How about those used car buyers (as victims)?
"SACRAMENTO, Calif. (AP) -- The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve."
Isn't that nice? You trade in your car on a new one, and a month later the lender on your original note comes after you! Why? Because the dealer, who contractually was obligated to pay off your note, didn't. He pocketed the money (literally!) and then went out of business.
This isn't an ordinary contract dispute, it is outright fraud. You were given paperwork showing that the lien was to be satisfied and your transferred your title to the dealer - you gave him the vehicle and he gave you both a new car with a loan and a representation that your previous vehicle's lien was being discharged.
The "soft underbelly" of this whole scheme is that frequently dealers have apparently not been immediately paying off these liens, but rather waiting for things like the manufacturer holdback to come to them. In the meantime they spent the money, and if they fold ahead of those "promises" you are the one who takes it on the chin.
This is yet another example of "The Bezzle" in our financial system - that is, the underlying fraud and embezzlement that has permeated every corner of our financial and social systems. The nasty part of "The Bezzle" is that it almost always has an element of cost-shifting involved in it - we have seen, for example, banks about to fold (like IndyMac) start offering crazy-rich CD rates into the market, cost-shifting the interest expanse onto others (specifically, the FDIC!) Not every piece of "The Bezzle" is a crime, but all parts of it raise costs for those who do the right thing and punish them, as all are a "skimming" operation in one form or another.
But back to the car dealer - you'd think that when you traded in your car the next day satisfaction of your old loan would be transferred out to the lender who held that note by that dealer. You'd be wrong - those dealers have sat on these notes for days, or in some cases a month or more. If they go bankrupt you are the loser because your contract is with the dealer; the lender has every right to hold you accountable when the note isn't paid, and does.
Note that this is distinct from Real Estate transactions where by law when closing takes place escrow has closed and money has changed hands. The deal is over. This is NOT necessarily true in the automobile world - it should be, but its NOT. The States, which have the responsibility to insure that the regulated businesses they govern act in an ethical and legal manner, have done little or nothing to do stop this because "times were fat" and heh, we don't want to actually demand that dealers remit the next business day on traded vehicles - even though they could have, and prevented this from happening. Everyone "won" if the dealers got to play fast and loose with the money for a few days - or weeks - pretending there was no risk in doing so.
Does it end there? Oh hell no. How about this one?
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More examples follow, including that of a 42-year-old drawing a government retirement pension worth $2 million, while also working another full time government job (which has its own pension benefits).
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