ROCHESTER, N.Y. — Attorney General Eric T. Schneiderman has shut down a Rochester-area auto dealer that misled customers by failing to pay off liens on used vehicles.

In numerous cases, the dealer, Frontier Autohaus, accepted cars as trade-ins that still had remaining loan balances. After failing to pay off those balances, he resold those vehicles to unwitting consumers. As a result, previous owners remained on the hook for their original loan, and new owners were unable to register their vehicles. 

Schneiderman filed a lawsuit that resulted in the Monroe County Supreme Court ordering the dealership to permanently close. It also mandated the sale of its assets, and prohibited its owner, Shawn Minnehan, from ever again operating a car dealership in the state of New York.

The dealership and its owner are also required to pay $289,000 in restitution to 46 consumers, and $50,000 in fines and other costs to the state. Schneiderman’s office also worked with several financial institutions to help ensure the return of vehicles to consumers who were defrauded. Finance source also forgave loans for consumers who were misled. They also worked with the attorney general on the payment to victims of proceeds from a Department of Motor Vehicles insurance bond.

“A car is one of the biggest purchases many New Yorkers will make, and consumers should have confidence that they will not be misled by unscrupulous businesses that fail to uphold their legal obligations,”Schneiderman said. “My office will aggressively pursue those who flout the law and abuse consumers in the marketplace.”

An investigation by the attorney general’s office found that Frontier Autohaus did not have clear titles on many of the cars it sold, and, in some cases, no title at all. Consumers who took out loans to buy cars from Frontier Autohaus discovered weeks later that the cars had liens against them because Frontier Autohaus had failed to pay off loan balances and titles were not transferred to consumers. As a result, consumers were at risk of having their vehicles repossessed by lenders who held liens that Frontier had failed to pay off.

Without the titles, consumers were unable to register their vehicles and could have had their licenses suspended if they continued to drive them. These consumers were stuck making payments on the new loan while unable to legally operate the vehicles. Additionally, many consumers traded in cars when they purchased their vehicles, but Frontier Autohaus did not pay off these trade-ins before reselling. As a result, lenders continued to pursue loan payments from consumers for cars they no longer possessed.

Frontier Autohaus also promised to handle the title and registration transfer for consumers for a fee, typically $150, and issued temporary registration stickers that permitted consumers to drive their newly purchased cars for 45 days. Schneiderman’s investigation revealed that Frontier often failed to submit registration and title materials to the DMV for consumers who paid Frontier to handle this service. These consumers were forced to go to the DMV and pay a second time to register their vehicles. 

In addition to unscrupulous sales and titling practices, Frontier charged customers for service agreements to cover the used cars they purchased, but the company pocketed the money instead of purchasing coverage from the companies responsible for administering the coverage. When consumers attempted to use their service contracts, they found that none existed.