Former Used-Car Dealer Convicted of $3 Million Fraud Scheme

GAINESVILLE, Ga. - Mitchell Simpson, who orchestrated a $3 million scheme to defraud companies that provided floor-plan financing to his used-car dealership, has pleaded guilty to wire fraud.

"This defendant abused the trust of the companies that loaned him money to operate his car dealership," said U.S. Attorney Ryan K. Buchanan. "We will continue to prosecute individuals motivated by greed who use illegal practices to deceive unsuspecting businesses."

"Simpson deceived the lenders who placed their trust in him and now he will be held accountable for his greed," said Mitchell Jackson, Senior Supervisory Special Agent, of FBI Atlanta's Gainesville Office. "As this conviction demonstrates, the FBI will not tolerate anyone who fraudulently steals or takes money that they did not earn."

According to U.S. Attorney Buchanan, the charges and other information presented in court: From early 2012 through early 2019, Simpson operated Mitch Simpson Motors, a used car dealership in Cleveland, Georgia. Three floor-plan lenders, Dealer Financial Holdings LLC, Americash Advance, Inc., and Floorplan Xpress, LLC-OK, each provided Simpson with a revolving line of credit, also known as floor-plan financing, so that Simpson could purchase an inventory of vehicles to re-sell to customers. Each line of credit was governed by a written contract, also known as a floor-plan financing agreement. Simpson was required to abide by the terms and conditions of the agreements, and he was required to provide the floor-plan lenders with complete and truthful information concerning all matters related to the agreements.

When Simpson wanted to borrow money to purchase a vehicle to add to his dealership's inventory, he would contact one of the floor-plan lenders and provide that lender with a description of the vehicle, including the vehicle identification number, and the amount of the loan requested. If the vehicle was subject to any other liens or security interests, Simpson was required to disclose that fact to the floor-plan lender. If Simpson led the lender to believe that the vehicle was not subject to any other liens or security interests, the lender would transfer the requested funds to Simpson's custody and control. In return for the loan, the dealership would grant the floor-plan lender a purchase-money security interest in the vehicle. Simpson was required to keep the vehicle free from all other liens and security interests until sold.

Simpson defrauded the floor-plan lenders by using a single vehicle as collateral for more than one floor-plan loan, which is a deceptive and illegal practice referred to in the used-car industry as double floor-planning and triple floor-planning -a practice expressly prohibited by the floor-plan financing agreements.

To hide the double and triple floor-planning, Simpson made false and misleading statements and omitted material facts in his communications with the floor-plan lenders. Also, whenever Simpson sold a vehicle in which one of the floor-plan lenders held a security interest, Simpson was required to hold the proceeds from the sale of that vehicle in trust for the secured lender and promptly pay the secured lender all amounts due under the applicable floor-plan financing agreement.

But Simpson did not always pay the floor-plan lenders, as required. In addition, he played a shell game with vehicle titles and did not always provide truthful information to lenders concerning the location of vehicles and concerning whether vehicles had been sold. This is an illegal practice referred to in the used-car industry as operating "out of trust," which was expressly prohibited by the floor-plan financing agreements. Simpson's fraudulent scheme resulted in a loss of more than $3 million to the floor-plan lenders.

Sentencing for Mitchell C. Simpson, 56, of Cornelia, Georgia, is scheduled for October 8, 2024, at 11:00 a.m. before U.S. District Judge Steve C. Jones in Gainesville, Georgia.

This case is being investigated by the Federal Bureau of Investigation.

Assistant U.S. Attorneys John Russell Phillips and David A. O'Neal are prosecuting the case.

For further information please contact the U.S. Attorney's Public Affairs Office at [email protected] or (404) 581-6016. The Internet address for the U.S. Attorney's Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.