This internal affairs case involved a class action suit involving a large city police department’s handling and seizing of automobiles associated with drug use-related offenses. The City allegedly had a policy, custom, and practice of circumventing the established codes and legal regulations of the city for the purpose of permanently parting registered owners from lien-encumbered vehicles impounded for drug related offenses without due process. The City allegedly coerced auto finance companies to terminate the terms of their liens and irreversibly repossess vehicles without notice to the registered owners by threatening a loss of indemnity if the cars are seized in conjunction with a future offense. Because of this implied threat, the auto finance companies take possession of the vehicles and then re-sell them.
Question(s) For Expert Witness
- 1. Please describe your experience in the auto finance industry.
- 2. Do you have any specific experience relating to repossession? Please explain.
- 3. Have you ever experienced or heard of government entities pressuring auto financers into terminating their liens on seized vehicles?
Expert Witness Response E-070734
I have 34 years of experience in the auto finance industry as a consultant for more than 200 participants, including virtually every major auto finance company. I have managed the Association that represents all the major captive finance companies for 23 years. I have written the only two major treatises on auto financing published in the last 30 years, and I have had more than a dozen subprime finance companies as clients for which repossession issues are critical to their survival. I’ve worked with a repossession company and a collection company in various contexts. A few years ago, I was an expert in a repossession case on a different issue. I don’t recall hearing of this alleged practice; I believe it is highly unusual. As Managing Director of an automobile leasing association, I have exposure to this city’s activities. The city is one of the most difficult cities to deal with; they bend or change the rules as they go in a variety of ways. For example, they may accelerate the sales tax of lessees who are moving in while not crediting the sales tax of lessees who are moving out. Other jurisdictions are much more careful to follow their mandates.
Expert Witness Response E-070736
I am experienced in all aspects of automobile financing including compliance. While every state has differently worded laws on repossessions, they tend to be fairly similar throughout the country. It is not in the ordinary course of business for lenders to terminate their liens, especially if they are pressured and harassed. I have worked as an expert witness several times before, including cases involving a used car dealer investor, a dealership bankruptcy, and an alleged embezzlement of $1.2 million that required me to analyze 623 lease transactions. I have experience as a dealer group and bank-approved Chief Restructuring Officer, (CRO), working side-by side with banks and dealer principals in the restructuring of out-of-trust dealerships or those that need temporary management status.