Yesterday, in federal court in Brooklyn, Shmuel Gali was sentenced by U.S. District Judge Kiyo A. Matsumoto to 60 months’ imprisonment for his role in a long-running odometer tampering and money laundering scheme and ordered to pay $3,936,000 in restitution. The defendant pleaded guilty in August 2020 to conspiracy to commit money laundering, conspiracy to commit odometer tampering, making false odometer statements and securities fraud.
“An automobile is one of the biggest purchases many consumers make,” stated Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Misrepresenting used car mileages defrauds buyers and hides important information concerning safety and reliability. The Department of Justice will continue to work with law enforcement partners to prosecute odometer fraud.”
“This sentence sends a warning that this office will prosecute those who engage in odometer tampering and deliberately dupe consumers into unknowingly paying inflated prices for their motor vehicles,” said Acting U.S. Attorney Jacquelyn M. Kasulis for the Eastern District of New York. “With the defendant being sentenced to prison and ordered to pay restitution to his victims, he is being held to account for his greed in contriving this fraudulent scheme.”
“Automobile sales stand as one of the pillars of the American economy, requiring transparency and integrity,” said Acting Special Agent-in-Charge Thomas Fattorusso of IRS-Criminal Investigation (IRS-CI). “The financial expertise of IRS-CI was needed to uncover this criminal enterprise perpetuated by Shmuel Gali who received a just sentence relative to his criminal activity.”
Between 2006 and June 2011, Shmuel Gali, while conspiring with his brother Chaim, defrauded buyers of used motor vehicles by misrepresenting the mileage of approximately 690 vehicles that they sold. They used fictitious dealer names to purchase high-mileage, used motor vehicles from a national vehicle-leasing company; altered the odometers of the vehicles to reflect false, lower mileages; and then sold the vehicles at wholesale automobile auctions. On average, the odometers on the vehicles were rolled back by close to 70,000 miles. Consumers who purchased the vehicles at dealerships did not know the true mileage and paid inflated sales prices.
This matter was investigated by the U.S. Department of Transportation National Highway Traffic Safety Administration (NHTSA) Office of Odometer Fraud Investigation and IRS-CI.
Senior Litigation Counsel Linda I. Marks of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Catherine M. Mirabile of the Eastern District of New York prosecuted the case.
NHTSA estimates that odometer fraud in the United States results in consumer losses of more than $1 billion annually. Individuals with information relating to odometer tampering should call NHTSA’s odometer fraud hotline at (800) 424-9393 or (202) 366-4761. More information on odometer fraud is available on the NHTSA website at https://www.nhtsa.gov/odometer-fraud.