The Car and Truck Fleet and Leasing Management Magazine

Canadian Lessor Victimized by Criminal Lessees

November 06, 2008

An investigation has found more than a dozen cars leased from Four Star AutoLease Ltd. to leaders and associates of gangs suspected or convicted ofcriminal activity, according to the VancouverSun.

Four Star President Erich Schmidt said that he first knew about the leases ayear ago when cars were brought back with bullet holes. Upon investigation, hefound that they had been referred by brokers; Schmidt felt his company had beenvictimized by brokers referring shady customers to his firm for financingagreements without his knowledge.

Four Star adds, in a release, that it is “a lease company that sources itsbusinesses through other dealers. [Its] business model is very similar to thatof a finance company. As such, [it] rarely deals with the customerface-to-face.”

He had talked to both police and the Insurance Corporation of B.C., askingfor a heads-up on gangsters that are already in their files. But, as they toldSchmidt, this is against privacy law.

According to Four Star, the company will continue to work with the policewhen required, but “credit bureaus do not report criminal activities and personalcriminal checks require permission from the customer.”

To prevent further criminal leases, “the company is also engaging in adetailed analysis of the portfolio to see if any patterns exist amongst thedealers that send [the company] the business so [it] can act further inreducing [its] exposure to this kind of element.”

Schmidt said he has cut off business with three or four brokers who seemedto have been referring criminals to his company, some with false paperwork andrecords.

Police and regulators say many gangsters are leasing cars as an easy way tounload some of their illicit cash on big-ticket luxury vehicles. These vehiclesare usually modified with bullet-proof Kevlar and have secret gun compartments.

Vancouver Police Insp. Dean Robinson advised businesses to be cautious aboutwho they are dealing with, as leasing companies may unknowingly aid in themovement of illegally obtained money.

To lease these vehicles, a large cash deposit is normally paid, somethingthat should raise suspicion. But as the car market is not covered by federallegislation, dealers are not obliged to report suspicious transactions, reportsthe Vancouver Sun.

In a response to the Vancouver Sunarticle, Enrich Schmidt stated that he was “extremely disappointed with the article”as it implied that Four Star “is knowingly entering into these contracts, whichthe company knows is untrue.” He adds that “he believes this to be an industry-wideproblem which needs to be addressed by all those that are affected by it,including businesses and government.”

Schmidt has stopped leasing expensive cars because ofthe gang problem.

 

 

 

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