Car dealer avoids jail by cooperating

A former Spokane Valley car dealer, who now sells used cars in Post Falls, avoided a likely prison term and a substantial fine by helping investigators unravel an international odometer rollback case.

Instead of low-mileage bargains, more than 135 buyers were stuck with high-mileage Canadian imports with altered mileage gauges.

For his part in the conspiracy, Richard “Rick” Shafer got no prison time Thursday, but must complete six months of home detention when he’s not at work and repay a Spokane credit union $172,792.

His wife, Dee Ann Shafer, got a similar break and was placed on three years of supervised release.

The U.S. attorney’s office recommended the no-prison-time sentences because the Shafers provided “substantial assistance” in the prosecution of Michael B. Cosand, the now-convicted mastermind of the conspiracy.

He is looking at eight to 10 years in prison when he’s sentenced in October.

“The government moved for a downward departure in your sentence because you’ve helped them,” U.S. District Court Judge Edward Shea told Richard Shafer at the sentencing hearing.

Shea, who presided at Cosand’s jury trial in March and heard the Shafers testify, said he would follow the U.S. attorney’s recommendation for light sentences and no prison time.

The Shafers operated Valley Cars and RVs in Spokane Valley, beginning in 1993.

Their used-car business acted as the registered importer for vehicles purchased in Canada by Geronimo Holdings Ltd., operated by Cosand, who lived in Spokane, and Ronald Simpson, of Cranbrook, B.C., Assistant U.S. Attorney Frank Wilson said in court documents.

Simpson, a former Royal Canadian Mounted Police officer, also struck a plea bargain and became a prosecution witness. He is now serving a year in prison in Canada.

Between 2000 and 2002, Cosand, working with Simpson, imported at least 139 Canadian SUVs and pickups with rolled-back kilometer odometers. Cosand registered them in Idaho or Washington, then resold the vehicles to consumers, many living in the Northwest, according to court documents and trial testimony.

As the “registered importer” for Geronimo Holdings, the Shafers’ Valley Cars and RVs processed the paperwork needed before the Canadian imports could be sold in the United States.

Valley Cars generated documentation that the vehicles imported for Geronimo Holdings complied with several federal requirements when Shafer and his business did not know the actual condition of the vehicles, including whether they met U.S. safety standards and emission control requirements, Wilson said.

Dee Ann Shafer personally became the “registered importer” for Valley Cars in November 2000.

The actual odometer rollbacks were done in Canada before the gauges were converted at a Spokane speedometer shop. Investigators determined the scam enhanced the combined value of the resale vehicles as much as $1 million before authorities launched an investigation and filed federal charges.

The Shafers were “not active members of the conspiracy,” but at some point they became aware that Cosand and Simpson were involved in the scheme to defraud buyers, Wilson said.

On the eve of Cosand’s trial in March, the Shafers struck plea bargains, agreeing to cooperate with investigators and testify as prosecution witnesses against their former business partner.

Richard Shafer pleaded guilty to concealing a felony and financial institution fraud. Dee Ann Shafer pleaded guilty to concealing a felony.

The fraud charge was related to Richard Shafer illegally diverting money customers paid for extended warranties for used cars, not those involved in the odometer-import conspiracy, Wilson said at the sentencing hearing.

Instead of forwarding the money to Global Credit Union, which had provided the financial “flooring” for his inventory of used cars, Shafer used the extended warranty money for other purposes and was “out of trust” with his lender.