Several potential customers were left scratching their head and looking for another vehicle licensing agency after the White Center location was closed down in the aftermath of two employees being arrested for taking part in an alleged fraud scheme.
UPDATE: White Center License Agency employees arrested in alleged fraud scheme
Updated details from this morning's story are found below.
Two employees at the White Center License Agency (a Department of Licensing sub-agency) on 16th Ave. S.W. were arrested on May 22 along with the father/son owners of T & C Premier Auto Sales (SeaTac) and T & C Wrecking (Seattle) for an alleged fraud and forgery scheme aimed at avoiding excise taxes on vehicle transfers, according to the Federal Way Police Department.
According to FWPD, a four month long investigation found the four were allegedly working in collusion “to forge and/or fabricate title documents to avoid paying excise taxes.”
Authorities believe the illegal operation has been going on for years, and “suspect hundreds, if not thousands, of vehicles have been illegally titled for the purpose of making money and defrauding the State of Washington of Motor Vehicle Sales/Use Taxes.”
Search warrants were issued at all three locations on May 22 and numerous computers and files were confiscated as evidence along with the arrests. The Washington State Department of Licensing “became suspicious when they noted an unusual increase in transactions at the White Center location” which lead to the opening of an investigation, according to FWPD.
We won’t name the suspects until (and unless) charges are filed, but two women from the White Center office and a father and son from T & C were arrested. All four were released from a Kent jail after their arrest pending charges and police said a fifth suspect is still outstanding.
We spoke with Cathy Schrock, Civilian Operations Manager for the Federal Way Police Department to explain how they believe the fraudulent activity worked.
Schrock said the owners of T & C became known in the non-English speaking community as an alternative way to get title paperwork done instead of going to a DOL office and working with the government, where red tape and language barriers could make for a frustrating experience.
Instead, she said, these people would legally purchase a car and bring the bill of sale and title transfer paperwork to the suspects at T & C. From there, the auto dealership would collect a $400 fee from the buyer and tell them there title would show up in the mail soon.
Behind the scenes, the suspects would then allegedly construct fraudulent paperwork that made it look like the original seller had gifted the vehicle to the buyer instead of selling it for a price that would be subject to sales tax at the time of title transfer. Gifted vehicles are not subject to sales tax, so the fee was avoided.
They would then allegedly take the doctored paperwork to the White Center License Agency where the arrested employees would complete the transaction.
Explaining the White Center connection, Schrock said
“All along, during the investigation, we assumed that the licensing agency employees were getting some kind of kickback. Interestingly enough, what we discovered once we arrested them was they actually did not accept money from (the auto dealer), but what they did was continue to accept his transfers, turning a blind eye to his fraudulent transfers, and keeping the numbers up and then they received bonuses from their employer for the number of transactions they were processing on a monthly basis.”
Schrock said the employees allegedly admitted in an interview after their arrest “that they knew what they were doing was wrong.”
In several interviews with local TV stations, Neal Lockett, owner of the White Center Licensing Agency, said he had no idea what was going on and believes his employees are innocent.
Schrock said King County’s licensing department has shut down the business for the time being and will be investigating the situation further.
Meanwhile, authorities have a lot of confiscated paperwork and computers to comb through in building a case.
Schrock said it could be some time before King County Prosecutors announce charges.
She said the goal of the investigation is to stop the fraudulent activity and doubts that the hundreds of car buyers who had T & C help them with the paperwork will be hunted down to pay the excise tax initially avoided (likely unknowingly in most cases).