A lawsuit filed by New York’s attorney general resulted in a shutdown of an independent dealer because a law enforcement investigation found the store misled customers and failed to pay off liens on used vehicles.

Attorney General Eric Schneiderman said earlier this week that Frontier Autohaus located in Rochester, N.Y., accepted trade-ins that still had remaining loan balances and failed to pay off these balances before reselling the vehicle to unwitting consumers. As a result, Schneiderman said 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 permanently closed, mandating the sale of its assets, and prohibiting its owner, Shawn Minnehan, from ever again operating a 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 New York State.

Schneiderman’s office also partnered with several financial institutions to help ensure the return of vehicles to consumers who were defrauded, the forgiveness of loans for consumers who were misled and 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 to many of the vehicles it sold, and, in some cases, no title at all.

Law enforcement discovered consumers who took out loans to buy vehicles from Frontier Autohaus discovered weeks later that the units 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, Schneiderman said many consumers traded in vehicles 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 vehicles they no longer possessed.

According to the attorney general’s investigation, 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 vehicles for 45 days.

Schneiderman also mentioned 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 warranties to cover the used vehicle they purchased, but the company pocketed the money instead of purchasing coverage from the companies responsible for administering warranty coverage,” Schneiderman said. “When consumers attempted to use the warranty coverage, they found that none existed.”