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November 12, 1991


The opinion of the court was delivered by: Nealon, District Judge.


In this criminal case, predicated upon an alleged odometer fraud,*fn1 there are several motions by the defendants to dismiss the indictments the United States (government) has brought against them.*fn2 Their defenses, inter alia, center on the application of the statute of limitations and the defendants' withdrawal from the conspiracy and substantive offenses.*fn3 For reasons which follow, the court will deny the defendants' motions.


The factual background of this case begins in South Carolina, where defendant Waldrop allegedly originated the odometer tampering scheme.*fn4 At all times relevant to this Memorandum, defendant Waldrop was the chief operating officer of Auction Recon Center, Inc., a South Carolina corporation and a wholesaler of used automobiles. Defendant Sammy Little owned Little's Used Cars, an automobile dealership, both wholesale and retail, also located in South Carolina. Defendant Wayne Sexton was an automobile mechanic who worked as an independent contractor for Auction Recon Center, reconditioning and repairing automobiles. Defendant Larry Walsh, a purchaser and wholesaler of used automobiles, operated State Auto Sales, located in Dupont, Pennsylvania. Pat Walsh, the brother of Larry Walsh, was the owner of Honesdale Lincoln Mercury.

According to the government, the scheme unfolded as follows:*fn5 Waldrop would purchase high-mileage used cars for the purpose of resale. Once Waldrop received the cars, he would arrange for defendant Sexton to roll back their odometers.*fn6 Waldrop then directed the employees of Auction Recon Center to prepare bills of sale, title transfer documents, and odometer statements to appear as though Auction Recon Center had sold the cars at their correct high-mileage figures to defendant Sammy Little's used car dealership. The next step involved Waldrop directing Auction Recon employees to prepare transfer documents of the same cars from Little's Used Cars to State Auto Sales, defendant Walsh's dealership. However, the transfer documents from Little to Walsh contained the rolled back low-mileage readings that Sexton had accomplished at Waldrop's direction.

Little played an intermediate role in the scheme. In reality, the cars were sold directly from Waldrop to Walsh. Little had never even seen most of the cars that he had "bought" from Waldrop and later "sold" to Walsh. The government has characterized Little as a mere "straw" who acted as a front for the sham sales. Little's involvement consisted primarily of signing the paperwork that gave the appearance that he was involved in the transactions.*fn7 In return, Waldrop paid Little initially $100.00 per car, which was raised to $150.00 a car by the time the scheme had been discovered.*fn8

As stated above, defendant Walsh was the true purchaser of Waldrop's clocked automobiles. When paying for the cars, Walsh would make a check payable to Little's Used Cars but would send it directly to Auction Recon Center. In return, Walsh would receive from Auction Recon the invoices and low-mileage odometer statements which reflected the purported sale from Little to Walsh, along with the cars' titles.*fn9

To complete a sale of the clocked cars, Walsh eventually had to be able to procure a transferable title that reflected the cars' clocked odometer.*fn10 Allegedly Walsh "took whatever action was necessary" to obtain new titles for the cars that reflected the cars' clocked mileage. See document 57 of record. This required altering the certificates of title to conform to the clocked odometer readings, which, in turn, included forging the names of his brother and employees of Auction Recon Center and returning them to Penn DOT to obtain new titles that reflected those false clocked mileage figures.*fn11 Walsh then sold the cars with their new falsified titles to other dealers, consumers, etc. Cars # 7 and # 8, reflecting Counts 7-13-14-20 of the superseding indictment, represent the scheme's end product.*fn12

Sometime in May and June of 1985, the scheme went awry.*fn13 Walsh had sent 12 altered titles into Penn DOT for reissuance. The 12 titles represented cars with clocked odometers pursuant to the alleged plan. Penn DOT, however, upon inspection of the titles, detected apparent alterations to the mileage readings, and seized them, along with their accompanying applications for new Pennsylvania titles. Five of the above mentioned titles represent cars 1, 2, 4, 5, and 6 of the indictment, reflecting Counts 2-8-15, 3-9-16, 4-11-17, 5-12-18, and 6-19, respectively.*fn14 United States Attorney Don Burley received the 12 seized titles from Penn DOT in August of 1985, and he has retained possession of the titles as of the date of this Memorandum.

Notwithstanding the title confiscation, Walsh still had these cars on his hands and had to take additional steps to sell them. However, to properly effectuate their sale, Walsh had to procure new titles that contained the falsified odometer readings. Thus, on August 12, 1985, Walsh and his attorney, Ralph Iori, contacted Burley concerning the confiscated titles. During the course of their conversation, Walsh represented to Burley that he had been victimized by Little, and was unaware of the fact that the cars had their mileage altered. A few months later, Walsh resubmitted the applications for new titles to Penn DOT.

On November 15, 1985, apparently believing that Walsh was an innocent victim, Penn DOT issued new titles to Walsh for the automobiles whose titles they had previously seized.*fn15 These titles represented cars 1, 2, 4, 5, and 6 of the indictment. On the back of each title, which would normally contain an odometer reading, there appeared the code "999." The code denoted that the true mileage of each car was either unknown or that the mileage on the odometer was incorrect.

In February and March of 1986, Walsh submitted the same "999" titles to Penn DOT under the auspices*fn16 of Honesdale Lincoln-Mercury (his brother Pat's dealership) for new titles.*fn17 Inexplicably, Penn DOT issued new titles to the cars containing the falsified odometer readings. He later sold the cars to other purchasers between May and September of 1986 through his brother Larry's Honesdale Lincoln-Mercury dealership without his brother's knowledge or consent.*fn18

In the meantime, Burley's office had arranged for William C. Kadlowec to investigate the chains of title to the 12 cars in South Carolina. Bill Kadlowec*fn19 was an odometer-tampering investigator employed by the state of South Carolina and appointed as a special investigator to the Federal Grand Jury in South Carolina. Sometime in late August or early September of 1985, Kadlowec learned that Auction Recon Center had sold several used cars to Little, who, in turn, sold them to Walsh. As it appeared to Kadlowec, the cars' odometers had been tampered with while in Little's possession. Sometime around September, 1985, based upon odometer statements provided to Kadlowec by Waldrop, Kadlowec asked Waldrop to have Little contact him concerning the odometer readings.

On September 12, 1985, Kadlowec talked with Little concerning Little's involvement with the tampered odometers. During that conversation, Little confessed to his role in Waldrop's scheme. Later, on April 26, 1986, Walsh revealed to the government the true background of the scheme. However, the government alleges that it was not a complete revelation because he failed, at the time, to disclose ...

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