Car dealer who defrauded customers sues DOT for ‘financial harm’

By: - June 30, 2021 9:27 am

A new court battle centers on an obscure Iowa law that discourages auto manufacturers from terminating franchise agreements with Iowa dealers, particularly if those dealers contribute to the public welfare through community support. (Photo by Obi Onyeador via Unsplash)

A former western Iowa car salesman accused of theft and fraud is now suing the state for interfering with his ability to continue selling cars.

In 2018, Robert Adams, then the owner of the Adams Motor Company dealership in Denison, was charged with 11 counts of first-degree theft, three counts of second-degree theft, and one count each of one count of felony unlawful activity and fraudulent sales practices.

Police and prosecutors alleged Adams sold vehicles knowing there were liens on them that would prevent the buyers from getting a clear title to the cars; overcharged customers thousands of dollars for tax, title, and licensing fees; sold extended warranties to customers who never received the warranty contracts they’d paid for; and sold a life and disability insurance policy without sending the policy application or the premiums to the insurance company.

As part of a plea agreement, Crawford County prosecutors agreed to drop 15 of the 16 charges in return for Adams pleading guilty to the fraudulent practices charge. Adams was then granted a deferred judgment — a resolution that typically results in the criminal case being expunged from the public record after the successful completion of probation.

As part of the deal, Adams was placed on probation for three years, during which time he was required to maintain gainful employment. Beginning in March 2019, Adams worked at Edwards of Storm Lake, a car dealership based in Storm Lake.

The Iowa Department of Transportation, which licenses dealerships in the state, then contacted the management of Edwards and allegedly threatened to revoke the company’s license if it continued to employ Adams. The dealership fired Adams last March, the lawsuit claims.

The DOT’s alleged threat was based on a state law that says any person “who has been convicted of a fraudulent practice” shall not be an owner, salesperson or employee of an Iowa-licensed motor vehicle dealer for at least five years from the date of conviction.

Adams is now taking the DOT to court and appealing the agency’s actions, claiming the DOT is incorrectly asserting that the deferred judgment that grew out of his guilty plea constitutes a “conviction” on the fraudulent practices charge. In court filings, Adams says he is now “unemployed and without income, despite consistent and sedulous efforts every week.”

The actions of the DOT, Adams claims, have “grossly interfered” with his deferred judgment and threatens to complicate or infringe on his ability to comply with a judicial order to maintain employment. In an affidavit filed with the court, Adams says the DOT’s action have “caused serious financial harm to me.”

The DOT says all of its actions in the case are in accordance with Iowa law.

Last July, Adams petitioned the court for an early termination of his probation, telling the judge, “I’ve been seeking employment nonstop, applying for at least two jobs per week since I was laid off in March due to COVID-19. Since my attorney filed the motion to terminate probation two weeks ago, I have applied for sixteen further jobs … I have received a conditional offer of employment from Colonial Life Insurance as a district manager for the state of Iowa. I was pleased to be considered for the job after getting my insurance licenses this year. However, they cannot hire me until they receive notification that I have successfully completed my probation.”

At that time, Adams also told the court, “For most of my life, working in car sales was my dream. But I now know that I will be happier and do better in a position where I can focus on the good aspects of my past career — working with people, customer service, and sales — in an environment where I do not have to handle the risk, stress, and strain of managing the finances of a business.”

Prosecutors resisted Adams’ request for an early end to his probation, telling the judge that many of the jobs Adams had applied for “are managerial in nature, and with a felony guilty plea to fraudulent sales practices, it is perhaps unsurprising that defendant is not being offered these positions.”

In denying Adams’ request to terminate his probation, District Court Judge Patrick Tott wrote that Adams had “received the benefit of a generous plea agreement in this case,” noting that the pre-sentence investigation provided to the court had “recommended incarceration” rather than probation.

“Not only has the defendant not been sentenced to prison, he has been given the opportunity of having this matter expunged if he successfully completes the terms of his deferred judgment,” Tott wrote. “While the court acknowledges that this probationary status may be hampering the defendant’s ability to obtain employment, possible fraudulent activity is a significant danger involved in the type of employment the defendant is seeking, i.e., working for an insurance company.”

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site.

Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing. His 2004 series on prosecutorial misconduct in Iowa was named a finalist for the Pulitzer Prize for Investigative Reporting. From October 2018 through November 2019, Kauffman was an assistant ombudsman for the Iowa Office of Ombudsman, an agency that investigates citizens’ complaints of wrongdoing within state and local government agencies.