INDIANAPOLIS - An ex-con will be headed back to prison for a car title scam that allowed hundreds of people to avoid paying for cars, while also allowing car thieves to obtain clear titles for stolen cars.
Joseph Woodruff, 59, of Indianapolis, pleaded guilty to two federal felony charges on Thursday, admitting that he scammed banks and other car owners with his company, Mechanic's Liens Plus .
A federal judge ordered that the company be dissolved on Thursday, as he sentenced Woodruff to nearly six years in federal prison.
The Call 6 Investigators first reported on the car title scam in December 2012.
As Woodruff left federal court on Thursday, a companion worked to shield him from a news camera and Woodruff then ducked into the nearby Indianapolis Star building in an attempt to avoid being photographed.
Moments earlier in court, Woodruff claimed he was remorseful and wanted forgiveness from all of the victims who lost their cars through his fraud, which ran from 2008 until his arrest in 2012.
None of the victims was in the courtroom.
In court documents and testimony, investigators said Woodruff's Mechanic's Liens Plus company would promise customers they could legally avoid paying for cars, including some cars that had just been purchased from car dealers. Some customers avoided paying even the first payment on the cars by paying Woodruff's firm a $1,000 fee.
Prosecutors submitted documents that detailed how Mechanic's Liens Plus would doctor repair paperwork to make it seem as though cars had been worked on by a mechanic. The paperwork would then claim that the sizeable mechanic's bills had not been paid and therefore a lien had been placed on the car.
The banks that financed the cars, or in some cases the car's other rightful owners, would then lose their interest in the vehicles with brand new titles being issued. That allowed Mechanic's Liens Plus and its customers to then claim legal ownership of the vehicles without any future payments being made.
The Indiana Mechanic's Lien statute is designed to allow auto repair firms to seize cars when someone fails to pay for repairs on the car. It requires formal notices to be sent to the lawful owner of the car and also requires a period of time to pass to allow the car owner to pay up to avoid having the car seized.
Mechanic's Liens Plus would doctor paperwork to make the repair bills seem so high that many banks and finance companies simply cut the process short by forfeiting their ownership rights to the car, even though prosecutors said no work was actually performed on the cars.
"I plead guilty," Woodruff said in federal court on Thursday.
He claimed "great remorse" and claimed his daughter, who is also set to plead guilty in the racket, had "no idea" that he was operating a fraud ring.
"As a parent, this is my most sorrowful regret," he said while sobbing and crying, occasionally pausing his presentation before the judge.
Assistant U.S. Attorney Zach Myers countered that Secret Service agents had recordings of Woodruff's daughter, Nisha Woodruff, telling customers she was familiar with how the laws were being manipulated to steal cars out from under victims.
Myers said she walked into the scam with her eyes open.
Myers also told the judge, "The loser was all of us."
He said some of the liens that were invalidated in the scam were intended to force people to pay state taxes or child support.
"This was about greed," Myers said, adding that taxpayers picked up the slack when people avoided paying child support or taxes by using the fraudulent lien company.
Defense attorney Kenneth Riggins asked the judge for a light sentence, saying Woodruff felt he wasn't really causing much harm. Riggins said many of the big banks that financed the cars simply wrote off the losses.
Riggins said Woodruff lost a $60,000 salary when his prior longtime job was downsized. Riggins claimed that Woodruff originally started Mechanic's Liens Plus as an entrepreneur with legitimate intentions.
He then realized business would sometimes taper off, so he looked for ways to increase his revenue and "started doing things he shouldn't," said Riggins.
"He regressed into a life of crime," said Riggins.
U.S. District Court Judge William Lawrence said it was hardly a victimless crime.
"These are poor people who lost their vehicles," he said in pronouncing his sentence.
The judge said he considered letters received by victims in the scheme, including one woman who lost her car and no longer had a way to attend crucial doctor's appointments.
"That means something to me," said the judge.
The judge also said he considered Woodruff's "pattern of conduct over decades."
Lawrence cited a pre-sentence investigation report that found Woodruff had been kicked out of Shortridge High School for truancy, then later arrested for stealing a car in 1972. He was then convicted for stealing another car and forgery in 1999, resulting in a state prison term.
The judge also said Woodruff may have violent inclinations
due to a past charge of criminal recklessness.
Despite his criminal record, Woodruff's attorney told the judge it was a positive sign that so much time passed between Woodruff's last prison sentence and his arrest in this scam.
Myers echoed that there were plenty of victims in the scheme, including financial institutions that were already on shaky grounds.
He also told the judge that Woodruff was not simply trying to "help the little guy" as he had insinuated in addressing the court. Myers said investigators found that Woodruff even ripped off his own customers, stealing cars out from under them and sometimes keeping the cars or money for himself by lying to them.
In some of those cases, federal agents said Woodruff would tell his paying customers that banks had gone ahead and paid up to take cars back, when in reality Woodruff would take the cars for himself. Customers were paid small fees purported to be percentages of what the banks had paid to get the cars back, but Woodruff was then actually keeping the car.
Woodruff participated in substance abuse treatment during his past prison sentence, and his lawyer asked for more treatment for alcohol and drug issues in his new prison term.
Federal investigators originally tallied 272 cars that had been stolen from their rightful owners in the fraud scheme, but many of those cars were recovered and seized during the investigation. On Thursday, the judge said he calculated the loss at more than $400,000 with more than 50 victims.
Prosecutors said his daughter, 29-year-old Nisha Woodruff, has signed paperwork saying that she intends to plead guilty to her part in the scheme.
Also convicted was an Indiana Bureau of Motor Vehicles employee, who was fired when the scam was discovered. Lee Ann Rinehart, 57, received probation after she pleaded guilty to using BMV computers to provide information to Mechanic's Liens Plus about the lienholders for hundreds of cars.
Joseph Woodruff told the court on Thursday that he acted alone, keeping everyone else in the dark about the true nature of his rip-off.
"I chose to do those things all by myself. No one else knew. I deceived everyone involved of my intentions," he said.
Woodruff asked the judge to allow him to stay out of prison as long as possible so that he could "make up for lost time" with his daughter.
"I just hope she will forgive me," he said while sobbing before the judge.
After his 70-month federal prison sentence, Woodruff was ordered to serve three years of probation known as supervised release. He was also ordered to pay $1,933.76 in restitution to some of the victims. The judge did not elaborate on why the restitution figure was so low.
The judge decided not to impose a fine, saying Woodruff likely did not have the means to pay it.
Finally, the judge ordered that Mechanic's Liens Plus be dissolved, and Woodruff must forfeit his notary public commission, which he used to doctor some of the documents.
After Woodruff's release from prison, he will not be allowed to start his own company or work for a friend.
Woodruff could have received a 25-year prison sentence for the conspiracy to commit mail fraud and the computer access fraud charges for which he pleaded guilty.
Judge Lawrence said he had concerns about justice being served for the victims by a light sentence, but his sentence was at the lowest part of the federal sentencing guidelines that were calculated for this case.
Sentencing guidelines suggested that Woodruff serve between 70 and 87 months in prison.
Federal law allows a judge to "depart" or impose a sentence above or below those guidelines if certain reasons are demonstrated.
The judge imposed a 70-month sentence, saying that Woodruff appeared to be remorseful and would be unlikely to commit future crimes when he is released.