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A nearly one-year investigation has resulted in a Woodside, Queens, used-car dealership and its husband and wife owners being charged with tax fraud and other felonies involving auto loan refinancing.
In addition, a Queens County grand jury has returned an indictment charging the dealership's former finance manager with defrauding 23 car buyers out of a total of more than $115,000 in cash through a phony refinance scheme.
Hooshmand ("Danny") Kohanano, 54, and his wife, Fereshteh ("Jenny") Kohanano own Auto Palace Inc. in Woodside, Queens.
According to the criminal complaint filed in the case, between Sept. 1, 2006, and Nov. 30, 2009, the Kohananos and the staff at Auto Palace allegedly stole more than $728,844 in state and local sales taxes that they collected from buyers but did not forward to the State Department of Taxation and Finance.
It is alleged that a review of 35 tax monthly and quarterly business sales tax returns filed with New York State for Auto Palace, indicated that the total sales of vehicles subject to tax for the time period totaled $4,665,231 with a reported sales tax liability reported and paid to New York State of $388,839. However, a review of records seized during the execution of a court-authorized search warrant in January allegedly demonstrated that total sales of vehicles subject to the collection of sales and use tax was, in fact, $13,505,492 with an attending tax liability of $1,117,683 - a difference of $728,844 (specifically, $353,610 is owed to New York State and $375,234 is owed to New York City).
In the second case, Julio Estrada (also known as Jay Torres), who was formerly employed as the dealership's finance manager, is awaiting arraignment on a 95-count indictment charging him with 12 counts of third-degree grand larceny, 11 counts of fourth-degree grand larceny, 12 counts of second-degree forgery, 15 counts of second-degree criminal possession of a forged instrument, 12 counts of third-degree criminal possession of stolen property, 11 counts of fourth-degree criminal possession of stolen property, 12 counts of first-degree identity theft, six counts of second-degree identity theft and one count of first-degree scheme to defraud. If convicted, he faces up to seven years in prison.
According to the charges filed, as Auto Palace's sole finance manager, Estrada was responsible for meeting with each car buyer to finalize the financial end of the purchase. As is typical, many car buyers financed their purchases through lending institutions. To entice customers to go through with their car purchases, it is alleged that Estrada promised customers that after six months of on-time payments they could come back and see him at the dealership and refinance their loans at a better rate and thus lower their monthly payment by hundreds of dollars.
It is additionally alleged that when customers returned to Auto Palace and met with Estrada, he would tell them that there was a "fee" or "down payment" - ranging from $1,000 to as much as $13,000 - that they had to pay in cash in order to refinance their loan. In carrying out his alleged scheme, it is alleged that Estrada sometimes fraudulently used the corporate identity of RoadMasters Auto Sales, a defunct Queens auto dealership, on loan refinance contracts, provided his victims with receipts for refinance fees from a fake company, P+G Enterprises, and, on at least one occasion, showed a victim a false check that he had made out to the original lender, purportedly as the payoff for their loan. At other times, it is alleged that Estrada would misrepresent himself as a bank employee in order to give the appearance that he was able to refinance a car loan.
It is further alleged that Estrada took a total of more than $115,000 in cash from 23 car buyers and never refinanced their loans. When the car buyers realized that their original loan payments were still due and contacted their original lenders, they were told that the loans were still in full effect and the loans had not been refinanced. In some cases, the loans went into default because Estrada had allegedly told them to stop paying their loans because the refinanced loans would be going into effect.