INDIANAPOLIS - Federal prosecutors might be filing new court action to recover some of the 272 vehicles that were issued fraudulent new titles in a suspected scam that was exposed by Call 6 Investigators on Tuesday.
U.S. Attorney Joe Hogsett on Wednesday laid out new details in the racket that centered on mechanic's liens being used to steal cars from banks and others who had ownership interests in the vehicles.
"These are not victimless crimes. Far from it," he said. "These individuals were responsible for operating their own personal BMV on the streets of Indianapolis."
Three people, including an Indiana Bureau of Motor Vehicles employee, are charged with federal crimes involving a business called "Mechanic's Liens Plus" on the west side of Indianapolis.
The owner of the business, Joseph Woodruff, 58, is charged with fraud and conspiracy along with his daughter Nisha, 28.
BMV employee Lee Ann Rinehart, 56, is also charged in the fraud case, including one count of exceeding her authorized access in the BMV computer systems.
She is accused of providing information about the legitimate lien-holders for the hundreds of vehicles that were taken away from those banks and others with ownership interest.
Prosecutors said Wednesday that each could face between five and 20 years in federal prison if they are found guilty. All three are set for their first federal court appearance on Dec. 18.
For a fee of $1,000, prosecutors said people would have Mechanic's Liens Plus file phony paperwork to enforce a mechanic's lien on cars so that drivers could get out from under making payments that they owed on the cars.
Hogsett said it also caused legitimate liens to simply go away for such things as paying child support or taxes that are owed to the State of Indiana.
Liens are typically placed against cars when someone owes child support or back taxes, but those liens and any bank liens from finance companies would be wiped clean if a mechanic's lien would be placed on vehicles.
Assistant U.S. Attorney Zach Myers, the lead prosecutor on the case, told Call 6 Investigators on Wednesday that some of the customers would end up with outright ownership of cars in order to avoid making their car payments.
He said others would use the business to avoid the other liens that would have required paying child support or taxes.
In an email, one woman wrote to Call 6 Investigators that her family lost a classic 1965 Corvette that their late father had owned. She said that Mechanic's Liens Plus was used by an unscrupulous mechanic to take the car away from her family after they had paid him $13,000 to fix the car.
Call 6 Investigators also found a 2011 case where an Indianapolis woman was sentenced to prison after using Mechanic's Liens Plus to obtain brand new titles for two different vehicles that had been stolen.
Tameka Caldwell fought her eight-year prison term, but an appeals court upheld the sentence for fraud and forgery.
The list of vehicles that received clean titles in the suspected scam includes a tractor-trailer, a boat, trailers and several luxury cars.
Myers told Call 6 Investigators that prosecutors have already filed in court to seize any of the cars in which the suspects may still have any ownership interest.
Myers also revealed that other court filings may be unsealed in the future as the feds try to confiscate some of the other vehicles that received clean titles with the help of Mechanic's Liens Plus.
Even if the drivers who hired the business are not charged with a crime, Myers said a forfeiture action could be filed in civil court since the cars were kept by the drivers through a fraudulent enterprise.
Hogsett would not spell out a dollar figure on the 272 vehicles or the taxes and child support that were avoided in the scheme, but he did call it "material" and a "sizeable amount of money."
Also on Wednesday, prosecutors revealed another way that banks had been scammed in this case.
Hogsett said that Mechanic's Liens Plus would begin the process of placing fraudulent liens on some vehicles, and that required notices to be sent to the finance companies for bogus repair bills.
Prosecutors say the fabricated repair bills were often so high that some banks would simply relinquish the cars, choosing not to fight it.
Others, Hogsett said, would decide to pay for the repairs, which were never performed, and Mechanic's Liens Plus is accused of splitting the money with their customers when those checks from the banks would arrive.
The BMV employee has been suspended by that agency and Deputy Commissioner Dennis Rosebrough said she could be fired, depending on the outcome of the criminal proceedings.
Marion County court records show several finance companies and individuals who challenged various mechanic's liens that were placed on their vehicles.
Federal prosecutors hinted on Wednesday that they might be going after other businesses in the Indianapolis area that could be operating the same sort of auto title scheme.