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UPDATE (April 2009): Eight years later, Vahid Sedaghat is still in the news. Read my latest update on my blog.

The following is a commentary on an investigative report aired February 5th, 2001 on KMSP-TV (Minneapolis/St. Paul). Black text represents the on-line story transcript that KMSP-TV posted. My comments are in red.

Mystery Car:Consumer Action

Let the buyer beware!

To be blunt: "Duh!" Businesses are not charities. They have an obligation to obey the law. (The vast, vast majority of "unethical" activity is illegal.) If you feel a business stepped out of line, work to change the laws so its actions can be declared illegal. If you feel a business has an obligation to behave over-and-above the law, against its own self-interest, your complaint isn’t with the business… it’s with capitalism itself.

This all begins as a simple complaint filed with our Consumer Action Team.

Car buyer Bill Aurandt told us a car he bought was far from what was represented to him.

Absolutely true. And Mr. Aurandt’s "representations" came from the dealership from which he bought the car. Will KMSP try to hunt down a bigger story by going beyond that simple fact?

It led us down a mysterious trail of suspicious ethics and into a world of intimidation.

Guess so.

Here's the bottom line for every car buyer in Minnesota, a clean title guarantees you nothing about your car's history and our hidden camera investigation proves it.

It doesn’t take a hidden camera investigation to prove this. It’s well known to anyone who deals with used cars. Who’s responsible for knowing that? I’m not sure… but the fault certainly doesn’t lie with those who repair cars within that system.

Bill Aurandt thought he was buying a fully loaded 2000 Ford Escort, essentially a new car.

Note the "fully loaded" reference. That will be important later.

He says, "I bought it from a dealer and only had 542 miles and they said it was a Ford program car."

I’m not familiar enough with vehicle designations to know whether "rental car" falls under the category of "program car". But I’ll grant the implication that the car had a "clean" history.

Little did he know this car comes fully equipped with a secret past. Aurandt noticed it seemed to have a heavy vibration.

He only had the car a few days when he became suspicious.

Joe Willie, an inspector from lemon busters confirmed his worst fears.

Inspector Willie said the frame was damaged beyond repair.

A very interesting term, "beyond repair". Obviously, the car was repaired. It drove fine, except for the vibration. (Point being, it’s not like the back end was dragging on the ground throwing sparks on the cars behind…) If "repair" is defined as "original factory specification", it’s very difficult to "repair" any car.

He finds additional evidence of front and rear end damage, the windshield's been replaced, both front air bags deployed and he's not sure if they're in working order.

Note on the rhetoric here: KMSP could check the air bags to confirm that they’re in place and determine some of their history. (Truly determining "working order" is difficult, short of actually deploying them… and that’s true for brand-new ones, as well.) If KMSP had found that the air bags were missing, they would have had a heck of a story to report here. They didn’t report that. Hmmmm…

Willie finds undercoating used to cover up imperfections like some pollution control equipment fixed with masking tape!!

I disagree that the tape they showed on-air looked like true masking tape, but that’s irrelevant. Look under the hood of your own car and you’ll see lots of tape. Tape isn’t inherently evil.

To be fair, KMSP’s on-line transcript doesn’t quote the on-air sound bite here, where Mr. Willie says something to the effect of, "That’s not factory original." A fairly damming statement… until you remember that perfectly safe, functional repairs can be made

In addition, Mr. Willie is quoted in the on-air report as saying, "I wouldn’t let my kids ride in that car". But that’s quite a subjective statement. If he were attempting to drive his family away from an exploding volcano, I bet he’d toss his kids in without hesitation. Lemon Busters’ job is to find safety issues with the automobiles it’s paid to inspect. They did their job here. It’s up to the purchaser to evaluate those safety issues. Since the car was represented to Mr. Aurandt as "like new," he has cause to complain. But is it a death-trap?

Armed with the lemon buster inspection report, Bill Aurandt takes the car back to where he bought it, "Anderson Koch" Ford in North Branch.

The dealer gave Mr. Aurandt a full refund and even reimbursed him for the inspection bill.

So far, so good.

But instead of going back to the auto auction, the car went right back on the Anderson Koch sales lot.

That’s bad.

An undercover Nine News photographer asked the dealer about the car.

Nine News said, "been in an accident or anything?"

The dealership said "none that we're aware of."

Unfortunate use of the word "we" by the salesman. Had he said, "I", maybe you could let this one slide. But the dealership certainly was aware of the car’s accident history

Now keep in mind, the dealership was given the lemon buster inspection report from Bill Aurandt.

And remember, the inspector found frame damage, indicating a serious wreck.

I’ll grant that the accident was "serious" But there are degrees of "serious," and "serious" does not necessarily mean "totaled". Beyond that, "totaled" does not necessarily mean "salvaged", but I’m getting ahead of myself…

We found the person who knows first hand what really happened.

Eric Bombardt says, "I just remember flying back in my seat. The airbags going off, a lot of smoke and then rolling down into the ditch. It was a hard hit. I think the state trooper said it was something like 65 miles an hour."

Bombardt was driving the Escort when it was smashed from behind and sandwiched between another car.

Pictures taken by the Wisconsin State Patrol showed a crumpled rear end, broken windshield and both air bags deployed.

This is an interesting passing tidbit. The accident apparently happened in Wisconsin. Where was the car titled? Are we dealing with a Budget Rental based in the Twin Cities, or with one in Wisconsin? Not a huge issue, but the laws in Minnesota and Wisconsin are different from each other. (Both Minnesota and Wisconsin have the same 70% threshold for salvage titles, which will make sense later and means that our analysis here won’t be affected.)

Bombardt was driving the car because it was a rental.

The original owner was actually the budget rental company.

After the crash, the Escort was deemed a total loss and not worth fixing. Budget sold the wreck at a salvage auction.

Note the use of the "passive voice": "the Escort was deemed a total loss…" Whose decision was that? Remember, Budget Rental is in the business of having cars moving around out on the road and charging people for that. It’s not going to look kindly on having one of its cars sitting in a repair shop. So, the car is sold at an auction for "repairables", colloquially called a "salvage auction". Does that mean that the cars sold there require a salvage title? Keep reading…

How can a rental car that was "totaled" in a crash get patched up and onto a dealer's lot, where it's sold with a clean title? Someone had to break the law, according to state investigators we checked with.

Break "the law"? That’s a pretty bold statement! Let’s look at Minnesota’s salvage law, according to CarFax.com (http://www.carfax.com/cfm/rdg_region2.htm). It says, "Minnesota has a two-tiered salvage law. Upon taking possession of a total loss vehicle, an insurance company is required to stamp the current title with a salvage distinction if the vehicle is less than 6 model years old, or is worth more than $ 5,000 in its pre- incident state. Vehicles that are self-insured must have their titles stamped salvage if the damage is greater than 70% of the vehicle's fair market value." (emphasis added) Do we think that Budget Rental contracts with an outside insurance agency, or that it "self-insures" its fleet? If it’s the former, then the title should have been stamped "SALVAGED". But if it’s the latter, we have a 70% figure to play with.

Remember when we noticed that the car was "fully loaded", according to KMSP? How much do we think it was worth? Let’s estimate $15,000. (I haven’t found a way to track down the MSRP through the used car pricing sites I know of, but I can get its used value up to $14,000, so this seems like a reasonable estimate.) 70% of that $15,000 would be $10,500.

Do we think that there was more than $10,000 worth of damage to the car in question? Remember, thats what we need to ask — not whether Budget Rental considered the car not worth repairing, but whether the damage met the legal requirement for a "SALVAGED" title.

We all know that car repairs are expensive… but $10,500 is a lot of money to work with. Both airbags deployed — there’s $2000 or so. Let’s call the windshield $500 (which is high — mine cost less than $400). We still have $8000 to play with, to fix the "front and rear end damage". Personally, I think that’s possible.

If you grant that my estimates are reasonable, and that Budget Rental self-insures its fleet, nothing illegal has occurred in the sale of this Escort.

We traced the wrecked car from budget to this St. Paul salvage auction, where it was bought by a company called Valor Enterprises of Little Canada, a licensed car dealer.

We went to Valor to ask what they did with the car.

We were met by the company's president Vahid Sedaghat.

Using a hidden camera we asked him, "Can you tell me where you sold it after you had it ?

So, a guy shows up and starts asking you details about some car from a few months ago. You deal in salvaged vehicles, so you’re buying and selling all the time. This guy obviously isn’t a customer; he’s just bugging you about your records. Maybe he claims to be working with some TV station — we don’t know, and KSMP didn’t air the clip if he did — but you don’t see any camera crew or anything to back up that claim, even if he makes it.

He said "I don't even remember."

We asked "Is there a way to check ?"

He said "We might check and tell you later on sir."

Then we asked "Would it be too much trouble to check now?"

He responded "Yes, sir I'm busy, I'm going to leave so I'm going to ask you politely right now, you can leave."

Seems like a reasonable conversation to me.

We still don't know where the car went when it left Valor, but Anderson Koch Ford says it bought the car at the Minneapolis Auto Auction with no apparent damage and a clean title.

No apparent damage, because it was repaired (and because Anderson Koch Ford apparently doesn’t inspect the cars it purchases as thoroughly as Lemon Busters does). A clean title because (as we’ve already discussed) it’s possible for a car with this history to have a legally clean title.

Under state law, this car's title should have been stamped "salvage" after budget sold it, but that never happened.

It depends on how Budget Rental insures its vehicles. If they’re self-insured, and the damage was under 70% of its value, the title should not have been stamped "SALVAGE". What if I’m wrong? KMSP is using the "passive voice" again to skirt the issue, when the facts seem pretty clear. Remember how CarFax quotes the first half of the law: "Upon taking possession of a total loss vehicle, an insurance company is required to stamp the current title with a salvage distinction".

If a salvaged car is repaired, the title should show that and the state is supposed to inspect the car before it can be sold, but that didn't happen either.

Once again, we don’t know if the car ever needed a "SALVAGE" title, and have good reason to believe it didn’t.

Bill Aurandt says he never saw the title when he bought the car from Anderson Koch.

If he had he would've discovered the original owner was a rental company and not ford.

Someone signed his name on the title without his approval.

These are all issues with Anderson Koch and nobody else.

So who fixed-up the car and sanitized the title?

A very interesting compound sentence. We know exactly who "fixed-up the car" — it was Valor Enterprises. That’s fine — that’s what they do. KMSP’s sentence implies that the title needed "sanitizing". And, right now, we have no evidence of that.

To repeat: There’s a good chance that the car didn’t require a salvage title because it wasn’t sufficiently damaged to meet the state’s requirements. And, if it did require a salvage title, the responsibility to mark it would have resided with Budget Rental’s insurance company.

We went back to Valor Enterprises, still trying to piece this together.

We parked down the block, but before we could get out of the car, Valor's president Vahid Sedaghat approached us. He wanted us to leave, and he was making threats.

He said "I'm telling you, honest to god...no matter what it would cost...you are messing around with the wrong people, sir."

Okay, it’s not "Hello, have a nice day!", but what kind of "threat" is this? KMSP would like you to believe it involves baseball bats and hiding in the bushes. I’d also interpret this as, "We have really good, expensive lawyers" or the like. Sure, that’s also a "threat", but of quite a different kind.

We're not the first people he's threatened.

We have a mug shot from a 1994 arrest for threatening 3 burnsville police officers.

"Arrest" is different from "conviction". I wonder what kind of arrest records your typical peace protester has? Sure, I doubt these arrests came because Mr. Sedaghat was singing "Give Peace a Chance" too loudly… but KMSP doesn’t share enough about these arrest to make a fair judgment, does it?

Sedaghat's criminal record includes felony convictions for motor vehicle title fraud, theft by swindle and forgery.

But, interestingly enough, KMSP had already told us that Valor Enterprises is a "licensed car dealer". Apparently, the State of Minnesota believes it’s possible for an individual to pay his or her debt to society and continue to do business here. KMSP disagrees, but doesn’t tell us any details of these convictions or their circumstances — or even when they occurred. I’m not saying that felonies are good things. I’m just pointing out that KMSP’s ad hominem ("personal") attacks don’t tell us much.

He also said to us, "go ahead, I be at your station and I be there one night and we follow you, just wait and see, that's why I wanted your address, to see who you are, you are an animal in human skin, go do whatever you can do and we will face each other."

Once again, this isn’t a pleasant statement. Downright stupid, in my opinion. But KMSP doesn’t air any of its reporter’s comments that may have provoked this outburst. And I still don’t see a direct threat of bodily harm — you could get that implication from the "I be there one night" comment, but for a station that airs its news programs only at night, it could just as easily mean, "I’m going to come down there and try to get on the air and explain my side of the story".

(You may think I’m being incredibly charitable toward Valor Enterprises. But you have to remember that KMSP is going to air the most inflammatory statements is has from Mr. Sedaghat; it did not leave his screams of "I’m going to put a bullet through your head!" on the cutting-room floor. So, this is the best they’ve got… Judge accordingly.)

What about the dealership in North Branch?

Anderson Koch Ford didn't want to talk on camera, but says it did not know the car's history and never knowingly misrepresented it.

Actually, this is quite possible. If our "under 70% damage" scenario is accurate, nobody had any legal obligation to inform the dealership. (Maybe the state’s threshold ought to be lower than 70%. But it’s not.) Maybe the dealer ought to inspect its cars better before it purchases them… and maybe it’s operating under an "Ask me no questions, I’ll tell you no lies" policy.

When it refunded Bill Aurandt's money, the dealer told him it was taking the car back to the Minneapolis Auto Auction for a refund.

Instead, they put it back on the lot and tried to sell it to our undercover photographer, without revealing any of the problems found by the inspector.

Bad. Possibly a mistake due to horrendously bad administration, but bad nonetheless.

When we told Anderson Koch Ford that we had traced the car to a salvage auction, they called us back minutes later to say they had just received word that new information had been added to the title indicating the car was totaled.

We don’t know what Anderson Koch Ford actually said in that phone call. Is it possible they said, "new information had been added about the title"? Who knows. We still don’t know if the car ever was legally totaled, passing the State of Minnesota’s 70% damage threshold.

We checked with the state. There's no record of any new information. The state says the title on this "totaled" car is still clean.

Yup — titles of cars that haven’t been totaled usually are clean. KMSP wants us to think the car should have been given a "SALVAGE" title, but they provide very little proof of that claim.

Eventually, Anderson Koch took the car to the Minneapolis Auto Auction. where it went from there, we don't know.

Is this a common problem?

According to investigators with the state vehicle crimes task force...the answer is "yes."

A consumer's best protection when buying any used car...no matter how few the miles...is to have it inspected.

Exactly! Cut out the inferences in the middle you’d have an excellent consumer-education story about this fact. But the ratings wouldn’t be as good…

 

NOTE: I assume the text/transcript of KMSP-TV’s story, quoted above, is copyrighted by the station. You can find it on-line at:

http://www.kmsp.tv/news/local/story.asp?content_id=273657

I quote it here under the "fair use" provision of the Copyright Act of 1976, which provides for educational (non-commercial) use of copyrighted material for the purposes of criticism and comment.

Feel free to direct questions and/or comments to me at KMSP@emlarson.com

 


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