The Lemon Merchant

Avi Stern was convicted in Ohio's greatest car scam. Is he back at it?

Halite 2800 Clinton Avenue 216-472-1120. Lunch: 11 a.m. to 3 p.m. Tuesday through Friday. Dinner: 5 p.m. to 1 a.m. Tuesday through Thursday, 5 p.m. to 2 a.m. Friday and Saturday
The rusty, wine-colored Intrepid needed a lot of work -- fog lights, locks, a new tire and rim. The hood was held down by a piece of wire, and the vehicle reeked.

The previous owner left spoiled meat in the trunk, explained Avi Stern, owner of Driver's Auto Mart in Slavic Village. He'd have it professionally cleaned, if she wanted. He'd also take care of all the repairs.

Sure, it was a wreck, Pat Shaw thought, but the engine was in good shape. And though a price of nearly $5,000 seemed high, if Stern did what he said, $270 a month was a good deal for someone with her credit history.

They signed the papers that afternoon. His mechanic would be available within the next two days, he said, but it was drivable in the meantime.

Two days turned into two weeks. Shaw says she called Stern about 50 times, but the mechanic was always tied up, or there would be some other excuse. Meanwhile, the "death smell" seemed to increase. It was so bad her kids cried -- they didn't want to ride to school. Neighbors could smell it from across the street.

Then, on September 30, 2002, Shaw was on the freeway when the wire that served as a hood latch broke free. The hood flew up and crashed against the windshield. She lost control and smashed into a cement retaining wall, suffering a concussion. She thought she'd hit the back of a semi.

When she got home from the hospital, she called Stern, expecting him to make amends. Instead, an employee named "Jay" came to visit that night. Shaw says he told her Stern was afraid she'd sue and that he wanted the car back. Stern would give her another, he said, but Shaw refused.

Instinct told her that her only insurance was in keeping the heap as evidence. She wanted to talk about compensation first. That's when things got nasty, Shaw says.

Stern sent repo toughs to sit in her driveway at 3 a.m., and Jay kept calling to ask if she would reconsider, according to Shaw. She describes him as using a combination good cop/gross-out strategy. "Avi plays dirty," he would say, "don't make him mad. He has guys working for him that carry guns." He told her Stern lied about the source of the smell -- it actually came from a dead Rottweiler the previous owner had kept in the trunk.

The harassment went on for weeks. One day, Shaw says, her 13-year-old daughter answered the phone. "I know your mommy's there," said the menacing voice. "Tell her I'm coming for her!"

The stress was too much. She finally let Driver's Auto Mart tow away the '97 Dodge. She had given up on getting compensation; she couldn't afford a lawyer and thought she'd just cut her losses. But on November 22 she was dumbfounded to receive a collection notice. Stern was demanding $3,787 -- the full price of the car, minus the down payment.

Many people, it seems, regret doing business with Avi Stern, aka Abe Stern, aka Avraham Schternlicht, aka Avi Abraham. Together with business partner Dennis Dunagan, the car dealer has been inciting the ire of customers, neighbors, and tax officials for almost 20 years.

Slavic Village Development, a nonprofit corporation dedicated to improving the quality of life in the neighborhood, has fielded myriad complaints about Stern's operation. He "always just misleads you or gives you the finger," says Tony Brancetelli, the agency's executive director. The Ohio Attorney General's office has a thick file of consumer complaints on him. Even the cautious Better Business Bureau -- which wipes the slate clean every three years -- gives Stern an "unsatisfactory" rating.

At least two repo companies, Skipco and Medlocks, say they no longer do business with Stern. "Those guys are slime!" says one Skipco employee. "Our nickname for [Driver's Auto Mart] was Dairymart . . . Or we just called them by their initials, DAM Cars!" adds a Skipco manager, who doesn't want his name used.

Stern's criminal record goes back at least to 1984, when he was sentenced to Orient Correctional Institution on nine counts of grand theft. At the time, he was president of Auto Cars Inc., a luxury auto-lease in Beachwood.

Stern was among nine people indicted in the greatest car scam Ohio has seen. It involved buying barely operable luxury cars dirt-cheap, then telling the insurance company that they were worth much more. Auto Cars Inc. would obtain huge bank loans based on the inflated value of its inventory, then crash or set fire to the brand-name wrecks. Then they'd report them as stolen to the insurance company. They skimmed off more than $1 million.

The case received even more play because of the names involved. Auto Cars' vice president was Thomas DeMarco, a flashy millionaire and former dean of Case Western's School of Dentistry. The secretary-treasurer was prominent lawyer Harvey Bruner. And then there was an assortment of guys like John Glover, local director of the United Negro College Fund. Glover didn't work for Stern, but he was one of several clients who, under Stern's direction, allegedly made false theft reports on Auto Cars vehicles.

Dennis Dunagan, then an Auto Cars employee, was also accused of lying about cars being mysteriously driven away. Investigators believed that Dunagan and Stern knew that the cars were too wrecked to even push off a lot.

All were indicted on felony charges, among them DeMarco, Bruner, and Glover; the first two were acquitted for lack of evidence, and Glover pled to a misdemeanor. Charges against Dunagan were dropped. Stern did time.

When Stern got to prison, Liberty Mutual Insurance sued him for allegedly lying about a pair of BMWs he'd claimed were stolen. The case was dismissed, but it was the beginning of a fusillade of suits brought by customers, banks, former business associates, and the county.

Low-Stakes Game

Avi Stern is said to have emigrated from Israel in the mid-'70s. He is reported to have worked as a Hebrew teacher before realizing his true calling: leasing luxury vehicles for Jaguar-Cleveland. Stern is the prototypical car man. Former associates say that he can be charming, intimate, exuberant. He lets you in on a secret, all the while making you feel as if he knows that you deserve a better class of X or a bigger Y. And all for the smart price.

But after the scandal, he changed. Ohio financial institutions, so generous and trusting before, iced him out. And his hands were too dirty for his old buddies, who publicly downplayed their association. Dunagan alone stuck by him.

When Stern got out of jail, he opened up U-Auto Lease on 24800 Chagrin Boulevard and sought a more humble clientele.

In the spring of 1990, Dorothy Winchester, a salty, churchgoing secretary, came looking for a car to lease. An affidavit filed in court says that after requesting a $500 security deposit, Stern showed her a 1984 Buick with smashed-in fenders and expired mismatching license plates. There were bricks piled under the seat to hold it up. The driver's side door wouldn't open from the inside.

Winchester was repelled by the vehicle, but according to her complaint, Stern convinced her to take it for a week while he searched for something more suitable. In the meantime, he had her sign a lease agreement for $176.55 every two weeks.

The agreement didn't pertain to the wreck, he explained. It was for the nicer car that he would deliver soon.

As with many of Stern's clients, this was Winchester's first auto purchase. She admits to being too trusting. Others might say gullible. Either way, she drove the car home that Friday. The following Monday, it wouldn't start. This marked the first in a series of disasters.

Two weeks later, a tire went flat, according to the log she kept. A week after that, the engine overheated. A week and a half later, the brakes and steering went. A few days later, a hose blew. Whenever she took the car in for repairs, Stern told her to pay out of pocket and just deduct the cost from the lease payment, court documents note. For all the lost wages and inconvenience, she could have kept her old car.

"He's a crook!" she says flatly, from the wheelchair she is now confined to after heart surgery. "And he thinks black women are fools."

When Winchester demanded the replacement car that Stern was supposed to find for her, he said that her credit wasn't good enough to justify a lease. The wreck she was driving was actually his brother-in-law's, he told her. He wasn't getting a dime. He was really just doing her a favor.

A month later, the Buick wouldn't start again. Winchester, stranded at the Wholesale Club, was through. She told Stern that his brother-in-law could have his car back. All she wanted was her deposit.

Hollering into the phone, Stern refused, insisting that she had agreed to purchase the car, Winchester says. She believed that he was trying to scare her, so she yelled right back. "You better take your raggedy-ass car back before I tear it up and set it on fire!" she told him. Then she reported him to the Ohio Attorney General's office.

Stern says he doesn't remember Dorothy Winchester, but on January 14, 1991, he responded to the attorney general's inquiry with a letter that -- while concurring with the most salient points in Winchester's complaint -- claimed that she had no right to deduct the cost of the various repairs from her monthly payments.

"We feel that because of the age of the car and the amount of miles she was driving, [those] were normal maintenance costs that were her responsibility," he wrote. "Winchester violated her lease agreement through delinquent payments . . . and we feel she owes us a balance of $842.89."

Winchester couldn't believe it. She says she ended up leaving the car in his driveway. Stern, however, refused to return the deposit, and in 1991 she took him to court. They settled and Stern agreed to return her $500 deposit -- of which, she says, he only paid her $200. Exhausted by the court process, Winchester gave up the fight.

"I just got screwed, that's all," she says.

Chain of Fools

Michelle Haynes could say the same thing. In her 2002 suit, she says that she and her husband, David, gave Stern $750 for a down payment on a '94 Chrysler. The total price was $6,056. It seemed like a lot for an eight-year-old car, but like Pat Shaw, Haynes figured it was worth it, considering all the work that Stern promised to do. It turned out to be a bad decision.

Unlike Shaw, the Hayneses didn't get anything in writing. The couple says that Stern promised to get the wheels aligned, to buy new tires, and to replace the ignition. "I'd never bought a car on my own," Michelle Haynes says. "And to tell you the truth, I loved my little car at first."

Love lasted about a week, until the battery died. Stern hadn't said anything about the car needing a new battery. And whenever Haynes called to ask about the promised repairs, Stern seemed to be out of the office. Worse, more than once he told her to come in on a certain day to meet the mechanic, she says. But when she got there, his secretary said he was out "on the road" and needed to reschedule.

Then the transmission blew. Stern finally gave her the names of two local mechanics and told her to get the work done; his office would subtract the cost of repairs from her weekly payments. But Haynes couldn't afford to pay up front.

Eventually, she says, Stern said that he'd cover the bills. But when she brought the car in, Haynes says, the first mechanic refused her outright, saying that he no longer does business with Stern, because Stern doesn't pay his bills. The second mechanic got on the phone with Stern, and in front the Hayneses, said that he would work on the car only if the bill were prepaid. The couple began to worry.

One thing after another went wrong with the Chrysler. Finally, they say, Stern told Haynes that she could "trade it in" for something else on his lot. He showed her an old red beater that seemed to be in worse shape than what she was driving.

"That piece of junk looked like somebody took a hammer and just beat it all over," says David. The alternative, Stern told them, would be to take a nicer car and pay for the difference in value. But the couple couldn't afford bigger payments.

When the transmission went out again, Haynes got a ride to the lemony-orange trailer that serves as the Driver's Auto Mart office at 7512 Broadway Avenue. His secretary said that Stern wasn't in, but Haynes was suspicious. She circled around the building and surprised Stern in his hidden office -- a small trailer in the back. Until then, she had given him the benefit of the doubt. But now she was ready to sue.

Haynes took Stern to court in May 2002. The judge encouraged them to work out a settlement. In the end, Haynes walked away with $1,000, plus attorney fees. She is not pleased. "I put $3,000 dollars into that car, but the lemon-lawyer told me to settle . . . otherwise it could drag on forever."

Get screwed, then pay

Haynes doesn't realize it, but she's luckier than most. At least she received the money that Stern agreed to pay. Lawyers don't seem to have any trouble negotiating favorable settlements against Driver's Auto Mart and Stern's related businesses. The trouble starts when it's time to collect.

"They just laugh in everyone's face, because everybody's always suing and no one's getting anything!" says Greg Schindler, a former business partner.

Lawyers say that the courts do nothing to assist in small-claims collection after a case is settled. It's up to the plaintiffs to take additional legal steps to get the money. If they don't have the time or the money to do so, they're out of luck.

The first time that consumer lawyer Phillip Althouse went up against Stern was in 1994, on behalf of Sabrina King. Back then, Stern often went by the name "Abraham Shternlicht," and his business was called "U-Auto Lease." It was located on Chagrin Boulevard in Beachwood.

According to court documents, King put $650 dollars down on an '88 Ford Tempo. Stern told her that if she made payments of $228 for four months, the money would go toward the purchase price of $3,800. Four months went by, and Stern refused to transfer the title into her name, telling her to wait.

Car-fraud specialist Ron Frederick says that failing to transfer title is illegal, but not uncommon among those who sell to low-income people. The reason: Dealers have to pay tax every time they make a sale.

Counting on the client to falter on her payment schedule, the dealer stalls for time. He doesn't transfer title, he doesn't make repairs. After receiving the down payment, the dealer's goal is to spend nothing.

When the client misses a payment -- and payments are often scheduled on a biweekly plan -- the dealer quickly repossesses and resells the car to someone new. In this way, the same old car is sold and resold and resold again. The dealer never has to pay any tax and avoids putting money into the car.

On the rare occasion that a buyer holds up her side of the bargain and demands that he deliver, the dealer cuts his losses in court.

In King's case, two months after she signed the purchase agreement, her brakes went out for the second time. In her complaint, she says that she had already spent hundreds of dollars on them and couldn't afford to have them replaced. Tired of bickering, she took Stern to court.

Predictably, the judge asked the two parties to work out a settlement. According to federal-court documents, Stern filed for bankruptcy, and King never received the $650 dollars that he promised to pay.

At the request of Althouse, King's lawyer, Stern also signed an agreement pledging to refrain from violating the Consumer Sales Act. He does not seem to have taken that pledge seriously.

Althouse is one of many attempting to pin down the inner workings of Stern's operation. It would be a far easier task, he says, if he had a bit more help from the agencies that are supposed to provide oversight.

The attorney general's office is partially to blame, he says. Auto fraud is low on its priority list. Cleveland's Department of Consumer Affairs has also been slow to take action. The end result is that a guy like Stern is essentially free to do what he wants for decades on end, regardless of what the law says.

Mama don't play

At least as interesting as the cops-and-robbers aspect is the story of the implosion of Stern's game. There is something roguish about a scam involving luxury vehicles and insurance companies. But it's hard to find the glamour in hiding from your matronly clients in a trailer. Or in telling them you'll "be right back" -- and then disappearing into the night.

That's what happened to another Althouse client, who doesn't want her name published. According to her complaint, filed last month, in September 2002 she traded in her old car for a '97 Taurus, giving Stern an additional $1,000 cash. He said it would take two days to get her the title, but weeks went by. When she called, Stern was always out of the office or too busy to talk, according to her complaint.

She says that when she withheld her biweekly payment in protest, Stern responded by repossessing the Taurus. She panicked: Title or no title, with two kids and a job to get to, she couldn't afford to be carless. The next day she went to the lot and paid up. He accepted her money, but told her that he would hold onto the car until he could get her "proper financing."

Stern told her not to worry; it wouldn't take long. She could hold onto the keys for security, and he offered to let her use a junky '88 Corolla in the meantime. Dubious, she nonetheless agreed. He then asked to borrow her Taurus key so he could "make a copy," she says. He'd be right back.

The woman sat there and waited while the sky grew dark. Stern never returned. Eventually, one of his workers told her to leave, but she refused.

The worker parked a car in the driveway, effectively imprisoning the woman on the lot. She believed that Stern thought she would abandon the car and take a bus home, but instead she drove through the chain-link fence, plowing it down.

The next day she returned the Corolla and asked for her deposit back -- she wanted nothing more to do with Stern. He refused, instead demanding $4,229 -- the full price of the Taurus. She has since filed suit and says that she doesn't want anyone else's family to have to go through what hers has with Stern. So sue me

Althouse's client will have to get in line behind other people who want their money. Stern filed for bankruptcy in January 2002, leaving over 30 creditors out of luck. On that list is Michael Davis, who successfully sued Stern in 2000 after getting burned on a trade-in deal.

According to the complaint filed in Common Pleas Court, Davis gave Stern his Jeep Grand Cherokee as partial payment for a Chevy Tahoe in 1996. But while on vacation in Cancun, Davis and his wife received a call. The highway patrol had pulled over his old Jeep -- only to find it full of cocaine.

Stern said the driver, Michael Bolding, had been "test-driving" the vehicle. What bothered Davis -- besides such niggling questions as why some guy was "test-driving" the truck all the way to Chicago and why he had installed a car-phone antenna to do so -- is that Stern had never transferred the title out of Davis' name. Nor had Stern kept up with the payments. Now Davis owed money on a car he'd thought he no longer owned.

Davis won the suit, and the court ordered Stern to pay $5,500. But Davis isn't holding his breath. "I just said to heck with it. I don't have the money to keep paying lawyers."

When Scene tried to contact Stern, his long-time secretary and sales associate, Sara Israel, said that he had relinquished leadership of Driver's Auto Mart. Dennis Dunagan was now the president, she said. A check with the Bureau of Motor Vehicles confirms this. Although Stern is still listed as an officer, Dunagan currently holds both the presidency and the vice presidency.

When tracked down on his cell phone, Stern expressed irritation with the line of questioning. "I ask you, people tell me you know about my prison record. How? It was expunged!" He hung up soon.

When Scene reached him again a few days later, Stern seemed willing to talk. He said it was disingenuous of his customers to vilify him.

"I give credit to people with no honor," he says. "These people cannot get money from anyone -- not mother, father, sister. No one will trust them, but I try and help. This is joke. I'd advise you get your facts straight." He went on to further attack the credibility of his former clients.

"That one girl who drive through my fence? That is criminal . . . I [will not] try this case in the magazine, but I ask you, why the police not get her? And Pat Shaw, if she is coming after me, she better look out, because she is [dishonest]!"

Before hanging up for the second time, Stern referred Scene to his lawyer, Craig Kvale, who said that he would review the files of the customers in question and call later with a response. He never called back.

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