New Hampshire Uncovers Illegal Luxury Car Export Scheme
Concord — Two California men at the heart of a complex multi-state luxury vehicle export scheme uncovered by investigators in New Hampshire last year have pleaded guilty to federal charges, U.S. Attorney John Kacavas said yesterday.
Flanked by representatives from the multi-agency investigation, Kacavas said between 2009 and 2012, Frank Ku, 31, of San Gabriel, Calif., and Danny Hsu, 33, of West Covina, Calif., orchestrated the purchase of 93 luxury vehicles worth more than $5.5 million dollars from 16 states, including New Hampshire. The cars were then shipped to China and sold for profit. U.S. law prohibits the export of new cars.
The Mercedes, BMWs, Lexus and Audi, and other luxury vehicles the two men illegally exported could sell in China for as much as twice their U.S. resale value, Kacavas said.
Fourteen of the vehicles, worth $750,000, were apprehended at the Port of Long Beach, Calif. Those vehicles are going through the forfeiture process, and Kacavas said he’s hopeful their value will be recouped.
“The 79 remaining cars that were exported to China are gone and there’s nothing we can do about that,” Kacavas said.
Authorities said the cars were shipped directly to California from dealerships but their registrations in other states made them appear used on customs declarations. Ku and Hsu obtained New Hampshire drivers licenses for themselves and several associates using fabricated leases and utility bills. They then transferred money from a company account in California to New Hampshire and purchased the cars outright using personal or cashier’s checks. Some of the cars were also bought by straw buyers, two to three of whom were from New Hampshire, said investigators.
“Some of our neediest citizens have been duped into participating in this,” said Richard Baily, Director of the New Hampshire Division of Motor Vehicles. “To someone who has no money, no assets, no job an offer of $500 to $1000 seems almost too good to pass up.”
Many of the straw buyers and addresses used to establish false residencies were found through Craigslist. Those agents and straw buyers who helped Ku and Hsu purchase luxury vehicles will not face charges, Kacavas said. Eleven of the vehicles were fraudulently titled in New Hampshire and three more were stopped by investigators. Only one of the vehicles was actually purchased in New Hampshire, from a BMW dealership in Stratham.
Such title fraud can hurt dealerships that sometimes face fees or other sanctions from auto manufacturers for making unlawful sales, though that has not happened thus far as part of this case.
David Cushman, owner of Holloway Motor Cars, a Mercedes-Benz dealership in Manchester, said such fraud is widespread and hurts the industry in a number of ways, including inflating sales figures. He said he was glad investigators had busted this particular scheme but added “it’s only a fraction of what’s going on.”
Ku and Hsu plead guilty to felony mail fraud and customs violations in a plea agreement with federal prosecutors and will be sentenced today. Kacavas said it’s unlikely they will receive jail time, but they do face financial penalties. They are both naturalized U.S. citizens and California residents. The two never lived in New Hampshire, but investigators said they visited on a number of occasions to conduct their illegal business and both had falsely established residency in the state.