Alabama Title Loan Proprietor Indicted for Exploiting Elderly Partner
Inside Subprime: Sept 5, 2018
By Kerry Reid
Fraudsters and con artists have long homed in on elderly people in their scams, often using targeted emotional advertising to reach into their bank accounts. And auto-title loan companies also can take advantage of anyone – elderly or otherwise – facing budget shortfalls.
But in an interesting development out of Decatur, Alabama in August, Greg Steenson, a partner in a used car and title-loan company, faces a felony charge of financial exploitation of an elderly person. The alleged victim? His former co-owner – who is also being sued in court.
As reported by Eric Fleischauer of the Decatur Daily, Steenson, 49, formerly a partner in now-bankrupt Priceville Partners LLC, is in Morgan County Jail facing a total of 14 felony charges related to his alleged sales and attempted sales of vehicles to which he did not have title.
Harold Jeffreys of Decatur, 74, owned 60 percent of the company when it went bankrupt in March 2016. According to the indictment brought by the Alabama Securities Commission and as reported by Fleischauer, Steenson fraudulently tried to get funds from Jeffreys “to purchase property in Tennessee which would be immediately sold at a higher price per acre.” However, Steenson never purchased any land with that money.
Jeffreys sued Steenson for fraud in December 2015, though the court filings didn’t mention the Tennessee deal. Instead, Jeffreys claimed that Steenson misappropriated funds and failed to repay loans as manager of Priceville Partners. That case was settled with a $3 million consent judgment.
Jeffreys also sued Joseph Wynn, the company accountant, for malpractice. In that case, allegations of Steenson keeping two separate sets of books – one of which reported inflated assets – came out.
Before working for Jeffreys, Steenson served 28 months in prison for a 2001 conviction on charges of check kiting and stealing money from banks. One of his victims was Heritage Bank – where Jeffreys served as chairman of the board. According to testimony reported by Fleischauer, Jeffreys met Steenson in 2013 selling Christmas trees in a vacant lot and felt “He gained my confidence that he was a repentant, redeemed individual… And my nature is I think people deserve a second chance.”
That lot became the site for Priceville Partners.
The plot thickens. Jeffreys himself was sued earlier this year by the bankruptcy trustee of Priceville Partners, alleging that he transferred more than $200,000 of company funds to his son and son-in-law and also used company assets to buy his son a house. All told, the complaint by the trustee claims that Jeffreys fraudulently transferred $700,000 in Priceville assets to himself and others.
The questions as to what Jeffreys knew about the workings of the business and Steenson’s alleged fraudulent actions against other people will surely come up in court. Like Jeffreys, many of the alleged victims in the indictments against Steenson have also been sued by the trustee of Priceville Partners in bankruptcy court.
It may all sound like a caper film. But underneath the complications lies the universal truth of “buyer beware” and also “borrower beware.”
Car-title fraud, such as what Steenson is charged with, comes in a variety of styles. Sometimes it simply involves selling a used car that has been put together from parts of several different cars and then sold under a false title that misrepresents its actual condition (the classic “chop shop” scenario).
Other times, it involves “washing” the title of a salvaged car that has been in a collision or other accident rendering it un-roadworthy. With “title washing,” it’s more like a shell game, where a salvaged vehicle is moved from one state to another until it gets a “new” title that hides its past history. The Better Business Bureau has a good guide for how to avoid these kinds of scams.
But auto-title loans – even those not provided by people currently under indictment or being sued – are always a risky business for borrowers. Attractive as they may be on the surface for people on a fixed income – such as seniors – when you take a good look under the hood, you might not like what you find.
As reported in a 2014 article for the AARP by Lynnette Khalfani-Cox, “One in five people ages 45 to 64 with incomes under $50,000 has used a vehicle for a short-term loan. And about one-third of people ages 65 and older have received car title loans.”
Auto-title loans, like payday loans, are short-term, high-interest loans for people who need quick cash and may lack access to more traditional lines of credit to help them out. But as the name implies, with auto-title loans, the borrower puts up the title to a vehicle as collateral. If they cannot repay the loan by the agreed-upon date, they risk losing their car.
According to a 2016 report by the Consumer Financial Protection Bureau (CFPB), one in five auto-title borrowers lose their vehicle for failure to repay their debt. And more than four in five of those loans are renewed the day they are due because the borrower can’t repay. All told, two-thirds of auto-title borrowers will take out seven or more consecutive loans. So even if they don’t lose their vehicle, they’ll end up paying far more than the cost of the original loan.
Better to consider other options than take that risk. If you believe you may have been the victim of fraud with either a car-title scam or an unscrupulous payday or auto-title lender, contact the office of consumer affairs in your state to file a complaint.
Read the full Alabama Subprime Report and check out the following reports on these related areas: