Lebanon car dealer sentenced to 18 months in prison for odometer rollback scheme

(From the U. S. Attorney for the Western District of Missouri)

A Lebanon, Mo., automobile dealer was sentenced in federal court today for a mail fraud scheme in which he sold dozens of vehicles with fraudulent titles that greatly underreported the actual mileage of the vehicles.

Kenneth W. Smith, 62, of Lebanon, was sentenced by U.S. District Judge M. Douglas Harpool to 18 months in federal prison without parole. The court also ordered Smith to pay a $50,000 fine.

Smith, who operated Cars Unlimited in Lebanon, pleaded guilty to mail fraud on June 21, 2016.

When Cars Unlimited bought used cars at auction, the titles would show the correct mileage. Smith admitted that, instead of filing those titles with the state of Missouri, he requested replacement titles that showed a lower mileage. Smith could then sell the vehicle at a higher price. When investigators executed a search warrant at the business, they found instrument clusters used to replace odometers in vehicles.

Smith obtained fraudulent replacement titles for dozens of vehicles that were sold by Cars Unlimited between February 2010 and Nov. 7, 2011. Smith (operating through Cars Unlimited) applied for and received 54 replacement titles from the state, each of which underreported the vehicle’s actual mileage. Smith resold these 54 vehicles at auto auctions using the fraudulent replacement titles. These 54 vehicles were sold for an aggregate total of approximately $346,450.

When Smith purchased vehicles (through Cars Unlimited) at auto auctions, the vehicle titles he received showed each vehicle's actual mileage. After purchasing a vehicle, Smith submitted an "Application for Missouri Title and License" seeking a replacement title for the vehicle. Although he sought a replacement title, he in fact possessed the original title for the vehicle. In each of those instances, Smith forged the signatures of the previous owner of the vehicle. The state of Missouri prepared a replacement title that was mailed to Smith at Cars Unlimited.

This case was prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by the FBI and the Missouri Department of Revenue, Compliance and Investigation Bureau.