CAMDEN, N.J. (AP) — The owner of a southern New Jersey car dealership has admitted operating a scheme that defrauded customers and lenders.
Federal prosecutors say Harry Klause, president and manager of Ocean City-based Harry Klause Cars and Trucks, pleaded guilty Friday to a complaint charging him with wire fraud. The 64-year-old Ocean City man faces up to 20 years in prison when he’s sentenced Nov. 15.
Prosecutors said Klause would buy trade-in vehicles from customers and apply the purchase price against the cost of vehicles those customers bought.
Although Klause agreed to pay off the existing loans those customers had on the trade-in vehicles, he didn’t do so in a timely way, causing damage to the customers’ credit scores. He also sold the vehicles to other customers, even though he had neither paid off the loans nor gotten the vehicle titles from the lenders.
Klause also steered the buyers of the trade-in vehicles to various lenders to finance their purchases, but didn’t immediately — or sometimes ever — send the titles to those lenders.
During his plea hearing in U.S. District Court in Camden, Klause admitted to specific acts of fraud concerning individual transactions. He will remain free on $100,000 bail until his sentencing. The dealership remains open.
Klause could not be reached for comment on Saturday.
(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)