'This is a mess': Hundreds of complaints against St. Charles-area car dealerships

  • Illinois Secretary of State Police are investigating the former Nissan of St. Charles automobile dealership and two others affiliated with the owner. Police have received hundreds of complaints from customers that the dealer failed to give them vehicle titles and failed to pay off outstanding loans on trade-in vehicles.

      Illinois Secretary of State Police are investigating the former Nissan of St. Charles automobile dealership and two others affiliated with the owner. Police have received hundreds of complaints from customers that the dealer failed to give them vehicle titles and failed to pay off outstanding loans on trade-in vehicles. Rick West | Staff Photographer

 
 

Three St. Charles-area car dealerships remain under investigation by state authorities who revoked the owner's license this spring after receiving complaints from customers.

Illinois Secretary of State Police are dealing with more than 500 cases tied to the Nissan of St. Charles dealership and the Pre-Owned of St. Charles dealerships in St. Charles and West Chicago, Deputy Director Elmer Garza said.

"This is a mess. In my 13 years in this business, this is the largest dealership closure we've dealt with," Garza said Thursday.

The problems

When you buy a vehicle in Illinois, the dealer is supposed to transfer the vehicle's title to the purchaser, or the bank financing the purchaser's car loan, within 20 days.

But hundreds of purchasers in 2018 and 2019 were left in the lurch by the dealerships, Garza said.

A buyer who had not received title and registration visited the Nissan dealership in April, but found it closed. That buyer notified the state, and the secretary of state police intervened. The owner surrendered the license and police collected all the unprocessed "deal jacket" paperwork. The police have been processing the title paperwork since then.

Another problem involved people who traded in vehicles on which money was still owed. "This dealer was not paying off liens" that amounted to more than $2 million, Garza said.

That meant the owners were stuck with payments on a vehicle they no longer owned.

Furthermore, the dealership owes money to the state because it did not turn over the $196-per-vehicle license-and-registration fee, Garza said.

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No criminal charges have been filed.

History

The Nissan dealership opened in 1990 as St. Charles Pontiac Inc. Through the years, it has been called St. Charles Pontiac-Buick, St. Charles Pontiac-Kia and St. Charles Pontiac-Buick-Kia, according to secretary of state records.

The dealership leases the land from St. Charles Investments LLC. But St. Charles Investments LLC has the same address as the St. Charles Pontiac Inc. (2535 E. Main St.), and one of the managers of the LLC is the Fred A. Vargason Living Trust.

Vargason is president of the dealership, according to documents concerning a $13 million line of credit that were recorded with the Kane County Recorder of Deeds. The line of credit was taken out in March 2013 from NextGear Capital, an Indiana firm that specializes in floor-plan financing for dealerships.

The secretary of state also lists Vargason as a manager for Pre-Owned of St. Charles LLC, with the 2535 E. Main St. mailing address.

In August 2018, the Internal Revenue Service put a lien on the 2535 E. Main property, alleging the dealership owed nearly $2.33 million in employee withholding taxes from March of 2017 through June 2018. (The documents do not indicate if the business paid anything at all, just the amount it was supposed to remit.)

                                                                                                                                                                                                                       
 

Vargason could not be reached for comment.

Helping buyers

Those who find themselves paying two loans can apply for relief to the state's Dealer Trust Recovery Fund, overseen by the attorney general's office.

Dealerships in Illinois are required to pay $500 a year to the fund, which was enacted after more than 60 dealerships closed as a result of the 2008 recession.

That fund pays off the liens on the traded-in vehicles. It also can be used when a dealership sells a vehicle with an undisclosed lien, then closes.

The fund's board will consider four applications this month from people who bought vehicles from Nissan of St. Charles.

Garza said people can still file complaints with his office. They may contact Ron Ford at (630) 693-0551, ext. 852.

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