Auto Warranty Scam
Mon December 13, 2010
Telemarketers in "auto warranty" scam plead guilty in East St. Louis
Two men pleaded guilty to federal charges today in East St. Louis in an auto contract robo-calling scheme that had 15,000 victims in all 50 states. Here's a breakdown of the people, places and charges involved:
These two men were the president and vice president of Transcontinental Warranty...
- Christopher D. Cowart, 49 of Ft. Lauderdale, Florida and
- Cris D. Saganelli, 45, of Boca Raton, Florida
The scheme the men admitted to in court on Monday worked this way:
- A third party company hired by Transcontinental made robo-calls to millions of homes. People who answered got a recording that told them their vehicle’s warranty was about to expire, and they could press one to renew or extend it.
- A person who pressed one was transferred to a telemarketing center at Transcontinental Warranty’s headquarters, where they would be offered, according a script from the company, a “comprehensive warranty” that pays for “all repairs including parts and labor on your engine, your water pump and oil pump” and several other parts. The callers implied they were from automobile manufacturers.
- The company was really selling extended auto vehicle service contracts. Those products are legal, but CANNOT be marketed as warranties.
In fact, the contracts often contained huge exemptions in coverage, and required deductibles.
- Sentencing for both men on March 21, 2011.
- Possible penalty of up to five years in prison, a fine of $250,000, and a term of supervised release not to exceed 3 years.
- Because the offense involved telemarketing, the defendants are subject to an additional term of 5 more years under the SCAMS Act.