ST. LOUIS, MO (STL.News) Missouri Attorney General Eric Schmitt announced Monday the conclusion of an investigation and litigation that provided restitution for numerous Missourians who were left affected by the 2018 closure and bankruptcy of Gateway Buick GMC of Hazelwood, Missouri. In all, the Attorney General’s investigation revealed more than $1.9 million dollars in financial damages to customers of Gateway.
In the spring of 2018, Gateway suddenly closed its doors and filed for bankruptcy protection, leaving numerous customers and other creditors with millions of dollars in claims and losses. Since then, the Attorney General’s Office has been continually working to help more than 300 customers recover those losses.
The Attorney General’s investigation revealed numerous sales practices regularly undertaken at Gateway in the months leading up to its closing:
- Gateway represented to customers that they could include sales tax obligations in their loan amount and the money would be given back to the customer;
- Gateway represented to customers that they could include their remaining lease payments in a new lease term and Gateway would pay off the prior lease;
- Gateway represented to customers that it would pay off any loans on trade-in vehicles when the remaining loan amount was included in the purchase price of a new vehicle;
- Gateway represented to customers that they could purchase aftermarket products such as extended vehicle service contracts, gap insurance, and various protection plans.
The Attorney General’s investigation revealed that many of these statements were untrue, and, ultimately the consumers were made to bear the losses when the dealership went bankrupt.
The investigation revealed that while making these representations to its customers, Gateway knew the money paid by their customer would not be used for the stated purposes but instead would be used to pay back debt it owed its lender. The investigation further revealed that Gateway took:
- $28,205.54 from 16 customers for sales tax and then failed to give that money back to the customer;
- $10,293.24 to pay off prior leases for 6 customer who included that amount in their new lease terms which leases were not paid off
- $844,875.38 to pay off loans on 48 traded-in vehicles which was not used to pay those loans off;
- $1,033,160 from 312 customers for the purchase of aftermarket products and then failed to actually forward funds to the providers of the products.
Throughout the bankruptcy proceedings, when presented with the results of the Attorney General’s investigation, third party companies agreed to resolve hundreds of thousands of dollars in losses to Gateway’s former customers. The providers of a majority of the aftermarket products agreed to honor them even without receiving the funds for their purchase. Additionally, Gateway’s lender eventually paid off the remaining loans on the 48 traded-in vehicles after repossessing them.
In addition to its investigation and mediation efforts, the Missouri Attorney General’s Office filed suit against Gateway in bankruptcy court over the remaining unresolved customer harm and obtained an $118,504.30 default judgment for the loss suffered by 162 customers. The Attorney General’s Office was able to collect a portion of this judgment from Gateway’s motor vehicle dealer surety bond and issued checks totaling $71,760.57 to those 162 customers for a portion of their loss.
“Gateway Buick GMC saddled hundreds of its customers with thousands in losses and debts through their deceptive and shady business practices before going bankrupt,” said Attorney General Eric Schmitt. “Because of our investigation and the generous actions of several aftermarket product companies and Gateway’s lender, a majority of these customers will get some, if not all, of their money back.”
This case was prosecuted by Assistant Attorney General Michelle Hinkl with the assistance of Investigator Tyler Wood. Customers who believe they may have been scammed by a business should file a complaint with the Missouri Attorney General’s Office by calling the consumer protection hotline at (800) 392-8222 or submitting a complaint online at ago.mo.gov.