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The used-car dealership, whose locations included Tampa, went from a seemingly flourishing business to a closed one, leaving disgruntled customers in its wake and FBI interest in its practices and partners.
By BILL COATS
© St. Petersburg Times, published November 4, 2001
TAMPA -- When Paul and Theresa Winsey went car shopping at ValuCar Inc. in Tampa 16 months ago, they got a pleasant surprise.
The used-car dealer assigned a trade-in value to their burgundy 1995 Chevy Astrovan that was $2,000 higher than any other dealer they had visited. So the Lutz couple traded it in and bought a gold 1999 Jeep Cherokee Sport from ValuCar.
"Why can't every car-buying experience go this way?" Mrs. Winsey recalls saying to her husband.
She didn't feel that way for long.
Just two months later, the 4-year-old ValuCar chain was out of business and in bankruptcy court. Ever since, customers such as the Winseys have been learning some disturbing facts about the chain, which had locations in Tampa, Orlando, Lakeland, Punta Gorda and Bradenton:
ValuCar had failed to pay off loans on cars traded in. The Winseys and other sellers found themselves still responsible for the payments on their old cars. Recently bought cars were repossessed. Previously clean credit ratings were trashed.
Many customers who had paid hundreds of dollars for extended warranties on the cars they bought from ValuCar discovered that the car dealer had not arranged the warranties and had apparently pocketed the money.
More than $14-million in claims have piled up against ValuCar, including from key lenders such as Ford Motor Credit Co.
Most surprising, the ValuCar customers learned that the chain had been raided by the FBI in June 2000 and many of its records seized. Yet it continued to sell cars to customers, including the Winseys, for another six weeks before shutting its doors. Many of the deals made in ValuCar's dying days were riddled with irregularities.
Like dozens of other customers, the Winseys could neither obtain the title to their new Jeep Cherokee nor free themselves from the loan payments on the traded-in Astrovan, which ValuCar was supposed to have paid off.
Unsnarling the mess cost the Winseys an extra $8,300, including nearly $3,900 to pay off the van and $3,000 to lawyers.
The Winseys' Jeep Cherokee, gold and appealing on ValuCar's lot last year, became a symbol of angst this year. They traded it away.
"I'm sick of the memories," Paul Winsey said.
The Winseys are left to wonder what went wrong at ValuCar. How could a company that seemed to be thriving collapse overnight?
And what was the FBI looking for? That remains a mystery. No charges have been filed, and the search warrants remain sealed.
But it's clear investigators are interested in the unusual cast of characters who were involved with ValuCar and its owners. Among them: A prominent Tampa Ford dealer who has since tangled with the FBI on another case. A man identified in law enforcement circles as the head of the Mafia in Tampa. And an Oldsmar man awaiting trial on an alleged $11-million international investment scam.
The judge handling ValuCar's still unresolved bankruptcy case in Tampa speculated in court during one hearing that "fraudulent transfers" of money may have occurred.
"It's all a big mess," U.S. Bankruptcy Judge Timothy Corcoran told a creditor's attorney at another hearing. "Since we can't take anybody out and shoot 'em, we can't solve the problem."
ValuCar was started in Bradenton in 1996 as national chains such as CarMax and AutoNation were creating a new, hassle-free image for a used-car business long saddled with a reputation for fast-talking, small-time operators.
Nelson Valdes Jr., ValuCar's founder, had a dozen years of experience in car sales around the Tampa Bay area and previously had set up a Nissan dealership for the Jim Quinlan group.
Valdes had a silent investor in Ranald Stewart Jr., a Tampa businessman who had been chairman, then chief executive of Belmac Corp., a troubled pharmaceutical company, before being ousted in a succession of upheavals there.
With ValuCar, Valdes quickly earned headlines in Bradenton by vowing to give away one used car a month to needy families.
By 1998, the changes in the used-car business were intriguing Ernie Haire III, the Tampa Ford dealer. He took a number of steps to become a bigger player:
In July, Haire, Valdes and Stewart subleased a corner of Nebraska and Bearss avenues in Tampa, just north of CarMax's 1-year-old Tampa store, and began building a ValuCar store. That put the upstart company in prime position to siphon off a share of customer traffic from CarMax.
In August, Haire and Stewart became ValuCar officers.
In September, Haire made a deal to sell Ernie Haire Ford, the family dealership for two decades, to CarMax. The deal called for moving the Ford operation to the CarMax location.
In October, ValuCar announced its plans for the store next door.
The sale of Haire's dealership to CarMax was short-circuited when Ford Motor Co. vetoed it.
Haire remained active in ValuCar as it expanded into Lakeland. His dealership, Ernie Haire Ford, became half-owner with ValuCar of a lot in Orlando, according to testimony in bankruptcy proceedings.
Haire says he's a victim in ValuCar's demise. "It's cost me millions," he said in an interview.
The FBI has told Haire's attorney it wanted to talk with him about ValuCar, the auto dealer said in September, but as a witness, not a target.
Haire had a less cordial encounter with the FBI on a separate matter. Over the summer, agents raided Haire's home in exclusive Avila, apparently seeking money belonging to his friend, business partner and neighbor, convicted felon Paul Bilzerian. The agents seized $69,000 from Haire's home safe, money that is still in dispute.
One of the people Haire said he met during his time with ValuCar was Vincent LoScalzo, who went to car auctions looking for vehicles to be sold on ValuCar's lots. "I've been in Florida since '73, and I'd never heard of the guy," Haire said.
Authorities know LoScalzo well. For a decade, law enforcement officials have identified the 64-year-old Brandon resident as the head of the Mafia in Tampa.
LoScalzo, who over the years has repeatedly denied he is associated with the Mafia, did not return several telephone calls. And Valdes, ValuCar's 41-year-old founder, declined to be interviewed by theSt. Petersburg Times. LoScalzo, Valdes, Stewart and Haire did not respond to certified letters seeking details about their roles in ValuCar.
In addition to working the auto auctions for ValuCar, LoScalzo had other dealings with Valdes. They both served as directors of Mahalo Auto Sales Inc., a wholesale company that opened in a small storefront a few blocks south of ValuCar's Tampa store two months before the FBI raid. Valdes' wife, Mary Jo, was president.
It's not clear what business Mahalo conducted during its short life. It closed in September 2000, shortly after ValuCar did. On Sept. 25, the office held one empty desk, a telephone and a pair of chairs. Those fixtures, and the sign out front, were gone a week later.
LoScalzo may have lost his ValuCar job, but he still was able to pay off the mortgage on the Brandon house he has owned for 25 years. His mortgage company released the deed in December.
Another intriguing relationship was Valdes' with Anthony "Tony" Montello of Oldsmar. Montello is under indictment on federal charges of investment and wire fraud, racketeering and money laundering in an $11-million international investment scam uncovered in 1998. Health problems have kept Montello, 62, out of the courthouse, and a settlement of his case is being discussed.
Valdes borrowed $250,000 from Montello's company, First Equity Resources, in March 1998, two months before Montello was indicted. First Equity collected at least one payment on the debt that summer. The payment came in an unusual form: It was a 1-year-old Toyota Camry from ValuCar.
By 1999, ValuCar's sales had soared to $69.4-million. Each of the three owners -- Valdes, Haire and Stewart -- was pocketing more than $295,000 a year, according to a report later filed in bankruptcy court. ValuCar seemed a picture of prosperity.
Then, in June 2000, ValuCar started to unravel.
In the cases of at least two dozen cars traded in by ValuCar customers in late May or early June, the company failed to pay off the old loans within the 10 working days required by Florida law. Ultimately, ValuCar's debt for unpaid trade-ins would grow to nearly $560,000.
Many of ValuCar's customers who paid for extended warranties on their new cars in spring 2000 later discovered that ValuCar apparently pocketed the money rather than arranging the warranty.
"I must have called them 20 times," said John E. Ellis IV of Bartow, who paid $1,219 for an extended warranty on the '97 Jeep Grand Cherokee he bought at ValuCar's Lakeland store in May 2000. No warranty was bought from the company that provided such coverage.
"I think they were just basically holding the money and trying to honor the warranties themselves," said Ellis, 34, comptroller for a medical clinic in Winter Haven.
"They never gave anybody the warranty," complained George Lloyd, 61, of Zephyrhills, who paid $848 for a warranty when he bought a '97 Plymouth Voyager in April 2000, also in Lakeland. "They just put the money in their pocket."
Ellis, Lloyd and others complained to the Florida Department of Insurance, which confirmed that an investigation was under way but would not elaborate.
On June 28, 2000, FBI agents swarmed onto ValuCar lots in Tampa, Bradenton and Punta Gorda with search warrants.
There was little news coverage of the FBI raid in the Tampa Bay area. Thus, Theresa and Paul Winsey confidently bought their Jeep Cherokee on July 2, four days after the raid.
"Obviously, the FBI thought enough to go in there and raid them," Mrs. Winsey complained later. "Why didn't they lock their doors?"
After the FBI raid, ValuCar operated for six weeks, but in growing disarray.
ValuCar kept selling cars after Ford Motor Credit Co., a key source of ValuCar's financing, declared it in default of $1.45-million. ValuCar stayed open after the company's owners missed a payment on $1.3-million in loans from Tampa's Central Bank. And ValuCar stayed open after filing for bankruptcy reorganization a month after the raid.
Sales finally halted in mid-August when Judge Corcoran authorized Ford Motor Credit to seize cars from ValuCar's lots.
The judge's order set off a massive repo operation. "I took every car they had from every lot they've got," said Byron Foley, a New Port Richey hauler who got the repo contract. "I put 10 trucks on the road for three days around the clock."
In all, Foley's drivers hauled more than 600 cars to a secured lot in Palmetto.
About 250 claims totaling $14.4-million were filed in ValuCar's bankruptcy case. Several creditors showed up at ValuCar's first creditors' meeting in August 2000, looking for answers about ValuCar's collapse.
But Valdes wouldn't discuss it. "Under the advice of counsel, I'm exercising my right to the Fifth Amendment," he said repeatedly.
A month later, Valdes asked Judge Corcoran for a $12,000 monthly salary from ValuCar's frozen accounts. Corcoran said no.
ValuCar's biggest creditors included Haire, who filed a claim in bankruptcy court stating he had loaned ValuCar $1.1-million on July 11, 2000. That's the same day Ford Motor Credit found ValuCar in default.
Soon, Haire was out more money. He and Valdes had personally guaranteed financing from Automotive Finance Corp. of Indiana to buy cars for ValuCar's inventory. AFC sued them for $1.1-million. Initially, the two men contended that the signatures on the guaranty documents were forgeries and weren't theirs. Haire later reached a confidential settlement.
Now, Haire and Stewart, ValuCar's third partner, face a $1.5-million lawsuit from Ford Motor Credit, also over loans they personally guaranteed.
"Hopefully that can be worked out," Haire said.
Of all ValuCar's creditors, Central Bank of Tampa was in the deepest. The company's owners owed the bank $5.4-million in loans secured by three ValuCar lots.
But the land proved to be solid security. ValuCar's Bradenton complex was sold in March of this year for $2.2-million. Then the Punta Gorda store went for $1.1-million in May. ValuCar's corner store in Tampa was auctioned by the clerk of court in August for $2.35-million. Central Bank was the winning bidder; a trust in the name of Haire's mother was the runnerup.
Valdes declared personal bankruptcy on May 3, fending off creditors including Automotive Finance Corp. The next day, he transferred to his wife his interest in their $900,000 bayfront house in Apollo Beach.
In his creditors' hearing in June, Valdes said his annual income went from $350,000 to nothing after the FBI raid.
"What were the reasons that the United States government seized your records?" an attorney asked.
"Couldn't tell you," Valdes replied. "No one's been indicted. No one's been charged. No one's been nothing."
-- Times researcher John Martin contributed to this report. Bill Coats can be reached at (813) 226-3469 or coats@sptimes.com.
Nelson J. Valdes Jr., 41, founded ValuCar Inc. in Bradenton in 1996 and ran it until it closed. He held a 31 percent ownership. Valdes previously had a dozen years of experience in car sales around the Tampa Bay area. He earned headlines in Bradenton by vowing to give away one used car a month to needy families. He lives with his wife, Mary Jo, and two children in a $900,000 bayfront house in Apollo Beach.
Ernie Haire III, 46, is president of Ernie Haire Ford. He was a 32 percent owner in ValuCar and his Ford dealership was half-owner of the company's Orlando lot. ValuCar's Tampa lot was built at a corner where Haire had tried to move his Ford dealership. He lives in a $1.4-million house in Tampa's Avila community.
Ranald Stewart Jr., 64, was an early investor in ValuCar and became an officer in 1998, with 32 percent ownership. He testified he was negotiating a sale of the company when the FBI raided it. Stewart had been chairman, then chief executive of Belmac Corp., a troubled pharmaceutical company, before being ousted in a succession of upheavals there. He lives in a $1.1-million house in South Tampa.
Vincent LoScalzo, 64, was a buyer for ValuCar at auto auctions. Law enforcement agencies have identified him for a decade as head of the Tampa Mafia. LoScalzo and his attorneys have denied it. Seven years ago, LoScalzo and six other men were charged with bilking investors out of $300,000, but a judge ruled the case was vague and weak. Ultimately, LoScalzo accepted a plea deal of three years' probation. He lives in a $150,000 house in Brandon.
-- BILL COATS