of which resulted in full board hearings--is necessary for the health and safety of the public, as well as whether it operates in the public interest.
The review team determined, among other things, that "the [dealer board] hearing process is time-consuming and inefficient" and that "a review of the disciplinary actions by the board shows inconsistencies in the application of administrative penalties. In some cases it appears the board ignored its own regulations." The review also stated that "consumers researching the record of a dealer they are considering purchasing a vehicle from have difficulty obtaining information."
The review criticized the board for spending more time on handling salespeople problems than on consumer complaints. And it frequently compared the board unfavorably with a similar state panel in Texas that is dominated by members of the public, not car dealers.
The report also came up with the groundbreaking finding that "motor vehicle dealers and salespeople in general, and those affiliated with the used car market in particular, are not held in high regard by consumers."
The bluntness of the sunset review angered the dealer board, which responded by calling the review team "naive" and the review itself a "worthless document."
"We feel the report is fundamentally flawed and demonstrates a general naivete about the realities of the motor vehicle industry," the board members wrote in a sixteen-page response to the review. "We believe you will find the Sunset Review poorly written, disjointed, and more importantly, factually inaccurate in several critical areas."
"We felt like DORA attacked us," says Dwayne Dodd, the board's president, "and we responded in the same way. Some people were upset that our response was bold and lacked finesse and political correctness. But I'm a country boy, and I tell it the way I see it. Political finesse doesn't work for me."
But finesse works for the dealer board. Problems are often resolved when investigators working on behalf of the board send letters or make phone calls to dealers about customer complaints. That pressure can prompt dealers to "unwind," or cancel, contentious deals. The problem also goes away for the dealer, which retains a clean record.
Similar behind-the-scenes work may be necessary this week, when House Bill 1128, which would extend the existence of the dealer board through the year 2003, hits the floor.
Mohamed B., a 38-year-old Denver businessman, has been waiting more than a year for his complaint against Cherry Creek Dodge to be handled by board investigators. This is his tale of frustration: He had intended to arrange financing for a new Dodge through his own bank at 7.3 percent. While waiting for his car to arrive, the dealer put him in a '96 Stratus. But when his new car finally showed up, Mohamed claims that Cherry Creek Dodge refused to accept his independent financing and said his new Stratus was already financed through Chrysler at 15.5 percent. Mohamed saw the board's newspaper ad directed at disgruntled automobile consumers and made a phone call. He was put in touch with a Division of Motor Vehicles investigator (the board doesn't have its own investigators). The investigator told him to go back to the dealership and try working the problem out with the general manager.
"I was dealing with Cherry Creek Dodge for three months," says Mohamed. "I went from the salesman to the owner to the general manager. But in the end they said I couldn't make the deal for the new car because I'd been driving the '96 for three months and I owed them money for that. In the end I spent $4,700 on a car that wasn't the right year and is nothing I want. But it's impossible to return.
"The dealer board has told me to be patient and that they'll get around to my case in nine months to a year. And even then, lawyers have told me I'll be lucky if I can win my case, because it's my word against theirs and they have more voices. Of course, this is causing problems with the wife."
To combat the backlog of cases awaiting an audience with the board, the sunset review suggested farming out some of them to an administrative law judge, or ALJ. "The board consistently cites a heavy workload as justification for not addressing public policy," the review states. "Yet the board spends hours each meeting listening to appeals of license denials and reviewing routine disciplinary matters. The board should direct simple cases to a designated hearing officer in the [DMV]. Complex cases should be referred to an ALJ."
Jim Clark, a state employee who serves as the board's executive secretary, claims it's not that simple. "Using an ALJ is a great idea," he says, "but it costs money. We estimate that it would cost an additional $50,000 annually. And when you throw attorneys in the mix, things tend to get more complicated instead of less."
Geoffrey Hier, the Department of Regulatory Agencies official who was in charge of the sunset review report, says that along with the fact that the board doesn't handle cases in a timely manner, it routinely ignores the most frequent complaint brought before it: timely delivery of the title to a vehicle.
"The board isn't doing anything about it," says Hier. "In fact, they passed an interpretive rule that told the investigative unit that they don't want to hear about any dealer until they have five [title] complaints. Quite possibly some of these dealers are having valid problems delivering the title, but you've got just as many who are 'playing the float' and harming the consumer."
"Playing the float" is similar to what some may call a pyramid scheme. Hier explains: "The dealer is financing the car from the bank and can't afford to pay the cash. So they sell the car to a customer and figure that they have thirty days [the Colorado time limit] to deliver the title. So if I'm the dealer, I wait until the 29th day to deliver so I can pay my own bills with the customer's money. The board just sits on these cases, letting the dealer give an excuse which pretty much amounts to 'the dog ate my homework,' when it could be doing something more pro-active about it."
Colorado dealers aren't alone in having problems delivering titles in the required time period. Brett Bray, director of the Texas Motor Vehicle Division (which handled almost 3,000 more complaints than Colorado in fiscal 1997), says he sees the same thing all the time. Texas dealers, however, have only twenty days to deliver a title.
"Theoretically, a title transfer should take between twelve and fourteen days," says Bray. "But I hear all sorts of reasons why it takes longer. After the first thousand excuses, you start losing sympathy."
Colorado's board secretary, Jim Clark, says title delivery is a problem the industry creates for itself. "It's definitely one of the items I want to see fixed," he says. "The problem is the linkage between the title and the registration of license plates.
"When you sell a used car, the title could be with the car, or Mom could have it or the bank could have it--hell, I haven't seen a title to my car in twelve years. But if you're a salesperson and it's September and you're trying to sell a convertible, you've got to move on the deal. That brings up all kinds of administrative problems trying to get hold of the title, which very well could be out of state. And if that takes too long, the customer's temporary plate expires and when the clerk at the DMV says they don't have the title, what does the customer do? They file a complaint with the board."
Dwayne Dodd says that for these reasons, the board doesn't pop the clutch on title violations. "The title doesn't always have to be in your fat little fist to sell a car," says Dodd, "and that brings up all sorts of trouble. But I'm not going to bring a dealer in for every nitpicking pen-and-ink problem, because I've been there myself."
And that is why the dealer board shakes its collective head when reports like the sunset review suggest that in order for it to be more consumer-friendly, it needs to shift the balance of power so that there are more public members than industry insiders. The sunset review pointed to Texas as an example of what the board makeup should be.
At one point, Texas had a dealer board comprising five dealers and four public appointees, but according to Texas officials, this changed in 1987, when the state decided against industry representation and went with six public members.
The Colorado sunset review reads: "At the national and state levels, it is being recognized that stronger public representation on regulatory boards is necessary. Some of the strongest regulatory programs in [Colorado], such as the Public Utilities Commission and the Gaming Commission, are comprised completely of public members."
Jim Clark doesn't think that makes sense. "It's simplistic to think that way," he says. "Hier thinks that we need more consumers on the board because the dealers are crooked. The truth is that people from the industry know the tricks of the trade; they can see through it.
"I've worked on several [regulatory] boards--doctors, optometrists--and I can say that the dealers are harder on themselves than those other boards. I've talked to the board in Texas, and they say it's been a nightmare to administer with a board full of consumers." (A Texas official says that starting this month, the state is going to add two dealer representatives and one auto manufacturer, with limited voting power, to its board. "We're just waiting for the governor to appoint them," says the official.)
Dodd contends that stereotypes about car dealers have been the most difficult thing for the board to overcome in getting people like Hier to understand why having dealers on the board is crucial.
"If there's some kind of devious, unscrupulous way to rape a customer," says Dodd, "there's somebody in the car business--or the legal or medical profession--who'll do it. But the overall stigma [about car dealers] isn't nearly as true as maybe it once was. The old days of salesmen with big cigars and white shoes has slowly disappeared. The stigma hasn't."
While the dealers contend that there isn't as much blatant chicanery as there once was, investigators say there is still plenty of suspicious activity out there. It's up to the investigators of the motor vehicle division to root them out and bring them to the board's attention.
Mary Marvin, the senior investigator in Colorado, has been chasing down hoods working under hoods for 25 years. Although the majority of her caseload is routine "failure to deliver title" complaints, she says, there are times when she's got to go out in the field and flash her badge.
"In most cases, it's an administrative problem," says Marvin. "It's rare that it's malicious." But yes, Virginia, there are some crooks in the car business. Like the "clockers," dealers who engage in odometer fraud.
"People think that odometer fraud went out with the gunslingers," she says. "But since the vehicle is usually the second most expensive individual possession next to a house, we take it very seriously.
"If you're buying a vehicle which you think has 30,000 miles on it, you're going to pay high dollar. You're going to be extremely disappointed when you find out down the road that it really has 170,000 on it."
Marvin says experienced clockers can punch out an odometer and roll back its miles in five to ten minutes. Charging a crooked dealer up to $200 a pop, a clocker can jack up the price of a used car by thousands of dollars.
"I just wrapped up a case in Lubbock, Texas," says Marvin, "where they were taking trucks, rolling back the odometers and then bringing them up to Colorado to sell. You'd think they had 20,000 miles on them, when in fact most of them had close to 200,000. They even smelled pretty."
Marvin says she had to track the trucks back to their original owners in each instance. She spent four years poring over dealer records and work orders in order to determine where the trucks were being tampered with. Her investigation eventually led her to Lubbock, where she found the clocker working out of the back of his van.
"He was a cute little old guy," she says. "He had this big briefcase which was supposedly holding all the records for the trucks, but when I asked him to open it up, there was one piece of paper in there. He came clean right there."
The clocker ended up getting 24 months in federal prison. However, the Colorado dealer, Auto Center owner Ruben Guerra, got only twelve months of home detention, much to Marvin's chagrin.
Aside from the clocker who pops up every once in a while, there are what Marvin calls the "weird ones." A woman once called Marvin to report that a dealership had zapped her car back up to Mars. "It turned out that the car was repossessed," Marvin explains, "but we told her we'd check it out."
Back on earth, the complaint that Marvin hears the most aside from failure to deliver titles is failure by the dealer to handle contract and financing issues properly.
Under Colorado law, a dealer has five days to inform a customer whether or not financing has been approved. In the meantime, the customer is often allowed to drive away with the dealer's vehicle after signing a "bailment contract." The bailment contract specifies that the customer will pay a set dollar amount per mile and per day if the sales contract is canceled and financing cannot be arranged. This leaves room for unscrupulous dealers to maneuver unsuspecting customers into costly mistakes that verge on illegality.
"Ninety-eight percent of the time, five days is sufficient to find out if a dealer can finance a customer," says Dwayne Dodd. "What we don't want to create [with the bailment contract] is a situation where a dealer is running a bailment profit center."
Jim Clark says that there have been cases in which a dealer will find out that a customer has been denied financing hours after the customer has driven a new car off the lot. But the dealer won't call the customer until the fifth day, allowing the customer to rack up a large bailment-contract bill. "It's a loophole which we're working on," Clark insists.
Carol Kent, the attorney in charge of dealer enforcement for the state of Texas, describes another abuse of the five-day financial grace period: "We've had instances down here where the dealer will put a guy in a fancy car that the dealer knows the customer can't afford. The guy then takes the car joyriding and showing it off to his friends and family. But then the dealer calls the customer back into the dealership to regretfully inform him that his financing, which they assured the customer would be taken care of, didn't go through. The customer agrees to higher financing because he's too embarrassed to go back into his neighborhood without the car."
Perhaps the most coercive trick in the book is "dehorsing"--a practice as time-honored as clocking. Larry Mooney, a 35-year-old electrician from Denver, claims it happened to him at Cherry Creek Dodge--which along with Shortline Subaru is "right up there in total consumer complaints [filed against it]," according to a dealer-board secretary.
Asked about the two dealerships, the board's Clark says, "Cherry Creek Dodge and Shortline have a high volume of sales, and as a result, they get a lot of complaints. However, they're both reputable dealers and handle the problems because they don't want to lose their license."
Jeff Shields, general manager of Shortline Subaru for the past three years, says, "There are always deals we're going to have problems with. And recently, we're having more of them than in the past. I don't know if this is because consumers' ideas of satisfaction have changed or what they think is fair has changed. But the board has not fined us, because we're forthright in dealing with legal and moral problems. If a deal goes bad, I'll just unwind it."
In the case of Cherry Creek Dodge, customer Mooney might say a little arm-twisting is necessary. "I had $1,500 in my pocket when I showed up on the lot," he recalls. "But I told the salesman right when I walked in the door that I didn't have the credit to get a car because of student loans. I think my exact words were, 'You'll never get me through.' But the guy ignored that and concentrated on the $1,500 I had, which would make a pretty nice down payment. And the car [a Toyota LandCruiser] was a cream puff, just in great shape.
"I told the salesman that I had to run a few errands, and he told me to take the car with me to check it out. When I got back, he slapped me on the back and said, 'You're in, my man!' They took my $1,500 as down payment, gave me $2,400 for my Trooper, which I traded in, and told me that they'd get me financing. I drove the car off the lot, but when I took it to get its emission tests, it failed, and the clutch was starting to feel funny. So I took the Toyota back to the dealership and they told me I'd have to leave it with them. I asked for my Trooper while the Toyota was being repaired, but the salesman told me he'd get me 'something better,' which turned out to be a Pontiac with no heat and bad brakes. My old Trooper was gone."
He had been dehorsed.
A few days later, after haggling with the dealership over who would pay for the repairs to his new car, Mooney again drove it off the lot. He got a call almost a month later asking him to come back into the dealership to "sign some additional papers." It was only then, he says, that he was told that the dealer could not get him financed and that he would need to come up with an additional $1,200. Mooney told the dealership that he didn't have it. The dealership told him that if that was the case, it would repossess the Toyota.
"It turns out that the $1,200 wasn't to lower my financing," says Mooney, "but was to be added to the purchase price. Twelve hundred dollars was also, incidentally, the cost of fixing the clutch. They had me over a barrel. My old car was gone, and I had already paid them $4,900. I felt like I was wrestling an alligator. Under duress, I paid them what they wanted."
But Mooney was determined not to get screwed. He complained to an investigator, who in turn put in a call to Cherry Creek Dodge to ask the dealer to pay Mooney back the money it had tacked on to the deal. The dealer forked over the $1,200. All it took was that call from an investigator. No formal action against the dealer was taken, and no blemish appeared on the dealer's record. The only bruises belonged to Mooney.
"It was a hard-fought battle," says Mooney. "I had to cancel and retrieve checks, go through the hassle of clearing my name from the credit agency and take four days off work. And it was adversarial every step of the way. I came out of it shaken. But in the end, I guess it was a decent outcome."
Carl Ventsam, general manager of Cherry Creek Dodge, says the whole problem was a result of poor communication. "In this case, the salesperson had agreed to fix the clutch," says Ventsam, "but he didn't tell that to the financing department, so they added the cost of repairs to the cost of the vehicle. The board contacted us and told us what the problem was, and we got everyone together and worked it out. But I can assure you that Mr. Mooney never would have been left high and dry.
"Ninety-nine percent of problems we deal with stem from miscommunication, and that's where the board comes in. They get contacted right and left because consumers feel like they need someone to run to if a deal gets confusing. That's why the board is important--because not all consumers are educated about how to handle a car deal. But the bottom line is that we weren't intentionally trying to dehorse Mr. Mooney."
Dehorsing is a practice officially frowned upon by the dealer board, but investigator Marvin says she often fields complaints about the practice. Customers may not know how to deal with such situations, but Dwayne Dodd explains that they have several options if their financing falls through.
"The customer can work with the dealer to find another source of financing at a higher rate, or the dealer might be able to carry it himself," says Dodd. "But a dealer can always unwind the deal all the way by returning the down payment. And the dealer better still have the trade-in. If the dealer sold the trade-in, they are required by law to give the consumer what they sold it for. It doesn't matter if they bought the trade-in for $1,000 and sold it for $2,000--they owe the customer $2,000. And I've never collected any money from a bailment contract before."
After the dealer board agrees upon the Tri-State Auto Leasing matter, it has two more cases to hear before the members can go back to selling their own cars. The first involves the now-defunct Denver dealership Al Smith Chevrolet and a salvage vehicle that was portrayed, and sold, as new. The attorney working his cell phone in the hallway finally cuts a deal in which the woman who bought the car will be given a check for $6,000 within the week, and Al Smith, who retired after the bum deal was brought to the board's attention, can avoid any sanction and go back into peaceful retirement.
The last case of the day is a cut-and-dried affair. A salesman took a car off the lot where he worked and gave it to his girlfriend to drive. She crashed it. The board moves to revoke the salesman's license, and the dealer can collect damages from the $5,000 bond required of every salesperson by the dealer board.
The licensing of salespeople is another appendage of the dealer board that the sunset review would like to amputate, much to the board's annoyance. As it is, salespeople are required to be licensed specifically to work at one dealership. If they change their place of employment, they must reregister with the board.
The sunset review states: "The bottom line is that the current licensing process does not protect the public. It is a poor-quality employment screening service for dealers. The application asks for past employment history, even though no experience is required, and no effort is made to verify the information."
The review also calls the required examination for dealer salespeople "a sham" and notes that of the 26 questionable applications for sales licenses that were reviewed by the board, only three were denied. "The board granted licenses to individuals with a variety of criminal convictions," the report says, "including: interstate transportation of stolen autos; intent to distribute large quantities of narcotics; sexual assault on a child; and aggravated auto theft."
Board president Dodd says dealers' "hands have been tied" regarding applicants' criminal records, adding, "If you've done your time, you're not supposed to have that held against you." However, Dodd says the board plans to institute a new policy that will "automatically disqualify" some candidates with unsavory pasts. And although Jim Clark admits that the testing process for would-be salespeople is easy, he is adamant that licensing is crucial. "A good salesman can get hired anywhere," says Clark. "And if they're dishonest, they can leave behind a swath of destruction from dealer to dealer."
According to the sunset review, the board should spend more time examining how bad salespeople harm consumers instead of dealers: "The majority of the time devoted by the board in both initial licensing and disciplinary actions involving salespeople [is] more related to employment decisions than public protection."
But the Texas DMV's Brett Bray agrees with Clark. He wishes his state required salesperson licensing if for no other reason than to track troublemakers.
"The fact is that the majority of consumer complaints are due to salespeople," says Bray. "If you address a bad salesman, you solve a lot of problems. What I've seen is a dealer getting in trouble and losing his license, and if you dig deep enough to find the underlying problem, you'll see the same players moving along and causing the same sort of problems emerging at other dealerships. And I'm talking about franchise dealerships. That's the best reason for licensing salespeople."
The debate about licensing salespeople is typical of the differences between the dealer board and DORA officials.
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"They're looking at themselves from the 'trickle down' perspective," Hier says of the dealer board. "They feel like their primary role is to instill ethics in dealers, and therefore, consumers will get taken care of. Our stance is to ask what [the board] is doing proactively to protect consumers. But we're required by law to look at things a certain way, and that's not the way the board wants to be looked at."
In response to Hier's suggestion that the dealer board isn't taking enough action against wayward dealers, Jim Clark fumes. "Do we have a quota or something?" he asks. "Our interest is in preventing problems and taking care of citizens instead of making some bean counter happy. The courts don't put every first offender away for life. I can say that we've gone to the mat with several dealers, but the fact is that we don't have the resources to take on every case. We've got to pick a few and make an example. Mr. Hier has assumed without basis that this board is like the People's Court with Judge Wapner. We're not principally organized as a consumer group. The dealer board is an avenue for consumer complaints, not an end."
The Colorado General Assembly will start looking at the board's role this week. At this time, boardmembers feel confident that HB 1128 will pass and the board's continued existence will be ensured. But Bill Barrow, president of the private Colorado Auto Dealers Association, is confident that either way, car dealers will make out just fine.
"What we really oppose is bureaucrats running the auto industry," says Barrow, who represents 300 new-car dealers across the state. "We can live without the board, and I know a couple of folks in the industry who would do away with it on their own. I'll admit that it's better than having consumers go into court with their complaints, but without the board, we'd operate like any other business. The dry cleaning industry doesn't have regulators.