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$600,000 in refunds will end fraud case

Lokey Oldsmobile adds that to another $700,000 payout to satisfy claims that bogus lease deals bilked customers.

Lokey Oldsmobile will pay another $600,000 in refunds to customers who were misled about leasing cars, ending a state investigation that netted $1.45-million, possibly the largest payout from a dealership in the state.

Prosecutors said Tuesday that dozens of customers were either duped into leasing a car or entered a lease that was formed fraudulently by Frank Engle, the dealership's financing manager at the time.

"This was really hoodwinking the average consumer," said Terry O'Loughlin, an investigator with the Attorney General's Office, which launched its review in 1997. "The ones uncovered in Lokey were as bad as I've ever seen."

Paul Lokey, the dealership president, apologized Tuesday for what he said was one man's deception, which cost the dealership $1.45-million. That man's deception also sparked a lawsuit, which was settled out of court, and a criminal investigation, which sent the ex-manager to prison.

Lokey officials say they already have voluntarily refunded $700,000, almost half of which was covered by insurance.

"We did what we needed to do to make our customers happy," Lokey said.

Nearly 280 additional customers will share the $600,000 in refunds that Lokey will pay. The agreement says that amount must be paid to the state within 120 days. The state then will distribute about $2,000 each to the customers.

The Attorney General's Office already has identified those customers, some of whom never complained, and will send letters explaining the settlement process.

As part of a settlement with the state, the dealership also will reimburse the Attorney General's Office $150,000 for investigative costs.

State investigators began investigating the dealership's practices in 1997 after the St. Petersburg Times reported that about a dozen consumer complaints had been filed against the business.

The customers, mostly elderly, had similar stories that involved Engle, who was financing manager at the time.

In some cases, customers thought they were buying a car but later found out that Engle actually had worked them into a lease. Others knew they were leasing but were told at the end of the lease that they owed more money than expected. Some leasing customers were either credited with thousands less on cash down payments or significantly shortchanged on trade-in allowances.

Harold and Madie Franks were asked to pay almost $37,000 for a $29,000 car at the end of a lease that they never knew that they had.

Arlene Kistner, of Largo, said she didn't know that she was leasing a car until she got a letter one day from the financing company.

"If (Engle) would have mentioned something (about a lease) I would have said "absolutely not,' " Kistner said. "When I buy something I want to own it." Kistner said she already has been reimbursed $2,000 by the dealership.

Two customers, Kenneth and Gretchen Boehm, sued the dealership and Engle. They settled out of court for an undisclosed amount and dropped the lawsuit in 1998.

That same year, Engle was charged with 19 counts of theft and scheming to defraud. Last year, he pleaded guilty and was sentenced to seven years in prison. State prosecutors said there were 106 victims and estimated Engle's restitution at far more than $100,000.

Initially, dealership officials said that there were isolated problems with lease transactions and all the customers had been satisfied.

"We spoke directly to Mr. (Paul) Lokey, and he handled and resolved any problems," said Sally Scanlan, who leased a 1995 Aurora. They realized there was a problem when they turned it in and "he took care of it immediately." The Palm Harbor couple wrote a letter of thanks to Lokey.

But criminal and civil complaints kept mounting.

Norris, the assistant attorney general, said Lokey Oldsmobile faced civil penalties of up to $15,000 for each incident. He estimated that there were 400 incidents.

"This was a giant settlement and hopefully sends a message that you can't defraud the elderly and get away with it," Norris said.