DMV Announces Settlement Terms With Gunderson Chevrolet

    SACRAMENTO, Calif.--April 20, 2001--The Department of Motor Vehicles (DMV) has reached a settlement agreement with Gunderson Chevrolet, located in El Monte, California, in the largest dealer fraud case to surface in California in recent years.
    The DMV had also referred this consumer fraud case to the Los Angeles County District Attorney's office (DA) for civil and possible criminal prosecution. As part of a global settlement, Gunderson Chevrolet will pay $900,000.00 in monetary settlement jointly to the DMV and the DA, pay restitution to consumers estimated at over $1,000,000.00, close its sales department for six consecutive days, have its dealer license on probationary status for the next four years, remunerate DMV $200,000.00 for investigative and legal costs, and be permanently enjoined from violating the laws alleged in the complaints.
    The settlement agreement between the DMV and Gunderson Chevrolet is the result of administrative charges originally filed by the DMV alleging that between February 1999 and May 2000, Gunderson's sales staff subjected over 1,500 customers to fraud, deceit and misrepresentation in connection with the sale and lease of new and used vehicles. The DMV charged that Gunderson Chevrolet engaged in "price packing" of after market products, such as theft etch protection, LoJack, and extended warranties, that "monthly payment" customers had not agreed to buy. Customers who might have been more concerned with a payment within their monthly budget than the total price of the vehicle, interest rate, or number of monthly payments were easy targets of "price packing."
    "We believe this settlement is fair to the 1500-plus customers who may have been defrauded and victimized during a 15-month period," said the DMV spokesperson John McClellan. McClellan added that, "This enforcement action sends a strong message to Gunderson Chevrolet and all other California dealerships that these kinds of illegal business practices will not be tolerated."
    The settlement agreement comes at the commencement of an administrative hearing that began April 16 and sought a suspension or revocation of Gunderson Chevrolet's vehicle dealer license. The license, issued by the DMV, permits the dealership to do business in the State of California.
    During the closure, the DMV will post notices on Gunderson's public access doors stating that the closure is by agreed order of the DMV. All Gunderson employees will be paid their regular salary during this closure.
    During the four-year probation period, DMV investigators will conduct five unannounced audits of Gunderson's dealership records: Two within the first 12 months of probation and one each year thereafter over the following three years. Gunderson agreed to pay the costs of the audits, up to a maximum of $50,000.00, for all five audits.
    Joel Grover, investigative reporter for KCBS-TV, first broke the story in May, 2000.