How a 'sham' South Jersey auto business with alleged mob ties is changing policy in Trenton

New Jersey's used-car industry is a haven for unpaid taxes, suspicious financial transactions, and rampant consumer fraud enabled by "phantom regulation," an independent state investigative agency reported 18 months ago.

What's the response in Trenton? Legislation that the state's top motor-vehicle regulator says would make it easier for these bad actors to operate and further erode consumer protections.

The bill would "legitimize a process that produced just about everything we found to be wrong" in the used-car industry, said Lee Seglem, acting executive director of the State Commission of Investigation (SCI), which wrote the December 2015 report.

Driving the policy change is the Cumberland County-based New Jersey Dealers Auto Mall, which the SCI described as a "sham" business with mob ties that served as "the foundation for an amalgam of consumer and bank fraud, unpaid taxes, suspicious financial transactions, and other questionable, unscrupulous and possibly illegal activities."

The Motor Vehicle Commission, lobbied by a Trenton firm hired by New Jersey Dealers Auto Mall (NJDAM), for years enabled the business to play by its own rules, exempting it and a similar class of businesses from unannounced audits, for example.

The legislation proposed this spring would relax a number of rules, including some adopted since the 2015 report, for all new- and used-car dealers, codifying into law unofficial practices that state investigators said had left consumers in New Jersey and other states vulnerable to buying defective cars.

"This guts our ability to properly regulate used-car dealers in the state," said Raymond Martinez, chief administrator of the state's Motor Vehicle Commission. "I would venture to say we actually need greater authority to regulate."

"This in no way, shape, or form serves the public interest," he said. "It harms the consumers."

The bill passed the state Assembly, 71-0, with two abstentions in March and passed the Senate Commerce Committee on a 5-1 vote last month. It would effectively kill some of the new rules the Motor Vehicle Commission adopted June 5 that are designed to boost oversight and clamp down on bad actors. A spokesman for Senate President Stephen Sweeney (D., Gloucester) declined to say whether he would hold a vote before the full Senate.

Assemblyman Raj Mukherji (D., Hudson), a sponsor, said he supports the bill because it would align regulation of car dealers with that of other industries. He said he welcomed input from MVC and would reexamine some provisions but added that the bill "doesn't negate any of MVC's enforcement powers to go after the bad apples in the industry, who I think should be hung from a guillotine."

The Motor Vehicle Commission regulates about 3,600 dealerships in the state, including 2,800 used-car dealers. Of those, 800 are based at multidealer locations. The state's biggest multidealer location is NJDAM, according to SCI.

NJDAM is more of a landlord than a dealer; it doesn't sell cars. It says its tenants are wholesale dealers who buy cars at auction and sell them to other used-car dealers. Those dealers then sell cars to the public.

Surrounded by a barbed-wire-topped chain-link fence and an empty parking lot, NJDAM occupies a former textile-processing plant in Bridgeton. One of 15 of New Jersey's so-called multidealer locations, NJDAM leases space to some 300 absentee dealer-tenants, enabling them to obtain used-car dealer licenses even as many operate out of state, where stricter rules make it tougher for them to get government approval, SCI found.

When New Jersey dealers conduct business from unlicensed locations, consumers often lose. Consider Sandra Figueroa, a 60-year-old retiree in the Bronx.

In May 2015, she says, she bought a used 2005 Ford Explorer for $4,200 from a business advertising parking and car washes in the Bronx. She says she needed the car to drive her mother to the doctor.

After discovering a number of defects, she asked for a refund, but the seller instead offered her a 2004 Jeep Liberty, which she accepted. The Jeep's check-engine light was on, the driver's side mirror wasn't working, and a mechanic informed Figueroa that the wheels had locks on them, but she had no key.

She has spent about $8,000 on repairs so far.

To Figueroa's surprise, New York's consumer affairs agency referred her complaint to New Jersey's Division of Consumer Affairs, in the Attorney General's Office, because the car's licensed dealer was N&E Auto Sales LLC of Bridgeton — where it rents space from New Jersey Dealers Auto Mall.

New Jersey authorities told Figueroa that she had little recourse because she had purchased the car "as is." New York, where she bought the car, mandates pre-sale inspections and certification that cars are in "satisfactory working order," according to SCI.

MVC renewed N&E Auto Sales' license in March, according to agency records. Selling cars out of state, from an unlicensed location, is illegal, unless the dealer is licensed in the other state as well.

Nelson Campos, a dealer for N&E Auto Sales, disputed how much Figueroa had paid for the Jeep and said it was in "perfect" condition when she bought it. Campos, who isn't licensed in New York, said he took cars there for storage.

"We just have that place for storage and convenience for somebody who's trying to buy a car," he said. "We make it easy for them."

To be sure, even without the legislation pending in Trenton, consumers like Figueroa may be vulnerable to unscrupulous dealers. But Martinez, who was appointed by Gov. Christie in 2010 as MVC's chief administrator, worries that the legislation would make it easier for bad actors licensed in New Jersey to sell defective cars and commit fraud.

That's because lawmakers want to eliminate a requirement that dealers maintain business hours; give newly licensed dealers 90 days to establish a place of business; require regulators to provide five business days' advance notice of a scheduled audit or investigation; give dealers three business days to provide proof of compliance in the event of an unannounced audit; and allow a single person to represent an unlimited number of dealers on-site in their absence.

These and other provisions would make it easier for dealers to operate from unauthorized locations, Martinez said, which is against the law and makes it harder for regulators, law enforcement, or aggrieved consumers to track the dealer and seek recourse.

And it means dealers could store sensitive government and consumer records — such as plates, transactions, and credit-card information — in an unsecured  or unsafe location, such as a trunk or basement.

Thomas G. Russomano, a lawyer for NJDAM who testified at a May hearing in favor of the bill, said the legislation would not roll back regulations or harm consumers. "The bill does recognize that there are no professions in this state where an individual is required to work a minimum number of hours per week, with the exception of Real Estate Brokers … and medical marijuana sellers," he said in an email.

As of 2015, NJDAM earned $2.2 million annually in rent, which helps cover services such as filling out licensing paperwork and dealing with regulators, according to SCI, a bipartisan, independent fact-finding agency with subpoena power.

NJDAM is owned by Louis Civello Jr., who, along with his father, wrested control of the company from their business partners in 2006, according to SCI. Louis Civello Sr. is a member and soldier of the Bonanno organized-crime family, according to SCI, which cited New York law enforcement authorities and a confidential source.

The younger Civello has also shared a bank account with and provided a loan to an associate of the DeCavalcante crime family, SCI found. Civello Jr. said he wasn't aware of the individual's mob ties. "It is my opinion if someone was associated with organized crime they wouldn't broadcast it," Civello told SCI. He didn't respond to requests for comment but has called the report "fiction."

The State Police investigated the Bridgeton site in the early 2000s, and authorities described it as "a major conduit of car‐sale fraud throughout the Northeast," according to SCI.

The State Police received 98 criminal complaints against the business between fall 1999 and spring 2001, detective Michael Kane told the Associated Press in 2005, but there were no prosecutions. "It's like chasing a ghost," he told the AP.

Asked for an updated number of complaints, a State Police spokesman referred questions to the Bridgeton police, who described NJDAM as "a shell building with various desks and nobody ever there."

The Cumberland County prosecutor had no record of charges against Civello Jr.

The legislative push in Trenton comes as at least one other state is moving in the opposite direction: Washington state enacted a law in April eliminating its wholesale dealer license after absentee dealers were found to have defrauded customers in other states.

NJDAM's problems go beyond consumer fraud, SCI found: As of 2015, its dealer-tenants had accrued $4.2 million in unpaid taxes in the last two decades.

A couple of months after the State Commission of Investigation released its report, C. Richard Kamin of the Trenton public-affairs firm MBI-Gluckshaw lobbied MVC to issue licenses to dealers that were delinquent on taxes, according to emails obtained by The Inquirer through public-records requests. They owe the state at least $132,188.39, court records show.

MVC declined licensure to some but renewed it for others, including MMM Auto Sales LLC, which owes the state about $69,000, according to agency and court records.

In the year and a half since SCI released its report, Kamin has lobbied the Motor Vehicle Commission, the lieutenant governor, and the Legislature on behalf of NJDAM and one other client with regard to regulations, according to records filed with the state Election Law Enforcement Commission.

In lobbying for the legislation, bill S2979/A4185, Kamin and his lobbying partner listed one client on their disclosure forms: New Jersey Dealers Auto Mall.

Kamin, a Republican, is a former head of MVC's precursor, the Division of Motor Vehicles, and served five terms in the state Assembly. Neither Kamin nor the firm's director for legislative affairs responded to requests for comment.

On their face, some of the changes specified in the bill may seem inconsequential, but Martinez says they would undermine the state's ability to regulate the industry and would hurt consumers.

"We're trying to maintain the status quo right now," he said. "We feel like we're fighting the tide."