DUTCHESS COUNTY, N.Y. – The co-owners of Mega Auto Group, which operated used-car dealerships in Poughkeepsie and LaGrange, N.Y., were ordered in June to pay more than $200,000 for selling bogus service contracts to nearly 100 of their customers, reported the Poughkeepsie Journal.

New York State Supreme Court Judge Christine Sproat issued the order against Jorge Manzanarez and Nilson Cortez. She found that the pair knowingly defrauded customers by selling a $2,000 service contract called SafeChoice to customers multiple times without their consent, then failed to submit the money to the provider.

After reviewing 100 deals to which the service contract was attached, the Attorney General's Office found the dealership only submitted nine contracts to licensor SafeData for service contract activation. The remaining contracts were never filed with the licensor. Instead, the dealer kept the $2,000 per contract and left at least 91 consumers with no coverage for their vehicles.

In a related matter, Manzanarez, Cortez and a third defendant, Shane Gordon, were indicted in April on grand larceny charges, a felony punishable by up to 25 years in state prison. They are accused of obtaining more than $1 million in fraudulent auto loans from TEG Federal Credit Union.

Gordon was employed as a loan officer at the credit union at the time of the alleged thefts. He has since been fired from his job, credit union spokeswoman Stephanie Molinelli said.

Manzanarez and Cortez are accused of creating and submitting forged pay stubs and bogus tax records on more than 80 auto loan applications for customers who otherwise would not have qualified for the money. Gordon allegedly accepted cash payments from Mega Auto Group in exchange for approving an estimated $1.4 million in phony loan applications.

The crimes allegedly took place between May and September 2007. About $340,000 of the loans are already in default and others are delinquent, according to Senior Assistant District Attorney Edward Whitesell.

The scheme was discovered during a joint investigation by the credit union, the District Attorney's Office, the state Attorney General's Office and detectives from the Dutchess County Sheriff's Office, Whitesell said.