McALLEN — Federal prosecutors allege a local longtime auto dealer attempted to defraud several banks as part of a scheme to generate cash beginning in 2012, according to court records.
In an indictment unsealed last month and reported first by the Advance News Journal of Pharr, the government alleges Joe Blackwell, 69, of Pharr, who is the owner of Auto Sense, sold contracts that were already used as collateral to obtain more than $1.5 million in credit from another bank.
“(Blackwell) was instructed that he could not sell vehicle installment contracts in order to generate cash flow for Auto Sense Inc.,” the indictment states. “These vehicle installment contracts were intended to be used as collateral to secure the final consolidation loan (from Rio Bank).
“A vehicle installment contract is a written agreement between the purchaser and Auto Sense Inc., where the purchaser agrees to make monthly payments for the purchase of an automobile.”
The government alleges that in November 2012, months after Rio Bank delivered its final loan to Blackwell, he initiated a new contract with Irving, Texas-based Strategic Dealer Services, agreeing to sell the vehicle installment contracts in exchange for money, court records show.
“Blackwell further represented that there were no liens, claims of encumbrances covering the transferred purchasing an automobile,” the indictment states.
Blackwell also sold vehicle installment contracts to Southlake, Texas-based Peritus Capital Partners LLC, the indictment states.
In all, the government alleges eight counts of mail fraud, 16 counts of wire fraud and one count of bank fraud in connection with the alleged scheme, according to court records.
But Blackwell’s attorney, Terry Canales, denies his client did anything out of the realm of regular business.
“The bottom line is what Joe was doing was not illegal and would not have taken place if the banking institutions he was working with held up their end of the deal,” Canales said.
Canales declined to elaborate on what he meant by holding up “their end of the deal.”
He also said he didn’t understand why the government was making his client’s case criminal as opposed to civil.
“I anticipate this case is going to trial, (but) my opinion is Joe has done nothing illegal,” Canales said.
Blackwell, who remains free on a $50,000 unsecured bond, is scheduled back in court in early March, court notes show.
If found guilty on the fraud charges, Blackwell faces up to 20 years in federal prison.
As part of Blackwell’s punishment, the court may also impose a monetary judgment of $976,479.92, court records show.