GAINESVILLE, Ga. — A car dealer in Cleveland, Georgia, was sentenced for stealing $3 million over roughly seven years from "floor-plan" financing firms, a company that helps car dealerships finance and afford their inventories.
That's according to the U.S. Attorney's Office for the Northern District of Georgia.
They say Mitchell Simpson was sentenced on Tuesday to nearly 3.5 years in federal prison after pleading guilty to wire fraud charges back in July. He was ordered to pay three "floor-plan" financing firms $105,803 in restitution.
When car dealers don't have the cash on hand to pay for inventory, many turn to "floor plan lenders" who offer a "revolving line of credit" to keep dealers' floors filled with vehicles.
But according to prosecutors, Simpson — the owner of Mitch Simpson Motors — exploited those companies and fraudulently took over $3 million from them.
In a press release, they say Simpson defrauded three companies: Dealer Financial Holdings LLC, Americash Advance, Inc., and Floorplan Xpress, LLC-OK, utilizing multiple illegal and deceptive business practices to get more than he was due and deprive the lenders of money they were owed.
For instance, as collateral, they say Simpson used a single vehicle on multiple "floor plan" loans, which prosecutors note was specifically prohibited under the agreement and considered "deceptive and illegal." Despite that, they say he did it anyway and lied to cover up his utilization of the practice.
Then, when a car was sold that a floor plan lender had an interest in, he was required to keep some of those funds set aside "in trust" for their proper payment. They say that did not always happen.
"But Simpson did not always pay the floor-plan lenders, as required," the U.S. Attorney's Office press release said. "Instead, he engaged in a shell game with vehicle titles and did not always provide truthful information to lenders concerning the location of vehicles and concerning whether vehicles had been sold."
After Simpson is released from federal prison, he will be subject to 3 years of supervised release.
