In this case, our client owned a chain of car dealerships. Our client was concerned that there was a kick-back scheme at one of their dealerships. Our client alleged that certain members of the dealership management team were accepting payments for having the dealership purchase vehicles from the wholesalers at a price above the market price.
To start, FAZ conducted extensive interviews with the dealership owners and dealership employees in order to gain a better understanding of the dealership’s operations. Through these interviews, it was uncovered that the dealership’s historical practice had been to send their own employees to auction houses to purchase used vehicles rather than buying vehicles from the wholesalers. However, certain dealership management had caused the dealership to begin purchasing vehicles from the wholesalers. Based on this finding, FAZ decided to investigate the purchases from the wholesalers further.
FAZ then conducted a forensic investigation to gather and analyze documents related to the dealership’s purchases of vehicles from the wholesalers. FAZ was able to obtain the dealership’s purchase orders, canceled checks, and general ledger detail to support the payments made by the dealership to the wholesalers. Additionally, FAZ was able to obtain sale documents from the auction houses which the wholesalers had originally purchased the same vehicles from. Using these documents, FAZ was able to analyze the amount the wholesaler had paid for a vehicle, and the amount the dealership had paid for that same vehicle to purchase it from the wholesaler. As our client had alleged, the dealership had been purchasing vehicles at a significant premium compared to the price the wholesalers had paid for the same vehicles.
In this case, FAZ’s forensic report and analysis was utilized to reach a settlement between the dealership owners and the wholesalers.