Last year, Elvia Thompson, of Alexandria, Va., was having no luck selling her 1984 BMW through classified ads until a Towson leasing company gave her an offer she couldn't resist.
Thompson says Better Value Leasing offered to pay her $264.06 a month for 36 months, giving her a total of $9,506.16, more than $2,000 over what she was asking. She took the deal and gave up the car. Several months later, all she had to show for it were two late payments and a bad check from Better Value, she says.
Thompson is one of about 600 people who claim to have been victimized by up to 10 similar firms. The companies, most of them no longer operating, are under investigation by the state Motor Vehicle Administration and the Maryland attorney general's office.
Because she owned her car outright, the Virginia woman may be more vulnerable legally than many of the others.
More typically, these firms brokered leases on vehicles still under bank financing, a criminal violation in Maryland since July 1, 1990, punishable by up to three years in prison, state officials say.
Many cases involved people who bought new cars they could barely afford and suffered a financial loss months later that left them unable to make the payments. Because they owed more on the cars than they could get by selling them, the people desperately advertised for someone to take over the payments and got a reply from one of these companies. The leasing companies typically offered to find someone to sublease the car, take over the payments and get the original buyer off the hook, prosecutors say.
If the bank that financed the original purchase doesn't give permission for such a deal, however, it's illegal, says Peter Berns, deputy chief of the attorney general's Consumer Protection Division.
The worst part is that some people find that their car has been leased and the leasing company is collecting payments, but is not forwarding the money to the financing bank, prosecutors say. The vehicle then gets repossessed, the original buyer still owes the full loan and the company keeps all the money.
Any criminal prosecutions, slowed by the numbers of victims, are months away, says Karen Kruger, an assistant attorney general.
Someone such as Thompson, who believes her car was stolen from her, has little recourse, Kruger admits, except to persuade a local prosecutor to seek charges for theft by deception. With drug, robbery and other serious personal crimes clogging local courts, that's easier said than done, Kruger acknowledges.
"I have 600 to 800" consumer complaints to investigate, Kruger says. "There are limits. I just don't have the resources."
Berns said the consumer protection division is working on a public consumer alert to help prevent the problem.
Edward R. K. Hargadon, another assistant attorney general, said the major companies involved are now shut down.
Thompson, meanwhile, is still searching for her BMW.
Robert S. Sherman, of the 6200 block of Pimlico Road, the president of Better Value Leasing, is a disbarred Baltimore lawyer who once was convicted of spending $9,400 of a client's money to pay his personal bills.
With his leasing company closed now, no one answers the phone at Better Value's former address in the 8800 block of Orchard Tree Lane.
"I just can't tell you how frustrated I am," Thompson says. She is moving now through the slow process of initiating a criminal complaint against Better Value and Sherman for the bad check she said she received from Better Value in February.
"We [the customers] all obey the laws because we're good guys, but the bad guys don't," and nothing happens to them, she says.
Hargadon says the state has gone to court against one of the leasing firms, Allstate Auto Plan, and obtained a Baltimore Circuit Court injunction in February 1990 to stop the firm from selling cars without a license. This was before the new subleasing law took effect July 1 of that year. He says salesmen from some of the firms driven from business by bad publicity or state action have begun new companies under different names.