Regularly, alerts and messages arrive in my inbox containing some kind of enforcement action against a dealership or finance company. Oftentimes, my approach is just stick with the facts of the matter contained in a press release, share the developments through our channels here at Cherokee Media Group and carry on with the next task.

However, an alert from the Department of Justice arrived this week about how Hallman Chevrolet of Erie, Pa., entered into a deferred prosecution agreement involving more than $2.1 million in penalties and restitution for auto financing misdeeds. Immediately, childhood memories came flooding back of being a pre-pubescent boy and then eager-driving teenager at that store that was as close to growing up in the car business as I personally experienced.

Hallman Chevrolet is situated on State Street in this northwestern Pennsylvania city. The dealership is a test drive away from Lake Erie, meaning snowfall is often measured in feet. My father purchased a half dozen vehicles at the dealership, ranging from the family ride of the day, a 1978 Chevrolet Impala, to a 1991 Chevrolet Cavalier for one of my siblings to a 1983 Chevrolet Custom Deluxe half-ton pickup that eventually became my first vehicle.

See, my father’s first cousin was married to the gentleman who oversaw new-truck and used-car sales at Hallman Chevrolet. Being my dad’s shotgun rider “on trips to town,” there were many times we visited that dealership. If their conversation wasn’t of interest to me, I meandered the lot, peaking inside vehicles where cassette players were the high-end electronics of the day.

During the past 10 years as I’ve interacted with finance company executives, dealers and scores of service providers, it’s crossed my mind more than a few times that had we lived closer to Hallman Chevrolet, I would have tried to become the store’s next Lou Bertie. (That was the name of the gentleman who was related by marriage and turned metal at the dealership).

So that’s why the DOJ news release about the matter involving Hallman Chevrolet struck me significantly this week.

U.S. Attorney Scott Brady said Hallman Chevrolet entered into a deferred prosecution agreement and agreed to pay a monetary penalty of $1.4 million and more than $737,000.00 in restitution to various finance companies.

According to the agreement entered into between Brady and David Hallman (on behalf of Hallman Chevrolet and the Hallman Auto Group), from 2009 through 2015, with knowledge and acquiescence of David Hallman, Hallman Chevrolet engaged in a bank fraud scheme and a conspiracy to commit bank fraud, for which Hallman accepted responsibility.

That news release indicated the parties entered into a comprehensive deferred prosecution agreement to hold Hallman Chevrolet accountable for its actions and to compensate finance companies. The agreement requires the monitoring of Hallman Chevrolet’s conduct over the next four years and imposes other substantial obligations on the auto dealership and its owner.

“For over six years, Hallman Chevrolet defrauded financial institutions throughout the region by systematically falsifying loan documents in hundreds of transactions,” Brady said. “The perpetration of large-scale auto loan fraud schemes in western Pennsylvania must stop.

“The auto dealership industry is put on notice that substantial penalties await those who engage in such schemes,” he continued. “In addition to the combined fine and restitution exceeding $2 million, the policies, procedures, compliance and ethics program required by this agreement should serve as a template for responsible, ethical conduct within this industry.”

Knox McLaughlin Gornall & Sennet represented Hallman Chevrolet in the matter. The firm sent me a press release as well, emphasizing that Hallman Chevrolet worked to cooperate with the attorneys and agents from the FBI and U.S. Attorney’s office during the investigation that focused on the store’s used-vehicle department.

“Hallman Chevrolet takes full responsibility for the conduct described in that agreement. Since the investigation began, Hallman Chevrolet has taken significant steps to employ a compliance plan and philosophy that will prevent the sort of conduct that led to the investigation and agreement,” the store said in that release.

“Hallman Chevrolet has already installed a version of this plan and made material changes to its business operations,” the store continued. “Consistent with the agreement, Hallman Chevrolet plans on continuing that work into the future. Additionally, and pursuant to the agreement with the United States Attorney, Hallman Chevrolet is making full restitution to the financial institutions whom the United States Attorney identified as having suffered losses due to the conduct at issue. 

“Hallman Chevrolet is committed to moving forward from this investigation in a way that treats compliance with all applicable laws and regulations as the primary and non-negotiable component of every transaction,” the store went on to say. From that place of compliance, Hallman Chevrolet will continue to provide exceptional value and service to its customers.

“Hallman Chevrolet has been a presence in downtown Erie for more than 44 years, and it plans on continuing its tradition of value and customer service into the next generation,” the store went on to say.

Since I left northwestern Pennsylvania more than 20 years ago, I haven’t followed in my father’s footsteps and made a vehicle purchase at Hallman Chevrolet. Despite the development, my memories of Hallman Chevrolet are still fond. It’s my hope the store has learned from its transgressions, and both franchised and independent dealerships shore up their compliance endeavors as not to sully the efforts of operations adhering to state and federal regulations.

Nick Zulovich is senior editor of SubPrime Auto Finance News and can be reached at nzulovich@cherokeemediagroup.com.