$1.8M restitution order vacated in car dealership fraud

The 7th Circuit Court of Appeals has reversed and remanded for the recalculation of restitution to be paid by a man involved in fraudulent activities at an Indianapolis car dealership.

Mahammad Hindi and Mohamed Mahmoud were the co-owners of Indianapolis car dealerships Elite Imports and Elite Car Imports, where their employees were engaged in a variety of illegal schemes intended to defraud lenders and insurance companies.

Specifically, Elite employees found a way around acquiring a car’s title from floor-plan lenders by obtaining a copy of the car’s title from the Indiana Bureau of Motor Vehicles’ online portal. If a copy of the title could not be acquired, the employees could still avoid asking floor-plan lenders to release the car’s title by continually issuing the customer temporary license plates.

To prevent this scheme from being detected, Elite employees would call customers and request that their cars be returned to the lot for a VIN number inspection or a free oil change. Some customers who obliged would return their cars to the lot before an auditor’s inspection, but those that couldn’t make it in time would be listed as on a test drive or in for repairs.

The employees also “helped” customers who could not afford a car without a loan to submit fraudulent applications to consumer lenders by creating fake bank statements, driver’s licenses and social security cards that the customers could send to their lenders. Additionally, the employees used the dealership’s resources to defraud insurance companies.

At some point after Hamza Dridi began working for Elite Imports, he participated in various aspects of its fraudulent schemes, including overseeing the disassembly of vehicles that would later be reported stolen and collecting insurance proceeds from the reports.

Dridi and three other employees were indicted in August 2016, and Dridi proceeded to trial on charges of conspiring to violate the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(d), and interstate transportation of stolen property, 18 U.S.C. § 2314. Dridi was convicted and sentenced to six years in prison and found jointly and severally liable for $1,811,679.25 in total restitution to more than 30 victims.

In a reversal, the 7th Circuit Court of Appeals agreed with Dridi that the U.S. District Court for the Southern District of Indiana erred by not making specific factual findings prior to sentencing him and by not adequately demarcating the scheme before imposing $1.8 million in restitution.

Arguing it was unclear whether a district court must make findings under U.S. Sentencing Guideline § 1B1.3 when loss is undisputed, the government cited the 7th Circuit’s recent statement in the case of United States v. White, 883 F.3d 983 (7th Cir. 2018): “When the issue of individual responsibility for conduct of others is contested, a district court should make a finding on each element of the relevant conduct test.”

But “White did not disturb the clear law in our circuit: before sentencing a defendant based on the loss caused by the entire conspiracy, the district court must make particularized findings about the scope of conduct attributable to the defendant. The district court here did not make those findings; that error is plain,” Judge Michael Kanne wrote for the circuit court.

Kanne then concluded the district court’s error in foregoing findings under § 1B1.3 did not affect Dridi’s substantial rights. The lack of factual findings on how Dridi is responsible for the restitution amount, however, was plain error and did affect his substantial rights.

“… (A)s discussed above, the evidence does not support holding Dridi liable for this entire amount,” the 7th Circuit concluded. “Therefore, the district court ordered restitution beyond what the record indicates Dridi caused; this warrants reconsideration of the entire restitution award. In redetermining the restitution award on remand, the court should demarcate the scheme and establish the actual amount of loss caused by Dridi’s conduct.”

However, Dridi’s sentence was affirmed. The case is United States of America v. Hamza Dridi, a/k/a Alex, 18-3334.

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