3 plead guilty in rollback of odometers One member of trio is former investigator for Maryland MVA

11 others were indicted

Interstate ring blamed for bilking hundreds of used-car buyers

December 14, 1996|By Scott Higham | Scott Higham,SUN STAFF

Three members of a bustling interstate odometer rollback ring pleaded guilty to conspiracy charges in federal court in Baltimore yesterday, admitting that they clicked back the mileage counters on hundreds of cars that were sold to unsuspecting customers around the country.

The men, including a former Maryland Motor Vehicle Administration investigator, were snared in a wide-ranging, 2 1/2 -year federal and state probe into a scheme that reached from New York to Florida to Indiana and wound up swindling consumers out of as much as $5 million.

George Willard Osenburg, 51, and Philip Simon, 67,pleaded guilty to conspiracy charges, and each could be sentenced to five years behind bars and $250,000 in fines. James G. Procheska III, 40, of Hydes pleaded guilty to conspiracy and money-laundering charges. He could receive 15 years in prison and a $750,000 fine.

Osenburg, a motor vehicles investigator who left the agency before he joined the ring in 1985, used his expertise to help advise ring members, and he and his partners in the scheme rolled back the odometers on at least 1,200 cars, according to court records. There is no evidence that he used his connections to the agency to help facilitate the conspiracy.

Motor vehicle managers weren't talking about Osenburg yesterday. The chief of the agency, Ronald L. Freeland, declined through a spokesman to say when Osenburg joined the agency, when he left and why he left -- information that is readily made public by other state agencies.

U.S. District Judge Catherine C. Blake did not set sentencing dates yesterday, giving the trio time to cooperate with FBI and Internal Revenue Service agents and state motor vehicles investigators who are still piecing the case together and bolstering the charges pending against other alleged ring members.

"When three people this high up in the organization plead guilty, it's time for the other people to consider cooperating with us," said Assistant U.S. Attorney Douglas B. Farquhar, who is prosecuting the case with Justice Department attorney Susan Strawn.

Of 12 people indicted by a federal grand jury in Baltimore in September for their roles in the ring, only one has pledged his cooperation -- Procheska, a former used-car salesman who ran several lots in Harford County, including Bay Country Motors and Budget Auto Sales.

Prosecutors did not seek indictments against Simon and Osenburg. They filed charges against them using criminal informations, an indication that the defendants have been cooperating with investigators all along. The 11 remaining suspects have pleaded not guilty to the charges and are awaiting trial.

Prosecutors say the ring members bought hundreds of cars, most of them at auctions, and rolled back the odometers, some by as much as 90,000 miles. Titles for the cars were doctored by ring members. In some cases, ring members had inside help to ensure the paperwork cleared, prosecutors say.

The grand jury indicted two motor vehicle clerks in North and South Carolina -- Dorothy Jones Grays and Nellie Drummond Duckett -- for their alleged roles in the ring, charging them with taking cash and gifts in exchange for processing titles that had been falsified.

The ring members then sold the cars at lots to unsuspecting customers. When the customers started to complain that their cars were falling apart, and their mechanics confirmed that the odometers had been rolled back, federal agents and state investigators started to unravel the scheme.

What they found were cases like this one: Ring members purchased a 1991 Ford Explorer with 120,064 miles for $11,400 in 1993, court records show. They then rolled back the odometer to 30,607 miles and sold the Explorer for $16,980 -- taking off 89,457 miles and turning a quick $5,580 profit.

"This type of investigation is important because it affects every consumer in the country," said FBI supervisor Joseph M. O'Hara, who oversaw the rollback investigation. "Consumers are buying used cars more and more every day."

The scheme is part of a growing trend in the United States. With the average price of new cars topping $20,000, the used-car market has been booming in recent years. The lure of fast and easy money has attracted unscrupulous salesmen willing to roll back odometers.

In the past three years, odometer fraud complaints have quadrupled at the Maryland MVA. At the National Highway Traffic Safety Administration, compliants have tripled since 1994. The federal government estimates that odometer tampering inflates used-car prices more than $4 billion each year.

Agents says consumers can take a series of steps to protect themselves from buying cars with high miles and low odometer readings. FBI agent Michelle A. Gruzs, the lead investigator in the Baltimore case, said buyers should inspect the steering wheel to determine whether the amount of wear seems to match the number of miles.

She said consumers can also check doorjambs for oil-change stickers that contain mileage figures. Be suspicious, she said, if the stickers have been stripped away. Consumers can also pay motor vehicle offices to run title checks, which list previous mileage and owners.

Gruzs also said buyers should inspect odometers to see whether the numbers line up. Look for a silver lining between the rows, a sign of possible tampering. Perhaps best of all: Bring the car to a mechanic or a licensed dealership and pay for a top-to-bottom inspection before making the car your own.

Pub Date: 12/14/96

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