Used car salesman Bill Thompson believed that his idea to sell high-interest car notes online was a good moneymaker for him and his investors, until the Oklahoma Department of Securities put the brakes on his dealings.
“We didn't know we were doing anything wrong — it never even entered our heads,” said Thompson, who owns Triple T Motors at NW 10 and N Portland.
State securities regulators on Monday filed a lawsuit against Thompson seeking restitution for investors in the Oklahoma City-based online companies Invest in Car Notes.com and Buy Car Notes.com which lost hundreds of thousands of dollars.
The Oklahoma Department of Securities claims in its lawsuit that Thompson used at least some of the $500,000 he raised from investors to line his pockets — something Thompson firmly denies.
The companies lured investors by promising returns of up to 21 percent by investing in car notes for car buyers with less-than perfect credit. The proceeds from the notes financed car loans for customers at Triple T Motors and other used car lots, Thompson said.
“It was a good deal for everybody — it gave a person with bad credit the opportunity to buy a car.” Thompson said. “If a person wouldn't pay and the note went bad, we would put tracking devices on the cars so we could find them and then give (the investor) a replacement note.”
Invest in Car Notes ran out of gas when the Securities Department declared that Thompson had been selling unregistered securities and ordered him to shut down the business. He was forced to sell the car notes to a big lender for pennies on the dollar of what his investors had paid, he said.
Thompson's former business partner, Oklahoma City resident David Harris, could not be reached for comment. Harris, who runs the investment website ScamXposer.com, once touted Invest in Car Notes on the site as good place for investors to put their money. The endorsement has since been removed from the ScamXposer site. Harris is not named as a defendant in the agency's lawsuit.
Houston investor David Hamer is one of a handful of investors who sued Thompson after he lost $25,000 in the business. However, he chose to drop the matter because of the mounting legal costs involved, he said.
Hamer stumbled across the Invest in Car Notes website and was attracted by the high rate of return promised by the site.
“They may have started out with good intentions, but when things weren't going well, they just kind of got new investors to pay the interest payments,” Hamer said.
Irving Faught, administrator for the Securities Department, said regulators filed suit against Thompson this week after he failed to comply with an earlier agreement to pay some reparations to investors.
“I don't know whether you would call it a Ponzi scheme or not, but he did use some of the money to pay personal expenses, as is alleged in the case,” Faught said.
In its lawsuit, the Securities Department claims that in some instances, a single car loan would be assigned to multiple investors. Although Thompson promised his investors notes that went into default would be replaced with a new note, he “did not have an adequate surplus of replacement notes.”
Thompson said he is committed to repaying those who lost money investing in his business. He also claims that he has been living off his Social Security check for the past year and a half and has not taken any salary while working to ensure investors get their money back.
“I won't take a dime until everyone gets their money back,” he said.