Chapter 15

Depositions of Auto Dealer Managers Concerning Yo-Yo and Other Sales Techniques (FL)

Raymond G. Ingalsbe received a B.A. from the University of Cincinnati in 1973, and his J.D. from the University of Miami in 1976. Mr. Ingalsbe has been a board certified civil trial lawyer since 1985. He is a member of the Academy of Florida Trial Lawyers and is involved in attempting to draft changes to Floridas Deceptive and Unfair Trade Practices Act as a member of the Consumer Protection Committee of the Florida Bar and the AFTL. Mr. Ingalsbe was the chairman of the Palm Beach County Bar Association Consumer Law Committee for four years. He is a frequent lecturer on sales fraud and deceptive and unfair trade practices, and has received two pro bono awards from the Palm Beach County Bar Association for his work in consumer law, and received an award for his work on the Academy of Florida Trial Lawyers journal. Mr. Ingalsbe is a charter member of the National Association of Consumer Advocates. His office is in Palm Beach Gardens, Florida and his practice is limited to consumer claims. Section 15.1 is the deposition of an F & I (finance and insurance) Director at a franchised automobile dealer regarding his standard operating procedures for preparing the paperwork, financing, additional charges, and disclosures involved in the spot delivery1 sale of an automobile. It mentions the Beacon credit scoring system used by Equifax and finance companies.2 Section 15.2 is the deposition of a general sales manager at a franchised automobile dealer. It discusses closing car sales and determining whether to spot deliver a car to marginal credit risks and financer conditions on approval of financing.

1 See National Consumer Law Center, Automobile Fraud 1.3.4 (2d ed. 2003 and Supp.). 2 See National Consumer Law Center, Fair Credit Reporting (5th ed. 2002 and Supp.).

15.1 Deposition of F & I Director

1 1 2 3 4 5 6 7 8 9 10 Defendant. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 - - DEPOSITION OF [WITNESS] A WITNESS TAKEN ON BEHALF OF THE PLAINTIFF - - DATE: TIME: Wednesday, October 8, 2003 10:03 a.m. to 11:30 a.m. IN THE FIFTEENTH JUDICIAL CIRCUIT COURT IN AND FOR PALM BEACH COUNTY, FLORIDA CASE NO. CA 02-11166 AH

[CONSUMER], Plaintiff, vs. MARGIE, LLC d/b/a TANNER WEST PALM BEACH AUTOMART/KIA,

INDEPENDENT COURT REPORTING, INC. 400 Executive Center Drive Suite 107 West Palm Beach, Florida 33409 (561) 697-9092

2 1 2 3 4 5 6 7 8 9 10 11 12 I N D E X WITNESS: [WITNESS] Direct Examination by Mr. Ingalsbe Signature Letter to Mr. Duffy Errata Sheet (To be forwarded later) PAGE 5 90 91

EXHIBITS:

PAGE

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Plaintiff's Exhibit 1 for identification (Purchase Order) Plaintiff's Exhibit 2 for identification (Memorandum Invoice) Plaintiff's Exhibit 3 for identification (Anti-Theft Guarantee) Plaintiff's Exhibit 4 for identification (Truth-In-Lending Disclosures) Plaintiff's Exhibit 5 for identification (Bailment Agreement) Plaintiff's Exhibit 6 for identification (Agreement to Provide Insurance) Plaintiff's Exhibit 7 for identification (Florida Insurance Affidavit) Plaintiff's Exhibit 8 for identification (Odometer Disclosure Statement)

29

30 35

36 64

68 69

69

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Plaintiff's Exhibit 16 for identification (Certificate of Origin) Plaintiff's Exhibit 17 for identification (Decline Letter) 79 80 Plaintiff's Exhibit 14 for identification (Handwritten Form) Plaintiff's Exhibit 15 for identification (Credit Report) 77 77 Plaintiff's Exhibit 12 for identification (Loan Approval Package) Plaintiff's Exhibit 13 for identification (Application Statement) 72 73 Plaintiff's Exhibit 10 for identification (Transfer of Registration) Plaintiff's Exhibit 11 for identification (Transfer of Tag) 71 71 Plaintiff's Exhibit 9 for identification (Title Reassignment) 70

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4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The deposition of [WITNESS], a witness in the above-entitled and numbered cause, was taken before me, Dinah Herrero, Registered Professional Reporter and Notary Public for the State of Florida at Large, at 400 Executive Center Drive, Suite 107, in the City of West Palm Beach, County of Palm Beach, State of Florida, on Wednesday, the 8th day of October, 2003. APPEARING ON BEHALF OF THE PLAINTIFF: Raymond G. Ingalsbe, Esquire RAYMOND G. INGALSBE, P.A. 4400 PGA Boulevard Suite 800 Palm Beach Gardens, Florida 33410 APPEARING ON BEHALF OF THE DEFENDANT: Lawrence Duffy, Esquire LAW OFFICE OF LAWRENCE DUFFY 7834 Manor Forest Boulevard Boynton Beach, Florida 33436

5 1 2 3 4 5 6 THEREUPON, [WITNESS], having been first duly sworn by me, was examined and testified as follows: DIRECT EXAMINATION BY MR. INGALSBE:

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Q A

State your name and address, please? [Name and address redacted.]

Q Are you employed? A Yes. Q Where? A At AutoMart/Kia. Q What is your position? A Finance Director. Q How long have you been Finance Director at that location? A It will be approximately one year on the 28th of this month. Q And what does a Finance Director do? A He's responsible for supervising the Finance Department, the Business Managers, getting deals approved, and getting them sent out to the bank, and getting them funded.

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6 Q Getting them approved with a third party lending source? A Correct. Q So you actually get on the phone with them, and try to get them to buy deals? A Correct. Q And before you began as Finance Director, at AutoMart/Kia, what did you do? A I worked for the Nappleton Auto Group, as Finance Manager, for a year and a half. Q Where was the Nappleton Auto Group? A Northlake Boulevard. Q Were you there the whole time, a year and a half? A I was there two and a half years. Q What were your other positions at Nappleton? A Sales Manager. Q Gee, I didn't know they had been there that long. A Well, it was Ed Morse, and Ed Morse became Nappleton. Q Were you working for Ed Morse for awhile? A Yes, I was. Q Did Nappleton buy out Ed Morse?

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Correct. Q How long did you work for Nappleton? A They bought it in October. Q What year? A 2002 -- October 2000. Q And in October 2000, what was your position there? A Well, okay. In October of 2000 it was Ed Morse/Kia, but Nappleton was in the process of buying it at the time. So we were like in ninety-day semi -- you know, between the two companies, and as of February of 2001 I was made the Finance Manager. Q The Finance Manager, as opposed to Finance Director? A Right, because I was doing only special finance. Q What is special finance? A Secondary financing. Q Have you reviewed the [Consumer] deal? A Yes, I have. Q Is this a special finance deal? A Yes, it is, definitely. Q Give me the chain of command at West Palm AutoMart/Kia, beginning with you, and going up? A My immediate Supervisor is Chuck Arbor.

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8 He's the Store Manager. Q Chuck? A Charles, A-r-b-o-r. Q And who is above him? A In the store, no one. Q Outside the store? A It would be the LLC, whoever in the corporate offices. Q It would be William Tanner, wouldn't it? MR. DUFFY: Objection; leading. You can answer. THE WITNESS: I don't know enough of the details of who actually owned LLC. BY MR. INGALSBE: Q I didn't ask who owned it. I said he answers to William Tanner, doesn't he? A I wouldn't want to say that a hundred percent, because it's a corporation. I don't deal with that. Q We're not talking about ownership. We're

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talking about who runs the show? A Believe it or not, Chuck Arbor, I answer to him directly. Q I know you do. He answers to who, my question to you is?

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9 A At times I guess he would call Mr. Tanner, but I don't know that for a fact. Q Where, in Memphis? A Yes. Q Mr. Tanner has a house here as well? A Yes, he does. Q He stops by the dealership occasionally? A He does. Q When he does, does he conduct sales meetings? A Yes, I'm aware he has. Q Aren't you ever in attendance? A No. I have nothing to do with sales, as far as the meetings are concerned. Q Does he ever have meetings with you in attendance? A He has meetings with me, as far as Finance Director. Q That's right. How often does that occur? A Probably once every six months. Q What does he ask? A He wants to know what I'm working on. Sometimes he'll ask me what banks we're using at the present time, and things like that. Basically, like what the policies are. For instance, have any banks

10 1 2 3 4 5 6 7 8 9 10 11 12 13 changed their policies, and things like that. Q And aren't you responsible, as Finance Director, to create a report, a finance report? A Yes. Q How often? A I create one once a month. Q And who is that for? A That's for Chuck. Q And what does Chuck do, does he discuss -A He discusses it with the Controller of the store. Q Who is the Controller? A James Elliott.

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Q How long has he been Controller? A About six months now. Q Aren't those reports transmitted to Memphis, for Mr. Tanner and -A Well, I would -Q Let me finish the question; Mr. Tanner and Angie Melson? A I would have to assume so. Q Wait a minute. Let me ask you questions. Why are you assuming? A Because I'm not in the loop when it comes to that. In other words, I report to Chuck and

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11 James, and then they report to the corporate offices. Q How many people are you in charge of? A Two. Q Are there three people in the Finance Department, total? A Correct. Q Has it ever been as many as four? A Not since I've been there. Q When did you begin there, again, the month and the year? A It was October of 2001. Q Who was -A I'm sorry, October 2002. I've been there a year. Q Who was there before you, as Finance Director? A The guy that I succeeded was -- there's been so many guys there. What is his name? I don't recollect right offhand. Q All right. Give me your employment history in the auto business? A Okay. I came to Florida in 1991. I worked for Palm Beach Auto Storage, which was a buy here/pay here. I worked for them about three and a half years.

12 1 2 3 4 5 6 Q What was your position? A Salesman; then I became a Sales Manager. Then they were bought by Don Cook Motors. I worked with them for two months. I worked there for two months, also as a Sales Manager. They were bought by First Choice, which was

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similar to a buy here/pay here, but it was a corporate buy here/pay here, operating out of Orlando, Florida. I worked for them for two and a half years. They had seven stores down here. I ran four of the stores here. Q Doing what? A Sales Manager. Then I left -- they went out of business. Q What year, roughly? A That's what I'm trying to figure. It was probably in '99. Then I applied for a position at the Palm Beach Auto Mall. I worked first as a salesman. Then I became the Mazda Sales Manager. I stayed there until October of 2001. Then I went to Ed Morse Kia, and they were in the process of selling the store at the time, and then I worked for the Nappleton Auto Group, and after that I went to AutoMart/Kia. Q At Nappleton, were you Finance there as

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13 well? A Yes, I was doing financing, yeah. Q Have you only been in the finance end of it for the past three or four years? A Yes, that would be correct. Q Before that it was just in the sales end of it? A Correct. Q You started out in '91. What did you do before that? A I lived in New York, and I ran a basketball program in New York City. Q But you weren't in the auto sales? A No, no. That's all my auto history. Q Now, does West Palm AutoMart/Kia still have something called a Road to the Sale? A Road to the Sale. In other words, it's a program? Q Something called Road to the Sale? MR. DUFFY: If you don't know, you can say that. THE WITNESS: Yeah, I don't know. I really don't know. BY MR. INGALSBE: Q What licenses do you operate under, if any?

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Just Florida Department of Finance. Q And do you have the license, or does the dealership? A No, I don't; the dealership. Q Is it hung on the wall in your office -A Yes, it is. Q Let me finish, I know you know what I'm saying, so she can get it down. A That's fine. Q And what does that license permit you to do? A It gives us the right to finance, to do deals with banks, and do financing. Q Well, to do the financing for customers, isn't it? A Correct. Q What is the F & I procedure, like when you -- when F & I is first introduced to the customer, what is given to you, if anything? A Okay. We're given a deal jacket, a deal folder. In other words, the sales desk brings us similar to what you have there in the jacket. Q What's in it when you get it? A Well, we open it up, spread it down, and go through each of the various papers in it.

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15 Q That's what I'm asking, what are the papers? A There's a credit ap. There's the customer's reference sheet. If there's stipulations, such as proof of income, various verification forms and so forth. A signed, what they call it? Q Buyer's order? A Buyer's order, and a signed credit ap. If there's a trade involved, there will be a trade appraisal sheet in there. They go out to the various cars that they're buying, and they'll put in a description of what the car is, because we have to know to enter this information in the computer. There's always like a worksheet. If we're promising the customers anything, that will be on the sheet. Q Is that the responsibility of the salesman? A Yes. Q How about insurance forms, do you get any of those? A Yes, we do.

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Q From the salesman? A Yes. In other words, the salesman will ask the customer if there's an insurance form, and what we're insuring and so forth, and write down the information.

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q You get it. What do you do with it? A We begin to load it into the computer. Q Does the Sales Manager have anything to do with it, between the salesman and you? A Well, yes, because the salesman is putting the numbers in the computer for us. In other words, they're the ones that are structuring what we're going to sell the car for, so they're structuring a deal for us. Q The Sales Manager? A The Sales Manager, correct. Q So what then do you input into the computer, in addition to what they've already put in there? A Well, if the customer is sitting in front of us, we'll verify the information. In other words, I'll ask them is this your correct address, correct spelling. We like to look at the driver's license, to make sure it's entered correctly. We'll ask the customer, verbally, whether this is the correct address. Q Entered correctly; do you put it in the computer, the driver's license number? A Sometimes we do it. Sometimes we don't, because what will happen is there are screens that

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17 pop up, but there are some deals -- I worked on a lot of different systems, and some systems allow you to do it, and some don't. Q Allow you to do what? A They'll prompt you for that information. Q You mean the driver's license number? A Uh-huh. Q Yes? A Yes. Q But my initial question was in addition to what the Sales Manager has already put into the computer -A Right.

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Q -- related to the buyer -A Correct. Q -- what else do you actually input into that same computer? A No, I just verify the information. Q You don't input anything? A Well, I mean -- no, because a lot of times -- okay. The sales desk has already entered the numbers for us, okay, so they've said what they're charging the customer for the car. Q You don't have to go through that again. My only question to you is do you put anything into

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18 the computer, the Finance Department? A Yes, we do. Q What? A All of the information that the Sales Department has not put in. Let me tell you what information will go in. They'll look at -MR. DUFFY: Just stop. You answered his question. Maybe that's all he cares about. BY MR. INGALSBE: Q You said that the Sales Manager has already put in the numbers that you're going to work with? A Correct. Q Do the Sales Managers put anything else in the system? A No. Q So if you've already got the numbers already in the computer, don't you then have to type in, I should say punch in the buyer's names, addresses, phone numbers? A I said that's what we were doing. Q I misunderstood that. I couldn't understand that. In addition to the customer's description and their address, what else do you put into the computer? A This follows screens. After that it has --

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19 let me show how I would put a name. I sit here, I ask the customer his name, if this is the correct name. I ask if this is your correct address. Then I ask is this your correct job number. Is this your correct home phone number. I go down the system, because the system is prompting me.

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We move to the next screen, the car information screen, and we verify this is the car you're buying. Then we move to the next screen, which is the insurance information. If the customer has insurance information, because usually it's on the sheet, we input it, and put in the salesman's name, and that's all the information that is inputed by the Finance Department. That's all that is asked. Q The Finance Department has no discretion on the APR number, is that correct? A No. Q The Sales Manager has already determined what the APR is going to be on the deal? A Usually APR -- ninety percent of the time APR is just inputed into the computer based on what the Credit Manager himself will say probably the way the deal is going to score. Q What Credit Manager? A That would be myself. In other words,

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they'll come ask me the credit worthiness of the customer, based on the computer scoring. Q Who will ask you? A The Sales Manager. Q What does he have to ask you about? A Because the credit report, I'll look at a credit report. Q Who pulls the credit report? A I do. Q Not the Sales Manager? A No, I do. Q You do. What information have you been given, and by whom, in order for you to get a credit report? A Okay. Sales people will bring me a signed credit ap, which gives me the authority to pull that credit report. Q This is before they introduce the customer to you? A Correct. Q So you pull a credit history, and then what do you do with that? A I communicate with the desk whether or not this deal has merit. In other words, if I pull a credit report, and I get a four fifty Beacon, and the

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21 customer has not paid anybody, the odds are the banks are not going to pick up the deal. Do you follow what I'm saying? Q In that circumstance -A Well -Q Wait a minute. Don't say anything. In the circumstance you just described, a four fifty Beacon, and the guy is not paying anything, what do you then tell the Sales Manager? A I recommend they do not sell that person a car. Q Let's just say that you evaluated it, and it's marginal, but still doable? A Uh-huh. Q What do you tell the Sales Manager? A Then that's their decision to make. I'll just recommend -- a recommendation, but it's his decision. Q Under the circumstances I described, marginable but doable, is that a special finance situation? A Yes, it is. Q What differentiates -- what causes you to put somebody in a special finance situation? A Bank criterias. We have books that we get

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22 banks, that set up their programs. A person with a seven hundred Beacon, we know that is going to buy it; AmSouth or SunTrust will deal. Five fifty to six fifty, that's a big, big gray area. This is the reason you hire a Finance Director or so forth, because now he has to evaluate how this deal is going to be presented, whether or not this deal can be sold or not to a bank. That's the reason why these companies exist. Q What companies? A Americredit, Household Finance, TransSouth, Triad. I mean, it's a million-dollar market. Q I understand. By the way, you don't make -- well, maybe I misunderstood. When it is marginal, but you think it's possible, do you tell the Sales Manager it's your decision whether you want to do it or not? A Correct. from the comes up the bank buy that

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Q Say the Sales Manager says yeah, let's try it, and then you run him through the F & I Department, and get them to sign all the papers, right? A Uh-huh. Q Yes?

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23 A Yes. Q I guess I'll ask you now, I would have asked you this later, but once -- do you deliver the customer then? A Yes. Q You spot them, right? A Correct. Q Put them out in the car. You haven't got the deal bought yet. Do you then shop it to more than one subprime lender? A Yes, we do. Q How many? A We'll start with -- basically, what I'll do is every bank has certain criteria. So a lot of banks now are computer scoring. So if it's a certain score, that particular bank, it doesn't make any sense to shop it there, because you know it's an automatic turn down. Q Even Triad? A A lot of them. Q Even the secondary lenders? A They have cutoffs. Q They do? A Yeah. Q I don't need to ask you that. They have

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24 cutoffs, so you know that, as Finance Director, right? A Yes, I do. Q You know if somebody has a particularly low score, but a doable score, you send them to somebody who is the most willing to buy that -A Usually what I'll do -- first of all, we instruct -- no matter what, a customer is told right up front, before they even go off that lot, that until you're financed, you do not own this car. This is stated in the strongest terms, and the reason for that is you don't want to give people

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false hopes. You don't want to get their hopes up. I don't need a customer out there showing this car all over the place, thinking he owns this car. Q Why deliver it then? A Because the car business is very competitive, and customers -- this is my philosophy, as long as customers understand this is subject to their being approved, that they don't own this car, I don't feel there's any harm being done. Q Well, that's not -A That's my philosophy. Q That may be your philosophy, but why do you spot deliver a car?

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I'll give you a better example. MR. DUFFY: You answered it. BY MR. INGALSBE: Q I don't want to know your philosophy. I want to know why West Palm AutoMart/Kia delivers a car to somebody with questionable credit? A Why do somebody sell a house? Q I asked you a question. MR. DUFFY: He's answering your question. THE WITNESS: I'm giving you an answer. Why would somebody sell a house with marginal credit, anticipating they're going to get it done? The same philosophy. It's a business decision. As long as the customer is aware, until they're financed, they don't own the car, this customer is not going out of there with that expectation. They can get a phone call to bring the car back to the store. As long as that's done, there's no harm. I feel the dealership suffers if this happens. BY MR. INGALSBE: Q That's to take them out of the market, correct? A I wouldn't have to say that. I'll tell you why, because if you use that same philosophy in any A

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26 product, you can sell anything in this country today, and it's competitive, because we live in a competitive market. I'll give you an example; the election yesterday in California, it's the classic example of

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just shopping, okay. We take three hundred people, and shop them all over the State of California. Were all of them qualified? Was there any expectation that each and every one of these people could be Governor of California? No, but they put them out. Q I don't understand the analogy, but my question to you is you spot deliver to take the people out of the market, so they don't go to the competitor, and buy there, correct? A No. Q You don't think that's correct? A No. Q What is the reason? A The customer comes to shop the market at our store. He wants to buy it there. We're hoping we're going to get the customer bought, but we're informing the customer the odds are if you're not bought, you're going to bring the car back. Q You have all the information into the computer; what happens next?

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Okay. One of my Business Managers will bring the deal to my office. Remember, I'm not -Q Let me ask you about what the Business Manager does. You know that, right? A Yes, I do. Q In fact, do you handle occasional -A Yes, I do. I do several of them. Q What is the procedure; you have it in the computer, then what? A Then I print all the forms. Q What are all the forms? Can you describe them? I'll show you what I have. To the best of your ability -A Fine. Contract, a Power Pack, Buyer's Order. Q What's the Power Pack? A That's the State of Florida forms. There's various ones that the State of Florida requires us to have customers sign. Q When you call it a Power Pack, are they all attached to one another? A Yes. Q Do they have perforations? A Yes, they do. Q So you can take them apart?

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28 A Yes, you can. Q When you present the Power Pack to the customer for signature, is it still together, on a long piece of paper? MR. DUFFY: Just answer if you know. THE WITNESS: Yes. If I can demonstrate, I can show you exactly. BY MR. INGALSBE: Q Well, the Power Pack, what Mr. Duffy brought with him, the deal file in this case, the Power Pack has probably been separated, hasn't it, by the time it's through financing? A Yes, eventually it is. Q All right. The Power Pack has, you say, State forms. What are they, Odometer Statements? A Odometer Statements, a Bailment Agreement. Q Bailment Agreement, what else? A A Power of Attorney. If there's a trade involved, the trade information. I'm trying to go over each one; anti-pollution. Q A Pollution Control Statement, or whatever it is? A Pollution Control Statement. I think that's about all that I can remember offhand. Q All right. Is it presented to the customer

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29 in one form? In other words, sign here, sign here, sign here? A It's prsented in a form, and each form is explained to the customer as they sign. Q I understand, but I guess my question to you is does the Finance Manager separate the forms, and then present them to them one at a time? A Every Finance Manager is different. They have different procedures. Q What do you do? A Usually I present the form out in front of the customer, and I explain each one as they're signing it. Q Since we have all this stuff here, this is my own pile here, I'm going to mark this Number 1. Identify that, if you would? A Okay. This is a standard Buyer's Order from AutoMart/Kia. (Thereupon, the document referred to was

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marked Plaintiff's Exhibit Number 1 for identification). BY MR. INGLASBE: Q That is a signed Buyer's Order, so that's gone through the computer? A Yes, it has.

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30 Q Take a look at what I've marked Exhibit Number 2. Tell me what that is? A That's the invoice -- this is exactly what we paid for the car from Kia. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 2 for identification). BY MR. INGALSBE: Q That's the invoice from the distributor, correct? A Correct. Q Now, I point at the top of Exhibit Number 1, where it says -- I'm not sure what it says, selling price? A Nineteen four thirty-one. Q Nineteen four thirty-one eighty-four, right? A Uh-huh. Q Yes? A Yes. Q But the MSRP on Exhibit Number 2 is less than the selling price, isn't it? A Well, that's the suggested price. In other words, that's what the manufacturer is suggesting that we can sell it for.

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31 Q I didn't ask a question. Listen to my question. We'll get to that in a moment. We'll let you blast off, if you feel like it. I don't think he wants you to. A I won't. Q Looking at Exhibit Number 2, the total at the bottom says nineteen thousand one hundred eighty-nine dollars. That is the MSRP, correct? A Correct. Q That number would appear on the window, as a Maroney (Phonetic) sticker, wouldn't it?

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MR. DUFFY: What? BY MR. INGALSBE: Q The MSRP? A Not necessarily. Q Not Exhibit 2, I'm talking about the window sticker? A No, this is not on the window sticker. Q I know. There is a window sticker? A Yes. That would be the price that would probably be on there. Q The MSRP appears on the invoice sticker? A Uh-huh. Q I'm sorry, the window sticker?

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32 A When you say Maroone, I don't call it that. Q Maroney, actually, it's called. My question to you, I ask the question, and you can answer it, why is the price on Exhibit 1, at the top; that is, nineteen four thirty-one, higher than the MSRP that appears at the bottom of Exhibit 2? A That's probably what they decided to sell the car for. Q Are you allowed to exceed MSRP? A Yes. Q How do you know? A This is just a suggested price. This is what the manufacturer is suggesting we sell it for. Q Does AutoMart/Kia exceed the MSRP, routinely? A I don't -- every dealership -- I've seen this many times. I can't tell what policies everybody do. Q Looking at Exhibit 1, I highlighted a four-hundred ninety-nine-dollar figure. What is that? A Basically, it spells it out. It's considered a pack that the dealership has on cars. Every dealership has a pack. Q Isn't it an additional profit to the

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33 dealership? A To be honest with you -Q Of course, you are under oath. A I don't know. I'll tell you why, because I don't see that in my profits, you know, when I'm

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paid. Q This is a noncommissionable amount of money, isn't it? A Yes, I think it is. Q And that four hundred ninety-nine dollars is simply it? A Q Exhibit 1 added to the price of the vehicle, isn't

Yes, it is. Now, the third thing I've highlighted on is a hundred-ninety-five-dollar charge. What is that for? A It's a security etch. Q But it's printed on there, instead of typed in there. Is that mandatory? A No. The customer doesn't have to take that. Q How does the customer know they don't have to take it? A Because when we disclose the contract, we disclose they're buying a hundred-ninety-five-dollar

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34 etch, and if they don't want that, it can be removed. Q How can it be removed from the windows? A I believe the Service Department, because I believe they acid it in, they can acid it out. I don't know. Q Has it happened, to your knowledge -A To my knowledge, I don't know. Q You don't know the answer to the question? MR. DUFFY: If you don't know, don't guess, because it's going to confuse us. BY MR. INGALSBE: Q The hundred-ninety-five-dollar charge, have you ever seen, either you or in your presence, a customer decline the hundred-ninety-five-dollar etch? A No. Q But your testimony is that they are aware they can decline it, is that correct? A Yes. Q Have you ever had occasion to mark or line through -A Yes, I have. Q Wait a minute. MR. DUFFY: Let him finish. BY MR. INGALSBE: Q To line through the

35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hundred-ninety-five-dollar charge? A Yes, I have. Q Why? A We've had several customers who have told us they just don't want it, and we have to take it off. Q Do you line through it on those deals? A Yes, we do. We have no choice. Q Take a look at what I marked Exhibit Number 3. Tell me what that is? A That is the etch contract. Q That's what we've been talking about, isn't it? A Correct. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 3 for identification). BY MR. INGALSBE: Q Is this printed through the computer as well? A Yes, it is. Q Is that part of the package that comes out of the computer routinely, with the customer? A Yes. Q So it's already typed out as part of the

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 package that you present to the customer for signature, is that correct? A Correct. Q And does it say anywhere on Exhibit 3 that it's optional, you don't have to pay it? A I have to look. No. It's similar to what Gap is. It's explained to the customer they don't have to have it. I don't see it on the form. Q Okay. Take a look at Exhibit Number 4. Identify that, if you could? A This is a Retail -MR. DUFFY: Can I see it before you look at it? THE WITNESS: Yeah (Indicating). (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 4 for identification). BY MR. INGALSBE:

19 20 21 22 23 24 25

Q What is it? A A Retail Installment Contract. Q And is that what some people refer to as a State form, or you never heard that? A I never heard that expression. Q But is this a generic Retail Installment Contract form that you use at Kia?

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37 A Yes. Q Do you ever use any forms with the name of a lender typed on it, or I should say that's already preprinted on it? A Not since I've been there, but there are forms that come from lenders. Q Like SunTrust might have its own form? A SunTrust don't, but some banks do; Chrysler Corporation, Ford Motor Credit, I've seen those before. Q Now, we were talking about the procedure in F & I. You get them to sign the Power Pack, right? A Yes. Q And the forms that we've seen here as well? A Correct. Q What, in addition; anything in addition? A If they buy any products, we present that to them; Gap. Q For example, Gap? A Service contracts. Q The extended warranty? A That's a service contract. Q Anything else? A Application for Title. Q That's not part of the Power Pack?

38 1 2 3 4 5 6 7 8 9 10 11 A No. Q All right. What else? A We have a Rescission Agreement. Q That's the Bailment Agreement? A Yes, but we also have a separate one too. It's the same thing. Q Let me ask you this; at least I haven't seen a Rescission Agreement in this case, but I did see a Bailment Agreement. Have you been using the separate Rescission Agreement since you've been working there?

12 13 14 15 16 17 18 19 20 21 22 23 24 25

A We use both. Q Ever since you started there? A Yes. Q All right. If you don't mind, let me look through here. Is there a Rescission Agreement in here? MR. DUFFY: No, there's not. MR. INGALSBE: You know there's not? MR. DUFFY: No, there's not. BY MR. INGALSBE: Q Obviously, this deal happened in 2000. You don't know if they were using separate Rescission Agreements? A I don't know that.

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39 Q Then is the Rescission Agreement used by Kia for the same reason the Bailment Agreement, for vehicle spot delivery? A Yes. Q Why have two? A It was just recommended that there be copies for everybody. Q Who by, do you know? A Oh, when I worked at Nappleton there was a policy I initiated, because at the time I was working at Nappleton, and we had it. Q So at Nappleton you initiated a separate Rescission Agreement? A Correct. Q What was your purpose for doing that? A Because I wanted customers to understand that they do not own this car when they leave there. In other words, it was really stating to the customer that they understood until financing was obtained, you're not the owner of the car. Q All right. Now, my question on Exhibit Number 4, how is this presented to the customer for their signature? Let's start with the front -- I should say the first page of Exhibit 4. Obviously, this is a

40 1 2 3 reduction of the size, because the original is bigger, seventeen inches long, and all that stuff? A Usually what I do, I'll take a contract,

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

and I usually have my pen with me, and I'll tell the customer -Q Don't mark on that. A Are you buying a 2000 Kia Sportage, and I'll say this is the correct car you're buying? I will say you're financing nineteen thousand eighty dollars fourteen cents. Your current interest rate is seventeen point oh seven. This is going to be your finance charge. This is the combination of the two charges here (Indicating). I explain what that is. Then I explain with the down payment, whatever that is, this is the total you pay for the car, if you pay the contract out exactly the way it's written (Indicating). Q You're pointing to the total sales price, the Truth-In-Lending area? A The total boxes. You have sixty payments of blah, blah, blah, beginning -- usually most contracts are forty-five days, so I'll say forty-five days, and this is going to be the date of your first payment. This is your sales taxes. This is what I

41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 explain. Then I go down here, and explain this here is -- whatever the down payment is. If there's a rebate, we'll say this is the rebate. If there's cash down, this is cash down, and I total that out. Then I'll explain this is the tire and battery charge (Indicating). Q What you're doing then is going down all the -A Yes, I do. Q Wait a minute. You're going over all the numbers printed on Exhibit 4, is that correct? A Correct, because it's the contract. Q I understand that. What, if anything, do you go over with them in terms of the -A Well, it depends -Q Wait a minute. MR. DUFFY: You have to let him finish the question. BY MR. INGALSBE: Q What, if anything, do you tell them regarding the preprinted portions that appear at the top of the contract, and appear on the right-hand side, if anything?

25

If anything is printed, like for instance

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42 here, the name -Q That's typed. I'm talking about the preprinted portions. Do you understand what I'm saying? A Okay. I understand. I do not read the entire contract to the customer. Q I didn't ask you that. I'm asking what, if anything, do you go over with the preprinted forms, if anything? A If there's credit life, I go over this. Q If there is, you do. If there isn't, you don't? A No, I don't. Q There's preprinted portions. This happens to be the second page of Exhibit 4, but in the original it's on the front page? A Correct, correct. Q Looking at the preprinted portion, this says; "No Cooling Off Period"? A I go over that. Q Tell me what you go over, everything? A I just explain -Q Take a look at Page 2 of Exhibit 4. Looking at the bottom of Page 2 of Exhibit 4, preprinted portion, what, if anything, do you discuss

43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 with the customer? A Okay. I explain that we did not solicit you off premises. You came here to buy the car, so there's no cooling off period. In other words, no buyer's remorse. If we get the deal financed, then the deal is yours. Q Is that how you explain the no cooling off period? A Basically. I explain that if we get the deal financed, and you sign this contract, then we have the right, you know, to send the contract to the bank, same thing. Q Well, how long does it take, in your experience, to get a deal financed? A A special finance deal? Q Yes.

17 18 19 20 21 22 23 24 25

A It varies. It can be from one to ten days. It varies. Q In those one to ten days, there is a cooling off period, the customer can cancel the deal, can't they? MR. DUFFY: Objection; calls for legal opinion. THE WITNESS: Right.

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44 BY MR. INGALSBE: Q Can they? A I don't know. Q Are you adopting what he just said? A I don't know. I don't know the law in Florida. Q In terms of West Palm AutoMart/Kia, between the time this customer takes delivery and the moment in time that some lender down the road buys it, whether it be a day or ten days later, can the customer return the vehicle, according to your dealership? A Legally, I don't know that. Q I didn't ask you legally. A I don't know. Q Have you ever seen a situation where Kia has allowed a customer, in that one to ten-day period of time, to return a car because it hasn't yet been bought by a lender? A There have been circumstances. Q What are those? A A customer sometimes -- I had a customer just recently. They had a death in the family, and they explained they couldn't pay for the car. I didn't want to shove the deal down the bank's throat.

1 2 3 4 5 6 7 8 9

45 Q So you rescinded the deal before it was bought? A That would have been a bad situation. Q Did you rescind the deal before it was bought? A Yes. Q In addition, you say you do explain the no cooling off period to customers? A Yes.

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q Verbally, to your customers? A Yes. Q Do your employees do that? A Yes, they do. I instruct that very strict. Q We're out of this box, down to the next box. It says; "How This Contract Can Be Changed". What, if anything, do you discuss with the customer about that box? A I just explain that you're going to be initialing this here. This explains -- sometimes I ask the customer to read this, sometimes I don't. Q Don't mark it. In any event, the second box toward the bottom of Exhibit 4, which starts; "How This Contract Can Be Changed", you obtain their initials in that box, correct? A Right.

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46 Q Do you have a statement that you make to them, verbally, about why they are initialing that? A No. Q You just ask them, initial here? A No. I have usually asked them to read that. Q You do? A Uh-huh. Q But you don't go over what it means with them? A Sometimes I might, sometimes I don't. Q Tell me what it means? A Basically, this box here is explaining to the customer; "This contract contains the entire agreement between you and us relating to this contract. Any change to this contract must be in writing, and we must sign it. No oral changes are binding. If any part of this contract is not valid, all other parts stay valid. We may delay or refrain from enforcing any of our rights under this contract without losing them. For example, we may extend the time for making some payments, without extending the time for making others", et cetera, et cetera. Under this contract, for example, we may extend the time for making some payments because,

47 1 2 basically, this is dealing with the bank. Q Well, what do you mean by that? I'm asking

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

you.

You just read that, and I can read it myself. A Right. Q My question to you is what, if anything, do you tell the customer about what that box means? A I explain basically -- because this contract is going to the bank, banks have -sometimes you may call into the bank, and decide that you want to have an extension on your payment, or you want to change, you know, things on your contract, but the bank is the one that makes that decision. We cannot make that decision for them. Q Why do you have a financing license? A Why? Q Yes. A I will assume -MR. DUFFY: Don't assume. You know or you don't know. THE WITNESS: I don't know. BY MR. INGALSBE: Q The dealership has a financing license so it can finance motor vehicles with customers, doesn't it? MR. DUFFY: Objection; calls for a legal

48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 conclusion. THE WIWTNESS: I don't know. BY MR. INGALSBE: Q You don't know that? A No. Q You started out reading the first sentence, which is how this contract can be changed. I'll repeat it. "This contract contains the entire agreement between you and us relating to this contract". That's what it says, doesn't it? Now, if you've got a Bailment Agreement, or a Rescission Agreement, then that's not true, that's not a true statement, is it? MR. DUFFY: Objection; calls for a legal opinion. BY MR. INGALSBE: Q No, it doesn't. I'm asking you. A It calls for a legal opinion. Q You don't know the answer to that question? A No. Q It says -- I'll read the sentence again, and ask you a different question.

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"This contract contains the entire agreement between you and us".

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

49 Us means the dealership, doesn't it? A No, means who the contract is assigned to. Q It's not assigned at the moment in time that the buyer signs it, is it? A I don't know. Q Well, you do know, because you go and try to get them to buy the contract? A You want me to be honest, a lot of our deals are contracts already assigned. I'm going from my own experience, not somebody else's experience. Q Most of the contracts are not assigned at the time the buyer signs it, correct? A That's incorrect. Q What is incorrect? A Because since I've been at AutoMart/Kia, we have different procedures. First of all, you're sitting here buying the car. I'm putting the deal to the bank. I'm on the computer. Seventy-five percent of the cars delivered at AutoMart/Kia now, we know the bank is right there before the customers leave. Q You mean the bank is there, present? A No, computers, computers. I can get on the computer with Household, AmFirst, Triad, and get a deal done during the time you're sitting out there. Q They don't condition --

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

50 A You don't understand. I'm sitting on the computer, netting the deal, and getting my call back right then and there. So by the time these people walk in Finance, their deal is done. Q And out of every hundred deals -A Seventy-five, seventy-five percent, and I'll stand by that. Don't confuse me with the procedures before, okay. It's a different procedure. Q No -A That's why they hired me. Q What you just testified to, it doesn't matter. It's your testimony, under oath, whatever? A I understand. Q Then why did you tell me before that the parameters of getting a deal bought is between one and ten days?

17 18 19 20 21 22 23 24 25

A Because every deal is different. Now, you asked me a generic question, how long would I feel it takes time to get a deal, and I'm saying one to ten days, but from my collected experience of what I can do, is totally a different situation, because first of all, I have a lot of experience with secondary financing. That's all I've done all my life. I work with these banks on a day-by-day basis. I can pick

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51 up a phone, and call the bank when the customer is sitting there, and negotiate. Q I understand. I know you can. A Difference, big difference. Q And based upon your picking up the phone and negotiating, do you do that with every customer that comes in? A I try to do as many as I can. Q Are you sitting next to the Business Manager? A I'm there almost six days a week. Q Are you sitting next to your Business Manager? A They have nothing to do with getting deals bought. Q I know. They have to get the customer's signature on these forms? A Correct. Q Where are you when they're getting the customers' signatures on the form? A Back and forth. I'm moving around. I try to get involved in the deals as much as I can. Q Are you in their office? A Yeah, I'm in their offices a lot. Q How many deals, when they're closing a deal

1 2 3 4 5 6 7 8 9

52 with any particular customer, out of every hundred, how often are you there when they're doing it? A I can say maybe twenty, twenty-five percent of the time. I'm not there that much, but I kind of know -- I kind of supervise -- I do supervise my Business Managers. Q Getting back to that statement; "This contract contains the entire agreement between you and us", and we know that [Consumer]'s deal wasn't

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

bought? A Q A

I don't know. Well, it wasn't. I say -MR. DUFFY: Wait. Move to strike. You're supposed to ask questions, let him answer them. You're not testifying. BY MR. INGALSBE: Q It's a correct statement to say that [Consumer]'s deal wasn't bought, right? A I was not there at the time. Q And every Retail Installment deal, on those twenty-five percent that you say are not bought at the time the customer signs, then what is the word us referring to; the dealership, or a bank that has not bought the deal yet?

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53 A I don't know. Q Now, tell me what else that you explain, if anything, to the customer? At the bottom of the Retail Installment Contract, just below How This Contract Can Be Changed, the next thing down from that says; "Notice To The Buyer". What, if anything, do you and your Business Managers discuss with the customer about that sentence? A Basically, we just ask them do you understand everything we've explained to you? If you do, please sign here. Q And so you don't really verbally go over this stuff at the bottom, do you? A No. Q So you point to where -- do you highlight the lines -A Ninety percent of the time it's highlighted. Q What color? Does it matter? A Various colors. Q Now, at the time the buyer signs, does the dealership sign while the customer is still on the premises?

54 1 2 A Q Sometimes, sometimes they don't. Who has the signatory authority?

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A When it goes to the bank, I do. Q After the bank has approved the deal? A Correct. Q So my question to you is when the buyer is still on the premises, and hasn't yet taken delivery of that vehicle, spot delivery of the vehicle, does anyone sign the Retail Installment Contract, on behalf of the dealership? A In my experience, I do, and I can't speak -- I cannot speak for other people. Q While the customer is still on the premises, you say you sign it? A Yes, I always do. Q Why is that? A I just do it because I've always done that. Since my buy here/pay here days, I've always signed the contracts. Q What does that signify, if anything? A Honestly, I really don't know. I always sign the contracts. Q Did somebody tell you they wanted you to? A I'm explaining this to you, so I sign it. I never used to sign this box, because I didn't have

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55 the right to sign it, but now, as Finance Director, but prior to being Finance Director, I never signed the final box, because usually the Controller or someone else, they are empowered to do that. Q What is the final box? A That's when the contract goes to the bank. The bank won't have a contract unless this box is signed. Q What box? A The box at the bottom. Q What is that box entitled, if you know? A I do know. Q I'm asking? A Either we're giving the bank recourse, or nonrecourse on the loan. Q For the record, I want you to tell me what that box is, and if you want to read it, I want you to read it, what you're talking about. He has it in his hands. MR. DUFFY: You're talking about this box here (Indicating)? THE WITNESS: Which box? MR. DUFFY: The one you said you don't

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sign, the one the seller signs, is that the box? THE WITNESS: I never sign this. I sign

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56 right here, as the Finance Director, allowing the bank to either we're going to have recourse, nonrecourse, or limited recourse (Indicating). BY MR. INGALSBE: Q There are no Recourse Contracts in Florida, are there? MR. DUFFY: That's what it says. THE WITNESS: We have to mark these. BY MR. INGALSBE: Q Please, just listen to my question. A I'm explaining it. Q Can I ask a question without you interrupting? A No problem. Q Have you ever, in your experience -- you're only experienced in Florida in the auto deals, right? A Uh-huh. Q Not in New York, right? A No, no. Q Have you ever seen a Recourse Contract? A No. Q That's right. So when you were telling me that you never sign the bottom -A No, no, let's go back. You misunderstood what I said; prior to being Finance Director. I have

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the authority now to sign the box. not accept that -Q What box? Stop it, please. The record is completely muddled, and I don't want it to be that way. MR. DUFFY: You have to help him, Ray. BY MR. INGALSBE: Q I want you to take a look at Exhibit 4, and you show me which box you sign, and which one you don't, and I want you to point to it. MR. DUFFY: At what point in time? BY MR. INGALSBE: Q When the customer is on the lot? A Okay. Q When the customer is still -A I'll tell --

57 The banks will

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Wait a minute. MR. DUFFY: Let him finish the question. BY MR. INGALSBE: Q When the customer is in the Finance Office, at that moment? A Correct. Q What, if any, box do you sign? A I've always customarily signed this box (Indicating).

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58 Q You're pointing to the one I've highlighted? A Correct. Q That highlighted one says seller signs. Do you see that, it says seller signs. Is that where you sign it? A No, I sign it over here (Indicating). Q Okay. A I never sign over here. I sign over here (Indicating). Q Okay. Just for the record, Exhibit 4, the second page of Exhibit 4, at the bottom, I'm pointing to it, it says; "Seller signs", on the left-hand side. There's a line for, presumably, a signature. Do you agree? A This also says; "Other owner signs --" Q I'm looking at -- please, I'm only asking a question. It says; "Seller signs". You don't sign that? A No. Q It says date. Do you insert a date? A Yes, I do. Q You do, by hand? A Uh-huh.

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Q A Q A Q A Q A Q

59 Yes? Yes, I do. Then it says by? That's where I sign. That's where you sign? Correct, I put my title. Which is what? Finance Director. Directly under that there's another box,

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and that box says; "Seller assigns its interest in this contract to", and this one is blank? A Right. Q Do you ever sign that box? A I always sign that box after I send the contract to the bank. Q After the bank has approved the deal? A Correct. Q After they've bought the deal? A Correct. Q And at the very bottom, that's the assignment box? A No, the assignment box is here (Indicating). Q It's the same box? A This is the box it prints on, right here.

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60 It prints right here (Indicating). Q What prints? A Right here. Q What is printed on there? A In other words, if, for instance, a bank is assigned -Q Please don't go into that. Is the bank's name printed in there? A It would be printed right there (Indicating). Q You're pointing to a line where it says the contract is assigned to, and then the bank is printed there, right? A Correct. Q Then you sign? A Right here (Indicating). Q The very, very bottom line, which says seller, a place to sign, and by, and there's a place to sign, and it says title, there's a place -A Correct. Q So you sign twice; once before the bank -A Only if I close the deal. It's different if someone else closed the deal. They have that discretion there. Q What do you mean, they have what

61 1 2 discretion? please. I'm talking about -- let's go back,

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We're talking about -No, you have two. MR. DUFFY: Listen. He's asking you questions. You're telling him more than he wants to know, and then you confuse him. If he asks you where do you sign, point to the box, stop, okay? THE WITNESS: I got you. BY MR. INGALSBE: Q You have two Finance Managers that work for you? A Yes. Q What discretion, if any, do they have about the signing where it says; "Seller signs", the highlighted portions that are here? Do they ever sign? A In my department, none. They sign right here (Indicating). Q They sign by? A Correct. Wherever they sign -- I mean, each one of them -- I've always seen the signatures there (Indicating). Q Do they always sign? A Yes.

A Q

62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Q Since when, you started there? A Since I've been there. Q Do you instruct them to sign? A Yes. Q Why? A Because they're delivering a car to you. They went over this contract with you. Somebody has to be responsible. Q Responsible for what? A Explaining the contract. Q You mean if their signature doesn't appear on Page 2, then they're not responsible for explaining the contract? A I'm not saying that. I'm saying I feel I sign this here because I just explained things to you, so I want to sign there. Q And the signing signifies that you've explained the contract to the customer? A For me. I mean, this is what I've always done all my life, since I've been in Florida, with the contract. If I sat down and explained something to you, and put my signature on there, I put my

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signature there because I explained it to you. Everybody has their own procedures.

63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q authority A Q A Q A Q A Q A Q Who else, besides you, has signature on bank contracts? The Controller. You said his name before? Yes. Does Mr. Tanner, do you know? I've never seen him sign a contract. I just asked you; do you know? I don't know. Does Angie Melson? I don't know. Now, take a look at what I've marked

Exhibit Number 5. Incidentally, going back, not to Exhibit 4, but let me ask you this question; are you familiar with the Truth-in-Lending Act? A Not all the details. Q Well, you are familiar with the Truth-In-Lending Disclosures in the box on the front page of Exhibit 4? A That I am. Q Federal Truth-In-Lending Disclosures, right? A Yes. Q You knew that was there?

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64 A Yes. Q You knew the Federal Law requires that to be there? A Yes. Q Other than that, do you know anything about the law? A Not the whole law. Q Have you ever heard of Florida's Motor Vehicle Retail Sales Finance Act? A No. Q So the answer to my next question, do you know anything about that act? A No. Q Take a look at Exhibit Number 5, and tell me what that is?

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This is a Bailment Agreement. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 5 for identification). BY MR. INGALSBE: Q Is that part of the Power Pack? A Yes. Q And what, if anything, do you and your Managers say to the customer when they get them to sign Exhibit 5?

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65 A Usually, what I say, I'm not going to speak for them, because I don't know, what I usually explain is that we're spot delivering this car, based on you do not own this car until the bank has approved this loan. In other words, we may call you to bring the car back. Q Do you ever say we're providing the car as a courtesy to you? A No, I don't say that. Q You don't. So they willingly sign that, is that correct? A Yes, they do. Q Do you go over any of the print? A No. I'm going to be honest, I don't go through the whole legalism. I summarize it by explaining to the customers I want you to understand we're spot delivering this car, based on the fact all the information you provided to us is truthful, and a bank will accept the contract, and we get the deal approved. Other than that, you don't own the car. Q Now, since you've been there, you've used a Rescission Agreement in addition to Exhibit 5? A Yes. Q Do you have them sign each one at roughly the same time, because they mean the same thing?

66 1 2 3 4 5 6 7 8 A Correct. Q You do? A Uh-huh. Q What do you do, put them next to one another? A Yes. I do it because I don't want a customer coming back -- I've been down this road myself. I don't want a customer coming back, saying

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

you told me that I owned this car because, you know, you go home, you take this car, I want peple to understand, when they walk out that door it's subject to we obtaining financing for you, because so many things go wrong, a customer mislead on the application. There's so many things go wrong. Q Are there any penalty provisions in the Rescission Agreement or the Bailment Agreement? A Yes, there are. Q What are they? A There's a mileage charge and damage charge. In other words, if you take the car -MR. DUFFY: He knows what that means. BY MR. INGALSBE: Q Do you have a rental charge as well, fifty dollars a day, twenty-five cents a mile? A I believe so, but in all honesty --

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

67 Q You don't remember? A Because I've never had to enforce those. Q Now, do you know when Exhibit 4, I should say any Retail Installment Contract is presented to the buyer, for the buyer's signature, who is the creditor? A Well, in my opinion -- I mean, in my experience, I know because usually I'm netting the deal right then and there, but every situation is different. Q Who is the creditor? MR. DUFFY: I don't understand the question. BY MR. INGALSBE: Q The bank down the road, that hasn't bought it yet, is that the creditor? A That's my understanding. Q Have you ever read the -A No, I have not. Q I'm going to have you read it now. Take a look at the top of Exhibit 4, over here (Indicating). What does that say? A Buyer. Q Buyer and co-buyer, name and address,

68 1 right?

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A Q A Q A Q who?

Uh-huh. Yes? Yes. What does it say right here (Indicating)? Creditor, seller. And then the creditor, seller's name is

A Tanner West Palm Beach AutoMart/Kia. Q Does that surprise you? A Yes, it does, honestly. Q Look at what I've marked Exhibit 6. Tell me what that is. A That's an agreement to provide insurance. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 6 for identification). BY MR. INGALSBE: Q Is that one of the forms that has to be signed at F & I? A Yes, it is. Q Is that part of the Power Pack, by the way? A No. Q Take a look at what I've marked Exhibit Number 7. Tell me what that is.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

69 A That's an affidavit that a customer is stating that they have insurance. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 7 for identification). BY MR. INGALSBE: Q Exhibit 7 happens to be two pages. Is that the back of Exhibit 7? A Yes, it is. Q Take a look at Exhibit Number 8. Even though I've highlighted it, forget the highlighting. What is Exhibit Number 8? A That's an Odometer Statement, stating the miles at the time of sale. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 8 for identification). BY MR. INGALSBE: Q I did highlight this, thinking that maybe I would have an employee that had been there at the time, but has anybody advised you of how thirty-eight hundred thirty-five miles got to be on this vehicle

23 24 25

before she bought it? A Not on this one. Q Take a look at Exhibit Number 9.

Tell me

70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 what that is? A That's a reassignment, reassigning the title. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 9 for identification). BY MR. INGALSBE: Q And this is, again, F & I forms? A Yes, these are standard forms. Q Motor Vehicle Dealer Title Reassignment Supplement. What is being reassigned, if this was a new car? A Oh, I don't know. Q You don't? A No. Q Is this just a form everybody has to sign? A Yes, it's just a form of reassignment of title. It's a standard form that we print out. Q Let me ask you a question; if a title has never been issued on a brand new vehicle, why would you need a Title Reassignment Supplement, if you know? A I don't know. I just don't know. Q Take a look at Exhibit Number 10. Tell me what that is.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

71 A That's when the customer has a tag they're transferring. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 10 for identification). BY MR. INGALSBE: Q Is that an F & I form? A Yes, it is. Q And F & I, for the record, is Finance and Insurance, right? A Correct. Q Take a look at Exhibit 11. What is it? A That's stating that you're going to transfer your tag. (Thereupon, the document referred to was

16 17 18 19 20 21 22 23 24 25

marked Plaintiff's Exhibit Number 11 for identification). BY MR. INGALSBE: Q Is that done in F & I? A I mean, F & I has them sign the form. Q That's what I'm saying. A But it doesn't do the transfer. Q I apologize for the question. I understand. 12, take a look at 12. I think it's a four-page exhibit. Yes.

72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A off of. Take a look at 12, and what is it? It's a worksheet that the salesman works

(Thereupon, the document referred to was marked Plaintiff's Exhibit Number 12 for identification). BY MR. INGALSBE: Q The salesman does? A Well, the customer and the salesman together. Q Right. Is this brought to you, Exhibit 12 brought to you? A Yes. Q As a result of you receiving -- strike that. What, if anything, does F & I do with Exhibit 12? A Basically, you just review it. You want to get a general picture of the customer. This is so when I'm ready to net the deal to the bank, I have some kind of knowledge to go off of. If a person has worked on a job less than six months, I can put in some of the previous information. If they lived at an address less than a certain amount. It's a worksheet.

1 2 3 4 5 6 7 8

Q yours? A Right. It's something we in F & I require so we can work with the dealer. Q Now, when a customer signs a credit ap -let me mark this 13. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 13 for

73 Ordinarily, this is the salesman's job, not

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

identification). BY MR. INGALSBE: Q When a customer -- by the way, identify Exhibit 13. It's a credit application, right? A Uh-huh. Q Yes? A Yes, it is. Q It's a West Palm AutoMart/Kia credit application? A Uh-huh. Q It's one of their forms? A Uh-huh. Q Using this credit ap, how many -- strike that. With the customer's approval, because the customer signs the bottom? A Uh-huh.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

74 Q Correct me if I'm wrong, that allows the dealership to pull her credit, correct? A Yes. Q Does this credit ap, Exhibit 13, allow anybody else to pull the credit? A Yes. We can share the information with any of the entities that we own. Q That wasn't the question. Does Exhibit Number 13 allow any other entity to pull her credit ap? A Yes. Q You've already pulled it? A Yes. Q Why would somebody else have -A The banks -Q Why don't you just transmit -A I'm going to explain -Q Hold on. MR. DUFFY: Answer the question. BY MR. INGALSBE: Q You have the credit ap, it's in front of you. You pulled it. Why don't you transmit what you've pulled to the proposed lending source? A We don't have the procedure to do that. Q You have a fax machine?

75 1 MR. DUFFY: I'm going to object to your

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

question. You're asking a legal question. Ask it again. BY MR. INGALSBE: Q No, no, you can transmit any information by fax machine to a proposed lender, correct, right? MR. DUFFY: Theoretically, or legally? THE WITNESS: Theoretically. It's not set up that way. It's not set up. The banks pull their own credit. They always do. Banks will not rely on our credit. BY MR. INGALSBE: Q My next question to you is if you shop it to four different lending sources, do they each pull the credit? A Yes. Q Do you tell the customer -A Yes, we do. Q -- that the proposed lenders are going to pull the credit? A Yes. Q What do you say? A Your loan is -- we're going to shop your loan to various lenders until somebody approves the loan. This is why -- I'm going to explain this, even

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

76 though I shouldn't have to explain it. I'm going to explain it. This is why CBI, or the credit bureaus had a problem. They lump it as one. If you're buying a car at one time, within a thirty-day period, you're not penalized for the credit being pulled. Q What do you mean, you're not penalized? A In the old days, every time you pulled your credit it was a whole different process. Q It shows up as an inquiry on your credit history, correct; do you know that? A I don't know that. Q So what are you telling me? If you don't know that, how has it changed? A Articles I've read. Q Say again? A Articles I've read. Q What has it changed to? A Well, a lot of people were complaining about the fact their credits were being pulled when they were shopping for a car or house. So the credit bureaus do not penalize you anymore for pulling

23 24 25

multiple credits. Q Take a look at what I've marked as Exhibit Number 14. What is it?

77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 It's a We Owe. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 14 for identification). BY MR. INGALSBE: Q I think I know what it is. Is that something F & I gets them to sign? A Yes. Q And who tells you that nothing is owed, and nothing is promised, does the Sales Manager? A The Sales Manager or the salesman. Q Take a look at what I've marked as Exhibit Number 15? A That's the credit bureau. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 15 for identification). BY MR. INGALSBE: Q That is the credit bureau? A Correct. Q This is [Consumer]'s credit bureau report that was pulled on the date of the sale, 7/22? A Correct. Q I've highlighted, it starts out EFX, Beacon ninety-six. What does that mean? A

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

78 A That's a credit Beacon score. In other words, it's a score that is used by Equifax. Q And what, if anything, do you, as Finance Director -- how do you interpret that, or what do you do with that? A If I saw a score like this, I would recommend the deal. Q And what is it about this that causes you to say that? A Bank criterias. Every bank has policies, and this Beacon score falls within every one of my banks. Q What Beacon score is that? A Five ninety-four, that would fall in every bank I deal with.

16 17 18 19 20 21 22 23 24 25

Q What is the cutoff, as far as you're concerned, five fifty? A No. I would say as low as five and a quarter. Q Five and a quarter, okay. A I never saw this. Let me take a quick glance. This would have been -MR. DUFFY: No, that's okay. There's no question. You answered it.

79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. INGALSBE: Q Take a look at what I marked 16. Can you identify that? A I believe that's an MFO. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 16 for identification). BY MR. INGALSBE: Q A Certificate of Origin, and it originated in Stone Mountain AutoMart/Kia. Is that associated with West Palm Beach AutoMart/Kia? A Yes. Q Now, when a lender rejects a deal, you're trying to get them to buy it, and they just won't buy it, what is the procedure when a deal hasn't been bought by a third party? A If I get one of those faxes, usually what I do is I get back to the phone -Q I'm not going to introduce these, because I didn't want to talk about these. Do you want me to introduce these, to talk about a decline? MR. DUFFY: It's your deposition. THE WITNESS: What I do --

80 1 2 3 4 5 6 7 8 BY MR. INGALSBE: Q Take a look at Exhibit 17, and tell me what it is? A It's a decline from Household Finance. (Thereupon, the document referred to was marked Plaintiff's Exhibit Number 17 for identification). BY MR. INGALSBE:

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q What does that mean? A Okay. The deal was physically netted over to the bank. In other words, the bank was asked to look at this deal. Q How is that done? A I don't know how -Q How is it done today? A By computer. Q And Household then looks at it on their screen or whatever? A Correct. Q Do they telephone first, before they mail you the decline? A No. Q They'll just send the decline? A It will come right through the fax. Q Once it's declined, and you can't get the

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

81 thing bought anywhere -A Stop there. Usually, if I had netted the deal to Household, I would feel there was merit. What I do, when I get a decline, I get back on the phone, and I try to overcome the decline. Q Let me give you the hypothetical. Say you try and try and try, they still say no. What then happens? A Then I shop to another bank. Q Forget that, say all the banks say no. What do you do next? A I inform the Sales Manager I cannot get the deal bought. Q What does the Sales Manager do in turn? A The Sales Manager would make a decision to get the car back. Q Are you and your Finance Managers ever involved in -A No, no. Q Wait a minute. MR. DUFFY: He's going to ask you have you ever been involved in a murder. That's why you should wait. THE WITNESS: I'm sorry. I shouldn't jump the gun.

82 1 BY MR. INGALSBE:

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q customer? A Q contract,

Are you involved in trying to refinance the

Whether we got the deal done or not done? Not done, the deal is not done on this the first contract, right. Now you call the customer back. Can you then try to recontract them, at different terms, that may be more comfortable with a bank? A That doesn't make sense. Q No, no, I didn't ask whether it makes sense. A No, I wouldn't do that. Q You wouldn't do it. To your knowledge, has West Palm AutoMart/Kia ever brought somebody back in to say this first contract was unacceptable, your credit was not approved, here is another Retail Installment Agreement we would like you to sign, with different terms that we think we can get bought? A Okay. First of all, usually what you would do, if you get a condition back from the bank, you call the customer in to resign. There's a difference. Q There you go, not a flat decline? A Right. A flat decline, you want your car

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

83 back. Q On a condition, however, you can present them with a second contract, with different terms, is that correct? A Correct. Q Has that happened? A Yes. Q How often? A That can happen often because, I mean, if you didn't have a deal approved when the person drove out the lot, and the bank conditions the loan, you call the customer back in, and you present the new terms to them. Sometimes the payments might be higher, sometimes it's information you don't know. Whatever the conditions. Q But the terms have changed? A Correct. Q Does that happen what, ten, fifteen times a month? A Yeah, I would say so. Q How often do you have to repo a vehicle,

23 24 25

have the customer return the car because they've been declined? A Say I gave out the information to the Sales

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

84 Manager, usually they'll contact that customer, and say ma'am, we couldn't get the deal done, bring the car back. Q How often does that happen? A In my experience, since I've been at AutoMart/Kia, maybe four, five times a month. Q Four or five times a month? A Uh-huh. Q Yes? A Yes. Q The Power Pack, and the other State forms that you have the customer sign? A Uh-huh. Q Are those held in the deal file, and not processed with the State until a third party buyer buys the deal? A Yes. Q Once a deal -- once a customer either returns the car, or the dealership goes out and repossesses the vehicle, what happens to that vehicle then? A Okay. Usually the vehicle will be restocked in. A lot of times it's discounted, if there's miles on the vehicle. Everyone is a different circumstance.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Q lot?

85 But they're cleaned up, and put back on the

A Usually a decision has to be made, because sometimes the cars come back very rough. Q Okay. Are they cleaned up, and put back out for retail sale? A Yes. Q Let me look at what you brought, and I'm done, as far as I know, unless you have questions for him, go ahead. (Whereupon, a recess was taken from 11:20 - 11:28 a.m.). BY MR. INGALSBE: Q I'm going to present to you -- I guess, for the record, I want to read them off. Mr. Duffy

16 17 18 19 20 21 22 23 24 25

brought the deal file to the deposition with him, and I separated -- I looked through it, and separated out things which I wanted photocopied, which were copied. For the record, I want to identify them as coming from the deal file. The attached Odometer Control Statement, and Vehicle Pollution Control Statement are attached as part of the Power -incidentally, Mr. Witness, what I've just said, those are two forms that are attached in the Power Pack,

86 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aren't they? A Yes. Q The next document that I had copied is Odometer Statement and Bailment Agreement for Vehicle Spot Delivery and, Mr. Witness, those are also part of the Power Pack, aren't they? A Yes. Q Next I had copied a Retail Installment Contract, signed by [Consumer], but nobody signed by the dealer, for the Sportage, with the last six VIN Numbers 660846. I also copied an Installment Contract signed by [Consumer], but not by the dealer, with the last six VIN Numbers 655886. I also copied an Installment Contract signed by [Consumer], and signed by somebody at the dealer, which the last six numbers on the VIN are 655886. I had copied a Request for Confirmation of Insurance; Coverage, also an Application for Certificate of Title With slash Without Registration; also a Buyer's Order for the last six numbers in the VIN 565 -- I'm sorry, 655886, with a handwritten notation in the middle saying cost, seventeen eighty sixty-eight, with a number five oh two circled.

1 2 3 4 5 6 7 8

87 Next I copied a Certificate of Origin for a vehicle with the last six numbers in the VIN as 660846. Next I have copied a West Palm AutoMart/Kia letterhead to Global Asset Recovery, dated September 8, 2000 and, finally, I had copied something called a Deal Recap, where the gross profit, in the lower right-hand corner, is listed as one thousand two

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

hundred eighty-two dollars eighty-eight cents. That's it. I'm done. Do you want to read? MR. DUFFY: He'll read. (Thereupon, at 11:30 a.m. the foregoing deposition was concluded).

88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE STATE OF FLORIDA COUNTY OF PALM BEACH ) )

I, the undersigned authority, certify that [WITNESS] personally appeared before me and was duly sworn. Witness my hand and official seal this day of October, 2003.

DINAH J. HERRERO, Notary Public, State of Florida. My Commission expires.

89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE STATE OF FLORIDA COUNTY OF PALM BEACH ) )

I, Dinah Herrero, Registered Professional Reporter, certify that I was authorized to and did stenographically report the deposition of [WITNESS]; that a review of the transcript was requested; and that the transcript is a true and complete record of my stenographic notes. I further certify that I am not a relative, employee, attorney or counsel of any of the parties, nor am I a relative or employee of any of the parties' attorney or counsel connected with the action, nor am I financially interested in the action. Dated this day of October, 2003.

DINAH J. HERRERO, R.P.R.

90 1 2 3 October 13, 2003 4 In Re: 5 Deposition of [WITNESS] 6 Dear Mr. Duffy: 7 8 9 Since counsel have agreed that you may have the witness read and sign your copy of the deposition, for your convenience, enclosed herewith you will find an Errata Sheet for [Witness]'s use in [CONSUMER] VS. MARGIE, LLC Lawrence Duffy, Esq. Law Office of Lawrence Duffy 7834 Manor Forest Boulevard Boynton Beach, Florida 33436

entering any changes to the deposition. 10 11 12 13 14 15 16 17 Thank you for your prompt attention. 18 19 20 21 22 23 24 25 Cordially yours, INDEPENDENT COURT REPORTING, INC. DINAH HERRERO, R.P.R. CC: Raymond G. Ingalsbe, Esq. We find that the above procedure facilitates handling of signature matters, and puts the necessary documents directly into the hands of counsel. Please execute within 20 days or prior to trial date of this matter. Please forward a copy of the executed document directly to all counsel involved in this matter for placement in the rear of the transcript. If no changes are to be noted, please indicate that on the Errata Sheet so counsel are aware that no changes were made.

91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ERRATA SHEET IN RE: [CONSUMER] VS. MARGIE, LLC DO NOT WRITE ON TRANSCRIPT -- ENTER CHANGES HERE: Page No. Line No. Change Reason / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /

21 22 23 24

Under penalties of perjury, I declare that I have read my deposition, and that it is true and correct, subject to any changes in form or substance entered above. DATE DJH [WITNESS]

25

15.2 Deposition of Sales Manager

1 IN THE FIFTEENTH JUDICIAL CIRCUIT COURT IN AND FOR PALM BEACH COUNTY, FLORIDA 2 CASE NO. CL 99-8628 AO 3 [CONSUMER 1] and [CONSUMER 2], 4 Plaintiffs, 5 vs. 6 N.S.S. ACQUISITION CORP. 7 d/b/a Bev Smith Toyota, 8 Defendant. ________________________/ 9 10 - - DEPOSITION OF THE WITNESS, 11 [WITNESS], TAKEN BY THE PLAINTIFFS. 12 - - 13 400 Executive Center Drive Suite 206 14 West Palm Beach, Florida Monday, October 1, 2001 15 10:35 a.m. - 11:50 a.m. Before Cindy C. Bender, R.P.R. 16 Notary Public, State of Florida APPEARANCES: 17 For the Plaintiffs: 18 RAYMOND G. INGALSBE, P.A. 19 4400 PGA Boulevard, Suite 800 Palm Beach Gardens, Florida 33410 20 By: RAYMOND G. INGALSBE, ESQUIRE 21 For the Defendant: 22 LAW OFFICE OF BOHDAN NESWIACHENY 540 Northeast Fourth Street 23 Fort Lauderdale, Florida 33301 By: JOHN VIGGIANI, ESQUIRE 24 ALSO PRESENT: 25 Erik Pratt 1

2 1 2 WITNESS: 3 [WITNESS] 4 (by Mr. Ingalsbe)..........3 5 6 7 8 9 10 EXHIBITS: Identified 11 12 13 14 15 16 17 18 19 20 21 Plaintiffs' Plaintiffs' Plaintiffs' Plaintiffs' Plaintiffs' Plaintiffs' Plaintiffs' Plaintiffs' No. No. No. No. No. No. No. No. 1......................56 2......................58 3......................63 4......................63 5......................65 6......................66 7......................66 8......................67 68 68 68 68 68 68 68 68 Marked I N D E X DIRECT CROSS REDIRECT RECROSS

CERTIFIED QUESTIONS: 22 23 (None.) 24 25

Page

Line

3 1 2 3 4 5 6 7 8 9 10 11 12 Whereupon, [WITNESS], called as a Witness by the Plaintiffs, and being by the undersigned Notary Public first duly sworn, testified as follows: DIRECT EXAMINATION Q. (BY MR. INGALSBE) Tell us your name and address. A. Q. A. [Name and address redacted.] How long have you lived there? 16 years.

13 Q. Do you own it? 14 A. Yes. 15 Q. How old are you? 16 A. 47. 17 Q. What's the extent of your education, the 18 highest grade you achieved? 19 A. High school. 20 Q. You graduated from high school? 21 A. Uh-huh. 22 Q. Yes? 23 A. Yes. 24 Q. What high school? 25 A. Nashua, N-A-S-H-U-A. 4 1 Q. New Hampshire? 2 A. Yes. 3 Q. Are you employed? 4 A. Yes. 5 Q. How are you employed? 6 A. General sales manager of Bev Smith Toyota. 7 Q. Do you know the corporate name of that entity? 8 A. N.S.S. Acquisitions Corp. 9 Q. How do you know that? 10 A. Wow. I was told that. 11 Q. You've been there so long you just know that? 12 A. Yeah. 13 Q. Is that on the top of your check, by the way, 14 or is it just called Bev Smith Toyota on your check? 15 A. I don't know that. I never really paid any 16 attention to it. 17 Q. And you're GSM, general sales manager? 18 A. Yes. 19 Q. And how long have you been GSM? 20 A. Four years this time. 21 Q. So, you've been GSM since 1997? 22 A. August 20th, 1997. 23 Q. And before that what were you? 24 A. I was the general manager at John Jochem 25 Chevrolet in Stuart, Florida for one year. 5 1 Q. Before that what were you? 2 A. General sales manager at Bev Smith Toyota. I 3 left for one year. 4 Q. I understand. I figured that out. 5 How long were you the GSM the first time at 6 Bev Smith Toyota? Roughly, I'm not going to nail you.

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. One year. Q. By the way, where's Bev Smith Toyota? A. 3350 South U.S. One, Fort Pierce, Florida, 34982. Q. Before your first tenure as GSM at Bev Smith Ford, what did you do? When you left the job, you left some position. A. Well, I was at Toyota, but in a different capacity. Q. What capacity? A. Finance manager. Q. At the time that you were finance manager, what -- roughly what year are we talking? A. I started there in 1989 -Q. In what -A. -- originally. Q. In what position? A. Used car sales manager. Q. Was it located at the same location? 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q. A. Q. years? A. Q. A. manager. Q.

Same location, different building. And how long were you used car sales manager? About two and a half years. Were you promoted at the end of two and a half Yes, uh-huh. To what position? Finance manager, then to general sales

I know. Was finance manager considered a promotion from used car sales manager? A. Yes. Q. Why? A. Paid more. Q. Makes sense. Was there a distinction in the finance office between a head finance manager and a regular finance manager? A. At the time there was only one. That was myself. Q. What kind of schooling did you take in order to become a finance manager, if any? A. Took some classes from Southeast Toyota, from Jim Raine and Associates. Q. And that's all? 7

A.

That's it.

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q. A. Q. A. is.

Didn't go to any other financing schools? No. You ever hear of Half-a-Car? I've heard of Half-a-Car. Did you ever attend it? No. It's a leasing program is what Half-a-Car

Q. Yeah. Have you attended leasing programs, by the way? A. Just with Southeast Toyota. Q. Give me the benefit of your employment in the auto sales and finance industry beginning the first year you set foot on a dealer's lot. A. Say that again. Q. Give the -- when's the first time you operated in the auto sales or finance industry? A. Back in 1977. Q. Where was that? A. Macmulkin Chevrolet in Nashua, New Hampshire. Q. What did you do there? A. Salesman. Q. How long? A. Four years, five years. Q. At the end of four or five years, what did you 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

do? A. Came to Florida and worked as a vending manager for a vending company. Q. For how long? A. About a year. Q. And then what did you do? A. Went to work at Steve Barnett Pontiac Cadillac. Q. Where was that located? A. Fort Pierce, Florida. Q. Roughly what year was that? A. '85, '84 or '85. Q. And what was your position there? A. Salesman. Q. And how long were you a salesman there? A. About four years. Q. At the end of four years, where did you go? A. National Auto Wholesalers in Fort Pierce. They're out of business now. Q. What did they do? A. Sold used cars. It was a used car dealership. Q. Was it a buy-here/pay-here lot? A. No. It was a subsidiary of Steve Barnett's.

24 He owned it. 25 Q. In your current position as GSM, what are your 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 duties? A. Supervise the finance manager, used car manager, used car, new car, detail department, sales people, I'm in charge of inventory, inventory control, wholesaling, retailing. Q. It sounds like you're the boss on premises. Would that be a fair statement? A. Yes, sir. Q. Do you also get involved in parts and service? A. No. Q. Who does? A. The general manager. Q. Is there a general manager on premises? A. He's there sometimes. He runs both stores. He switches from one store to the other. Q. What's the other store? A. Bev Smith Ford. Q. And the GM? A. Frank Gonzalez. Q. Give me the chain of command at your dealership. Who do you answer to? A. Frank Gonzalez. Q. Who does Frank answer to? A. Mr. Smith. Q. Nick Smith? 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 A. Nick Smith, yes. Q. Do you either call or otherwise hold management meetings? A. Yes. Q. That is, different from the sales meetings that are -A. Right. Q. When are the management meetings held? A. Tenth of each month, approximately the tenth of each month. Q. Where is it held at? A. The Toyota store. Q. Who is in attendance? A. Mr. Smith, Mr. Gonzalez, myself, Ken Rankey, Joe Dodson, Erik Pratt. Q. Is that Erik (indicating)? MR. PRATT: Yes. THE WITNESS: Liz Ivy.

19 Q. (BY MR. INGALSBE) Liz Ivy? 20 A. Lois Kane. 21 Q. What is her position? 22 A. She's the comptroller. 23 Q. Is she the one that signs the retail 24 installment contracts? 25 A. I believe Mr. Gonzalez signs them now.

I'm 11

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not sure of that. MR. INGALSBE: Off the record. (An off-the-record discussion was held.) Q. (BY MR. INGALSBE) Does Nick Smith come by the store on occasion? A. Yes, sir. Q. Well, he goes to the management meetings, doesn't he? A. Yes, sir. Q. At management meetings, do you discuss the financial statements from the preceding month? A. Yes, sir. Q. Do you make projections on how you're going to do for the ensuing -- the next month, as far as number of sales, et cetera? A. No, sir. Q. Nobody asks for a projection of sales and deals? A. We do that at the beginning of the month, not in the managers' meeting. Q. Oh. Is there another type of meeting where you do those projections? A. Not really. Following the meeting, myself and Mr. Gonzalez sit down and figure out what we want to do, yes. 12

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Q. Does he give you goals they want you to achieve? A. Well, I wouldn't call them goals. We forecast what we think we're going to do. Q. Do you try to forecast something in excess of what you did the similar month last year? A. Depending on what month it is. Q. Well -A. Depending on the circumstances during that month. Q. But you try to sell more, don't you? A. Try to exceed every month, yes. Q. In that regard, does Southeast Toyota sell you

14 15 16 17 18 19 20 21 22 23 24 25

more cars so you have to raise your production? A. No, sir. We work on a turn-and-earn basis. Q. A turn and earn? A. The more we sell, the more we earn. Q. How big is your used car lot? How many units at any given day? A. Anywhere between 100 and 125. Q. Does your store have any written, typed, or printed sales closing techniques for the sales people and the F and I people? A. No. Q. Are those things discussed at meetings? 13

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A. Are closing techniques discussed? Q. Sure, how to close a deal. A. Certainly. Q. How often are there sales meetings held? A. Every day. Q. What time of day? A. 8:30 and one. Q. Are you in attendance? A. Every one of them. Q. And the one at 8:30 is for those guys that come on early and the one at 1:00 is for the guys that come on late? A. Yes. Q. I say guys, but are there any female sales people? A. Right now? Q. Yeah. A. Just one, yeah. MR. PRATT: Just one, right. THE WITNESS: Just one. I'm sorry. MR. INGALSBE: It's all right. I don't care. Q. (BY MR. INGALSBE) How many -- the deals that took place in this case took place in November of '97 and November of '98. Did the store operate any differently during that year period of time than it does 14

1 today that you recall? 2 A. When you say differently, how do you mean? 3 Q. I don't mean anything. I'm just questioning 4 whether the store operates the same now, three years or 5 four years later, than it did then -- as it did then? 6 A. I'm sure it operates the same way. 7 Q. Same chain of command? 8 A. At the time, yes.

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. Well, not necessarily the names, but the positions. A. Yes. Q. Now that you raise the issue, do you have the same finance manager today as you did then? A. As I did when? Q. November of '97 was the first deal in this case. A. November of '97, gentleman by the name of Jerry Bobbard (phonetic). Q. Is he still employed? A. No. Q. In any capacity? A. No. Q. Did Jerry do the finance and insurance aspect of these deals, if you know? A. I don't know. 15

1 Q. All right. In November of '88, which is the 2 [Consumer 1] deal, who was the finance manager, if you recall? 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Erik Pratt. Q. What's Erik Pratt's position today? A. Lead F and I guy, lead finance and insurance manager. Q. How many finance and insurance managers are there? A. Right now, three. Q. Does that include him? A. Yes. Q. Why are there three? A. We're very busy. Q. Besides that. I mean, do they come on at different times? A. Well, they work different shifts, not shifts, different schedules. That way they have some time off. Q. Okay. Typically -- by the way, are you selling and leasing as many new and used cars today as four years ago? MR. VIGGIANI: Objection, relevance. THE WITNESS: Answer the question? MR. VIGGIANI: Yes. THE WITNESS: More. Q. (BY MR. INGALSBE) Significantly more? 16 1 2 MR. VIGGIANI: Same objection. THE WITNESS: Answer the question?

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

MR. VIGGIANI: (Nods head.) THE WITNESS: Yes. Q. (BY MR. INGALSBE) How many more? MR. VIGGIANI: Same objection. THE WITNESS: Probably ten percent, guessing. Q. (BY MR. INGALSBE) So, how many new and used deals are there per month, average? A. Average? MR. VIGGIANI: Object to the form. THE WITNESS: About 220. Q. (BY MR. INGALSBE) And of those 220 deals, how many, in your estimation, are dealer-arranged finance deals? MR. VIGGIANI: Object, form. THE WITNESS: Wow. Strictly speculation, 75 percent. Speculation on my part, I don't know that. Q. (BY MR. INGALSBE) Well, let's just hypothetically say it's 75 percent, regardless of whether it actually is or not, just to use a number to work with. A. Sure. Q. What would the other 25 percent be? 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

A. Cash. Q. All of it? A. Lease -Q. Are there any -A. I put lease and finance in the same category. Q. Okay. A. So, if they're not leased or financed, they're cash. Q. Are there ever -- of the 75 percent that you mentioned, again, we're not sticking with that necessarily, are there any finance deals where the buyer goes through their own lending source? A. Certainly. I count those as cash. Q. Okay, got you. Because that's what they bring you, isn't it? A. Exactly. Q. Of the dealer-arranged finance deals, regardless of percentage of them, how many of them are callbacks on a monthly basis? MR. VIGGIANI: Object, form. Q. (BY MR. INGALSBE) Callbacks, refinance, recontracts. A. Recontracts? Q. Right, recontracts.

25

A.

It would strictly be a guess on my part. 18

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Q. Well, you're the boss. A. Ten percent, 15 percent. Q. All right. And of those recontracts, how -who is responsible for contacting the customer to get them back to the store? MR. VIGGIANI: Object, form. THE WITNESS: The sales person. Q. (BY MR. INGALSBE) The salesman? A. (Nods head.) Q. Is that at your direction? A. Not necessarily my direction, just been the practice. Q. What, if anything, is the salesman supposed to tell the customer -MR. VIGGIANI: Object, form. Q. (BY MR. INGALSBE) -- to get them back to the store? THE WITNESS: Answer the question? Q. (BY MR. INGALSBE) Yes. He's objecting to the form. If he tells you not to answer, then you don't. A. Okay. Can you repeat the question, please? Q. All right. What, if anything -- well, obviously they do. What are the salesmen supposed to tell the customer to get them back to the store? 19

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A. Well, depending on what the circumstances are, it's a difficult question to answer. Q. What are the different circumstances of a recontract? A. Well, unable to get financed is one. Q. Isn't that the primary reason? A. Probably so. Q. All right. Let's take that scenario. What, if anything, is the salesman supposed to tell the customer? A. Supposed to tell the customer we weren't able to obtain financing with the source, to come in to review the paperwork and go over the necessary documents. Q. And when you say -- when the salesman says you were unable to obtain financing, does the salesman at that time know why financing was not approved? A. Usually not. Q. You would know, though, wouldn't you?

20 A. Not all the time. 21 Q. Would Mr. Pratt? 22 A. Yes. 23 Q. And one of the reasons that financing wouldn't 24 be approved is that the bank requires more of a down 25 stroke, right? 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. VIGGIANI: Object, form. THE WITNESS: Could be numerous reasons. Q. (BY MR. INGALSBE) Well, tell me some of the reasons you're aware of. A. Quality of credit, term of contract, balance to finance, numerous reasons, unable to verify jobs. It goes on and on and on. Q. Okay. Now, once the customer's back in the store, who does that customer deal with? A. Well, the finance manager, whoever happens to be there at the time. Q. It wouldn't necessarily be Mr. Pratt because he's the boss? A. It would not necessarily be Mr. Pratt, no. Q. Do you get involved in the recontracting? A. No, sir. Q. Do you get involved in the original contracting? A. The actual bank contract? Q. The first deal. A. The bank contract? Q. Well, no, not necessarily. Let me go back. Once the salesman meets and greets the customer, takes them for a test drive and they land them on a new or used unit that the customer's interested in, 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 what is initially written up, a worksheet or buyer's order? A. Worksheet. Q. And is the worksheet -- what is the worksheet considered to be by you, an offer by the buyer? A. Just exactly what it is, a worksheet. We start our numbers on it. Q. When the numbers are agreed to by the customer, what is supposed to take place then? A. The sales person puts together his deal jacket, which consists of a buyer's order, credit ap if there's financing, buyer's guide if it's a used car, insurance information, copy of driver's license, copy of an insurance card, registration for the trade if there

15 is one, and title if there is one. That's it. 16 Q. But before then, don't the salesmen -- don't 17 the salesmen require a manager's signature on the deal? 18 A. Absolutely. 19 Q. Has to be approved, doesn't it? 20 A. That's what he brings to the desk. 21 Q. What, brings the worksheet to the desk? 22 A. The whole deal. 23 Q. This is after it's completed, all those things 24 you just mentioned? 25 A. Uh-huh. 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Yes? A. Yes. Then I'll sign off. Q. What if you don't? A. If I don't sign? Q. If you say there's not enough profit or whatever the reasons are, what would happen next? A. You asked me what happened after the customer agreed to the price. Q. Well, okay. Is the customer presented a price -A. Yes. Q. -- to agree to? A. On the worksheet. Q. Is the customer ever asked, well, what will you buy it for? A. Certainly. Q. Okay. In that case, when they're not necessarily presented a price, it would be the customer presenting a price to you? A. No. We put the asking price on the worksheet. Q. If the customer says, no, I don't agree; I will buy it for X dollars -A. Yes, sir. Q. -- in that instance, is that number put on the worksheet? 23 1 A. Yes. 2 Q. And then is it brought to you to approve or 3 disapprove? 4 A. Yes, sir. 5 Q. Yes. And has there been a situation where 6 whatever the customer wanted to buy it for just didn't 7 give you enough profit margin so you reject it? 8 A. Absolutely.

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. What happens then? A. Customer leaves without buying a car. Q. Don't you send it back to the sales desk to try to bump the customer a bit, explain why? A. Sure, absolutely. Q. Do you have a TO system? A. Yes, sir. Q. What's a TO system? A. The TO system is, very simply put, if the salesman can't close, he gets one of the team leaders to talk to the customer to see if they can close them. Q. What are the team leaders, just other salesmen? A. No, they're lower-level management. Q. What do you call them? A. Team leaders. Q. Oh, okay. What do they -- what do they do 24

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when they're not being a TO closer? A. Well, they do a lot of things. They're in charge of their team, which is about 12 people apiece. Their responsibilities include, but are not limited to, follow-up; they're responsible for their team's attendance, appearance; they're responsible for making sure the salesmen do what they're supposed to do. Q. Do they also sell? A. No. Q. How do they get paid? A. They get paid an override on their team. Q. Is that part of the gross that their team has generated? A. Yes, sir. Q. So, your financial -- month-end financial statement, is it broken up into teams? A. The financial statement? No. Q. What kind of documents are created as to notify the team leader that he has X dollars coming to him? MR. VIGGIANI: Object, form. Q. (BY MR. INGALSBE) What's the percentage of, whatever the team generated? A. He gets -- there's a form that shows how much the team generated. He gets a percentage of that. 25

1 Q. 2 basis? 3 A.

All the salesmen are paid on a commission Yes.

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. What's the commission percentage? A. Well, it starts off at 25 percent and escalates to 30 percent, depending on the gross. Q. And you're GSM. Do you have sales managers? A. Yes. Q. What are the sales -- how are the sales managers paid? A. Commission. MR. VIGGIANI: Object, form. Q. (BY MR. INGALSBE) Are they a percentage of gross? A. Yes, sir. Q. And how do you get paid? A. Commission. Q. Percentage of gross? A. Yes, sir. Q. Do the sales managers get paid on front and back-end profit? A. Sales managers? Q. Yes. A. Yes. Q. You do, as well? 26

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A. Yes. When you say back-end profit, what do you mean by that? Q. Finance and insurance profit. A. Yes. Q. Now, is your store, perhaps like all stores, isn't your objective to deliver a unit the same day the customer comes on the lot? A. Absolutely. Q. Why? A. Why? Q. Yeah. A. So, we make our living. Q. I understand. But what if a customer wants to buy the car, he'll even pay, sign the papers, but he doesn't want to take the car today, does that make a difference? A. We've done that. Q. Is one of the objectives to put the person -put the consumer in the car, put them over the curb, to take them out of the market so they don't shop? A. Absolutely. Q. Listen, you can just say yes. I'm proposing these things. You can say either yes or no. Do you spot deliver? And I define spot deliver as delivering a vehicle without first getting

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 finance approval. A. Yes. Q. Likewise, lease approval if it's a lease deal? A. Yes. Q. Have you ever heard of the term yo-yo? A. No, sir. Q. Do you use a rescission agreement? A. Yes, sir. Q. Do you have different forms for the rescission agreement? A. Yes, sir. Q. Why? A. So that way the customer fully understands that we do have a rescission agreement. Q. Okay. Do they have to sign more than one? A. Yes, sir. Q. We'll get to that in a moment. The one I think you're talking about is right on the buyer's order, isn't it? A. Yes, sir. Q. And is there another, separate form? A. I don't know that. I believe there is one on the bank contract. Q. All right. And the TO system is used to deliver a vehicle the same day to the customer on the 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 lot, correct? A. TO system is used to close deals. Q. Close deals the same day? A. Preferably, yes. Q. You wouldn't turn them over if you didn't try to sell the same day, would you? A. Absolutely. Q. You would or you wouldn't? A. We wouldn't. Q. Okay. Incidentally, one of the rules -- one of your rules is that the salesman is not to -- strike that. Is a salesman, when they have a customer that is resistant, it is your rule that there must be a TO before the customer leaves, right? A. Absolutely. Q. Are you ever a closer in those situations? A. Yes, sir. Q. Do you do it often? A. Not as often as I used to, but, yes.

21 Q. But you've been doing it a long time, right? 22 A. Yes, sir. 23 Q. Who reviews it? That is, from the first -24 from the point in time where the dealership, your store, 25 runs somebody's credit history, who first reviews it? 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Sales manager. Q. All right. And what does the sales manager review it for? A. To see if he's got somebody who can buy a car. Q. And what are the elements that the sales manager would look at to make the determination? A. Oh, numerous things. Q. Well, there's a beacon score? A. Credit worthiness, beacon score, down payment, trade value, advance, debt to income. I mean, there's a lot of variables you're looking at when you're looking at it. Q. What do you -- is that what you use to evaluate a customer's credit worthiness? A. Me personally? Q. Yeah. A. Yes, sir. Q. In -- just to quantify it, in every hundred deals that you've looked at over the years, not necessarily deals, but the credit worthiness of a customer, are you generally right when you spot a vehicle? In other words, I know this guy will be approved; therefore, we're going to spot him. MR. VIGGIANI: Object, form. THE WITNESS: Well, the easy ones, certainly. 30 1 If you walk in and have an 800 beacon, you're 2 putting $10,000 down on a new Camry, financing 3 $10,000, that's common sense the bank's going to 4 buy that deal. 5 Q. (BY MR. INGALSBE) Oh, I understand. But 6 obviously not all deals are like that. In fact, very 7 few are like that, I imagine. 8 A. Exactly. 9 Q. Out of every hundred deals that you determine 10 are qualified to spot, how often are you wrong? 11 A. Guessing, ten percent. 12 Q. Really. 13 Who makes the decision to spot? 14 A. Ultimately I would if someone said not to. 15 Q. Who makes the initial decision?

16 A. The sales manager. 17 Q. And do you review the sales manager's decision 18 to spot? 19 A. Only if asked to. 20 Q. And who would ask you? 21 A. Mr. Pratt. 22 Q. Okay. And how often are you asked to? 23 A. Not very often. 24 Q. So, it's not F and I's decision to spot or not 25 to spot, correct? 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Ultimately it is. If he feels that it's not a good deal, he will bring it to my attention before I make the decision to spot it. Q. Mr. Pratt will? A. Yes, or the other F and I managers. Q. In that circumstance, Mr. Pratt is the first line; that is, they're supposed to go to him first before they go to you? A. Yes. Q. And do they go to you when he's not available? Is that the deal? A. No. They go to the other F and I managers. The only one that comes to me is the F and I manager. Q. Well, that's what I was talking about. Sales managers, they don't have any authority to spot, do they? A. Not at all. Q. Does F and I have any authority to spot? A. Certainly. They spot anybody they think they can get approved. Q. But is there -- without mentioning their names, I don't care what the names are now, who is your -- an F and I or business manager right now employed at your store with the least experience? A. With the least experience? 32 1 Q. Yeah. 2 A. I have one brand-new one, just promoted. 3 Q. Is it a he or she? 4 A. It's a he. 5 Q. Does he have the authority to spot? 6 A. Well, yes, but we wouldn't -- you're asking an 7 open-end question. We wouldn't give him the 8 responsibility of a marginal deal. We would probably 9 bring it to Erik's attention, Debbie Moody's attention. 10 Q. That's why I asked that question. With a

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

young finance manager, any decision that he makes has to be reviewed by Mr. Pratt or yourself? A. Somewhere along the way common sense has to take place. Q. All right. Or what does that mean? A review needs to be made, right? A. Exactly. Q. Is a decision ever made not to spot? A. Yes. Q. Give me some reasons why. A. Horrible credit, no down payment, no job. Q. Well, in those cases would you even try to sell them a car? A. We don't know that until we get to the credit application. We don't qualify whether or not -- credit 33

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

worthiness before. We judge it after we sell them. Q. All right. So, your definition of after we sell them is after you got your signature on the buyer's order? A. Yes. Then we run a credit ap. Q. Then you run a credit ap and then you review it. And who reviews it? A. Sales manager. Q. All right. And the sales manager looks at it and says, this guy is not a candidate to spot? A. Exactly. Q. Do you try to run it by a lending source? A. We'll call it in. Q. Okay. What do you tell the customer? We'll call you back if and when you get approved? A. Try to get a deposit from the customer and we'll call you back as soon as we get an answer from the bank. Q. In those circumstances, I imagine that you have got him approved and they've come back? A. Certainly. Q. In those cases where because a sales manager has made the decision, for whatever reason, not to spot that particular customer and later a lending source does approve credit for that particular customer, who calls 34

1 the customer back into the store? 2 A. Salesman. 3 Q. And what happens when that customer calls 4 back?

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Put the -- do the deal with finance, contract him, send him on his way with his car. Q. On occasion, is more than one finance contract signed by the buyer the first day? A. No. Q. Do you use World Omni? A. Occasionally. Q. Who's your primary lending source? A. Ford Motor Credit Corporation. Q. Well, Ford Credit has their own retail installment contract forms, don't they? A. Yes, but there's also a law contract. Q. I know. My question to you is when you first sign a customer up, do you use a Ford contract? A. Depends. Q. Okay. Do you ever do that? A. Do I ever do what? Q. Does F and I ever sign a customer up on a Ford Credit contract initially? A. Sure. Q. And that's on a spot delivery? 35

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A. Sure. Q. What if Ford doesn't approve the deal? Do you have to call them back in and put them on a law contract? A. Or whatever bank we got them approved with. Q. But in no case do you have them sign up on two different installment contracts and shop them? A. No, sir. Q. Doesn't happen? A. No, sir. Q. What other prime sources do you have? A. Southeast Toyota Finance, Ford Motor Credit, gosh, we've got a bunch of them, Charter One, Riverside National, First National Bank and Trust, Nations, Bank One, there's still probably another ten, 15 of them. Q. Yeah. You use subprime sources? A. Yes, sir. Q. Do you have a special finance office? A. No, sir. Q. Who are your subprime sources, a couple, three of them? A. Household Finance TranSouth. Q. Do you ever use Park? A. Park Finance. There's more there, too. Q. What documents is F and I responsible to

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 generate? A. All the title and tag work, bank contract. That's it. Q. What are the back end sales items? A. Gap insurance, credit life, credit disability, extended warranty, car care service plans. That's it. Q. Financing? A. And financing. Q. Do you sell security systems out of F and I? A. No, sir. Q. Do you sell security systems elsewhere? A. Yes, sir. Q. Where? A. On the floor. Q. On the front end? A. Uh-huh. Q. Yes? A. Yes. Q. Who sells them, sales people? A. Salesmen. Q. In the finance office, what is the procedure in terms of either -- well, strike that. Is the finance manager required to give the customer -- or ask the customer to read the documents before they sign? 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Say that once more. I'm sorry. Is F and I -- does F and I -- strike that. Are the finance managers required to offer the buyer the opportunity to read the documents, various documents, that they sign? A. Absolutely. Q. Well, I mean, is that one of the rules? A. Absolutely. Q. And what are they supposed to say to the customer in that regard? A. I guess it would depend which form you're talking about. Q. Let's talk about the retail installment contract since it's the most important. A. The retail installment contract would be put in front of the customer, disclose the blocks, ask the customer to sign it. Q. And the federal disclosure boxes -- I'll mark these later -- you're talking about these truth-in-lending boxes? A. Right there (indicating). A. Q.

22 Q. Yes. Would you -- do you know whether those 23 are associated with the federal Truth-in-Lending Act? 24 A. I don't know that. 25 Q. All right. Are they asked to read any other 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aspects of the retail installment contract? A. They're not asked to, no. Q. Do the finance manager or -- are the finance managers required to go over any other portions of the retail installment contract other than the five boxes that you just referred to? A. Only if asked to by the customer. Q. Okay. Now, the sales -- the salesman handwrites a buyer's order; is that correct? A. Actually, the sales manager puts the numbers in. The salesmen put the customer information in. Q. Okay. When the sales managers put the numbers in, if the customer has asked the salesman about how much my monthly payment's going to be, do you, as a sales manager -- I know you're GSM, but do you and the sales managers have a computer where you can give them a range of what their likely payment's going to be? A. Yes, sir. Q. Does that happen? A. Occasionally. Q. All right. In that regard, do you and your sales managers, not Mr. Pratt, determine what the APR's going to be in any given contract? A. No. We range them. Q. You and the sales managers range them? 39 1 2 3 4 5 6 7 8 for, 9 10 11 12 13 14 15 A. The sales managers range them. Q. Who do you tell that to? A. The customer. Q. The APR? A. Sure, if they ask. Q. What if they don't ask? A. Then just give them the information they ask the payment.

Q. Well, my question is, for example -- again, I'm going to mark these later, but this is just for demonstration purposes. This top one says 16.5 percent. Now, I know that F and I inputted it into the computer for that to come out, right? A. Yes, sir. Q. My question is whether the sales manager has

16 told F and I what APR they want on the contract. 17 A. No. 18 Q. Is the 16.5 chosen by the F and I manager that 19 works the deal? 20 A. Yes, sir. 21 Q. Is it done based on a rate sheet? 22 A. Yes, sir. 23 Q. Is it subject to your approval? 24 A. No, sir. 25 Q. You know what the rate spreads are and they 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know, too, right? A. Overall, yes. Q. Well, the object -- correct me if I'm wrong, but the object in financing the APR would be to obtain some sort of a financial profit, right? A. Absolutely. Q. And you and the F and I managers know what numbers would create a profit, right? A. Usually, yes. Q. Is that discussed in sales meetings? A. No, sir. Q. Is that discussed in management meetings? A. No, sir. Q. When new rate sheets are published, given to the dealership, are they discussed? A. No, sir. Q. Are they discussed between Mr. Pratt and his employees? A. That would be an assumption on my part, yes. Q. All right. Is there a standard procedure used by your F and I managers in creating the forms and closing the deals? A. I'm not sure if I understand that question. Q. Are there any dealership- or store-required procedures for your employees to follow in the F and I 41 1 office, not necessarily written down? 2 A. Only to make sure it's done properly. 3 Q. All right. Dot the I's and cross the T's? 4 A. Exactly. 5 Q. What at the end of the deal -- strike that. 6 Let's go back. There is a handwritten buyer's 7 order, regardless of who drafted it, right? 8 A. Right. 9 Q. That's given to F and I? 10 A. Yes, sir.

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. Does then F and I input numbers off the handwritten buyer's order into the computer? A. Yes, sir. Q. Or are the numbers put into the computer by you and your sales managers? A. No, sir. Q. Does the computer then print a typed buyer's order? A. Yes, sir. Q. What, if anything, is the -- what does the finance manager say, if anything, about the rescission agreement? A. Tells them exactly what it is. Q. What do they tell them? A. Tells them if they're unable to obtain 42

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

financing, they must bring us back our car. Q. Before that occurs, during the handwritten phase, what, if anything, is a salesman supposed to tell the customer? A. Same thing. Q. All right. In addition to those two -- and these are requirements for verbal disclosures; I understand. Are there any others? For example, does the sales manager get involved and say, we're delivering this vehicle to you without financing approval, blah, blah, blah? A. Occasionally. Q. What transaction documentations are required to be provided to the customer at the close of the deal? A. Say that one more time. I'm sorry. Q. What transaction documents do you require that the customer receive copies of? A. From the salesperson or from F and I? Q. From F and I. A. Copy of the contract. Q. That's the retail installment contract? A. Retail installment contract, notification of transfer, registration or temporary tag. I believe that's it, to be honest with you. Q. Okay. Do they get a copy of the typed buyer's 43

1 order? 2 A. I don't believe so, no. The salesman usually 3 gives them a copy of the handwritten one. 4 Q. They do? 5 A. Usually.

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. When you say usually, not necessarily always? A. Not necessarily always. Q. Now, the retail installment contract that F and I has the computer type up is a multipart form, isn't it? A. Yes, sir. Q. One of the copies says buyer's copy, doesn't it? A. Yes, sir. Q. And is that -- the F and I manager tears that out and gives it to the customer? A. Yes, sir. Q. Before the F and I manager tears it out and gives it to the customer, is F and I required to get the customer's signature on the form? A. Yes, sir. Q. Now, from that point forward, when is the retail installment contract signed by the dealership? A. Just prior to it going to the bank. Q. And you mean after it's gone to the accounting 44

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

office? A. No. It goes from the finance office to our billing clerk. Our billing clerk would get it signed by the dealer or whoever's responsible for signing. Q. Right. And at what point in time does the dealership sign it? A. Just prior to going to the bank. Q. Well, when you say just prior to going to the bank is after you receive bank approval for the deal? A. Yes. Q. And how does the bank transmit its approval to you? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Via fax. Always? Not always. What other means? By telephone. Is it ever done by computer? Yes. Who? Ford Motor Credit. Ever use Primus? We don't use Primus. Okay. Primus, I believe, is a branch of Ford Motor

45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Credit. Q. Uh-huh. In your experience, give me the parameters of time of bank acceptance; that is, what's the shortest time? What's the longest time in your experience? A. My experience? Q. (Nods head.) A. Five minutes to 60 days. Q. Okay. Really, 60 days? A. Certainly. Q. In the five minutes, how do you get them in five minutes? A. Call the bank prior to delivering. Q. Do you have to fax them the credit ap first? A. Not necessarily. Q. What do you say to the bank that you can get instant approval like that? What do you tell them? A. Tell them the truth. Tell them the information the customer's provided to us on the credit ap; give information on the credit bureaus, including the beacon score, how much down payment, what term we need, what rate we need. Q. Under what circumstances would F and I call it into a lending store that quickly? A. Just to get it done quick. 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Q. While the customer is still on the lot? A. Sure. Q. Why? A. Why not? Q. No, I'm just asking you why. A. Quick approval call is a no-brainer. Q. Okay. Because you've made the determination that the guy looks solid? A. Uh-huh. Q. Yes? A. Yes. Q. Otherwise is it -- well, I don't want to suggest anything to you. You say your store is fairly busy, right? A. Very busy. Q. And if it's very busy, that means F and I has to do one deal after another, right? A. Most certainly. Q. In those circumstances, does F and I save the deals until the end of the day to call them into the source?

22 23 24 25

A. Q. A. Q.

Sometimes the next day. Sometimes the next day? (Nods head.) Can you call in a deal on a Sunday? 47

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A. You can call in, yes. Q. But you can't get approval? A. Some banks will, yes. Q. Will Ford Credit? A. Yes. Q. But some banks won't, right? A. Most banks won't. Q. So, you have to wait until the Monday to do it, right? A. Exactly. Q. In your experience, at least the past couple, three years, how many deals might be stacked on F and I waiting to be called in to a bank on a particularly heavy day? A. 20 to 30. Q. Really? What's your next closest Toyota competitor? A. Actually, they're both about the same distance; one, Vero Beach Toyota, the other, Stuart Toyota. Q. Okay. Now, the copy of the retail installment contract that's given to the buyer at or around the time of vehicle delivery is not signed by the dealership, correct? A. No, sir. 48

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Q. It's not correct? A. That's correct; it is not signed. Q. All right. I had an experience a couple of weeks ago and I want you to tell me whether you've made the same observation or you've been advised of this. I took the deposition of West Palm Mitsubishi's general manager who said that their dealerships have been advised by the South Florida Automobile Dealers Association to sign their retail installment contracts in the F and I office, that is, have an F and I manager sign the contracts. Have you heard that at all through the Automobile Dealers Association? A. I have not, no. Q. Okay. Now, in terms of actual, physical procedure, the deal has been delivered, spot delivered

16 17 18 19 20 21 22 23 24 25

without financing approval. That customer is gone. All the documents are where, in the finance office in the deal jacket? A. Yes, sir. Q. Physically what happens to that deal jacket and all the documents from that point until bank approval, if you know? A. Well, we have someone call it into the bank. Q. Who, the title clerk or whatever you're talking about? 49

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A. We use different people to call it in. It could be one of the finance managers. We also have two girls that work for us that could call it in. It just depends. Q. Okay. Then before -- when a finance manager calls in, is the deal on his desk? A. No. It's put in a little bin, sorted by date. Q. Is the bin within the finance office? A. It's within the finance office. Q. Once approval has been received, what happens to that deal? A. They take the deal, give it to our billing clerk. She bills it. If there's a bank contract in it, it goes to Frank Gonzalez's office, where he signs it. And it's returned back to the billing clerk and FedEx'ed to the bank. Then the paperwork goes to the accounting office. Q. Where's the billing clerk in relation to the F and I office? A. Right next door. Q. Where is the accounting office? A. Down the hall. Q. You've been at Bev Smith Toyota for -- except for -- you were even there during the year, weren't you? A. Excuse me? 50

1 Q. Were you gone for a whole year? 2 A. I was gone for one year. 3 Q. Okay. So, the total time that you've been at 4 Bev Smith Toyota started what, in '94? 5 A. '89 originally. 6 Q. So, you've been there, except for one year, 7 been there 12 years? 8 A. Uh-huh. 9 Q. Yes? 10 A. '88. I'm sorry.

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. '88. Except for that one year, has the procedure for getting papers signed by the customer and then approved by the bank and then going to the billing office and then cashing the deal been the same for the whole 13 years, that you're aware of? A. Yes. Q. So, has there ever been an occasion, to your knowledge, where the dealership has signed a retail installment contract at or prior to delivery of the vehicle? A. None that I know of. Q. Okay. When the dealership obtains the buyer's signature on all the forms, including the retail installment contract, at that moment is it the dealership's position that they have a binding deal with 51

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the customer? A. Yes. Q. At that moment or between that moment and the time the bank actually approves the deal, does the customer have any ability to unwind the deal? A. If it doesn't get approved? Q. No. Let's just say that you close and deliver the vehicle spot, without financing approval, at 3 p.m. on any given day during the week. And you don't get bank approval until 5:00 the very next day. A. Okay. Q. So, it's been like 26 hours. In that 26-hour period of time, does the buyer have any ability to cancel the deal? A. It's Mr. Smith's policy if somebody doesn't want a car, give them their trade back. Q. And, so, the answer to my question is, yes, you will cancel the deal? A. Yes. Q. That has occurred? A. Yes. Q. How often does that occur? A. Not often. Q. If the retail installment contract has not been signed by the dealer, but has been signed by the 52

1 buyer, can it 2 A. Can 3 Q. The 4 the contract? 5 A. Not

be changed? what be changed? retail installment contract, the terms of without the customer signing a new one.

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Okay. So, they can be changed? MR. VIGGIANI: Objection, asked and answered. THE WITNESS: Certainly. Q. (BY MR. INGALSBE) Meaning that if the initial retail installment contract is not signed by the dealer? A. Right. Q. Does that make -- strike that. The initial retail installment contract is signed by the buyer, but not signed by the dealer, and not yet approved by the bank. Does the dealership regard that as binding on the dealership? A. I'm not sure if I understand the question. Q. There is a retail installment contract that's signed by the buyer, but not yet signed by the dealership. A. Right. Q. Is that, nonetheless, a binding contract on the dealership? MR. VIGGIANI: Object, form. 53

Q.

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Q. (BY MR. INGALSBE) If you know. A. As far as we're concerned, it's a binding contract until the bank approves it. Q. It is a binding contract? A. As far as we're concerned it is. Q. Well, it is subject to bank approval. That means it's subject to being recalled, isn't it? A. Sure. Q. So, under those circumstances, does the dealership, nonetheless, consider it binding on the dealer? A. Certainly. Q. Why? A. Well, you can also sign resource if you had to. Q. Have you ever? A. Not that I can remember. Q. I mean all contracts in Florida under these circumstances are nonresource, aren't they? A. Somewhere. Q. I mean, are they resource contracts? A. Not with our dealership. Q. I guess, to be more concrete, if you put a customer out on a contract with these boxes completely filled in, which you do, but the dealership doesn't sign 54

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

it, are those numbers cut into stone? In other words, can they be changed or can't they be changed? A. They can be changed. Q. So, correct me if I'm wrong, initially where the dealer has not yet signed a deal and the bank has not yet approved a deal these numbers are mere estimates, aren't they? A. No. Q. You estimate that that's what you can get the deal done for, correct? A. Yes. Q. You don't know those are the numbers you can get the deal done for, correct? A. They fit into bank guidelines when we do it. Q. Well, how do you know that? A. Because each bank has their own credit criteria to follow. Not to say they won't turn it down or condition it, but most banks have a written format on what they will approve and what they won't approve. Q. What's normally called a rate sheet? A. A rate sheet, yes. Q. Is that it? A. Yes. Q. You have an agreement deal with each lender, don't you? 55

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A. Yes, sir. Q. Does it also give you any lending criteria as to how to structure the deals? Does a dealer agreement say anything like that? A. I don't know that. Q. Okay. Who signs the dealer agreement on behalf of the dealer? A. That would be Mr. Smith. Q. Do you know anything about the Motor Vehicle Retail Sales Finance Act? A. No, sir. Q. Do you know anything about the Truth-in-Lending Act? A. I know some of it, yes, not all of it. Q. I don't expect you to. What do you know about it generally? A. Just that there has to be proper disclosure of the contract. Q. Okay. Let me take a minute here, okay? (An off-the-record discussion was held.) Q. (BY MR. INGALSBE) I'll mark these in order at the bottom right-hand corner for the benefit of the

23 court reporter. 24 Take a look at what I've marked Plaintiffs' 25 Exhibit 1 and ask whether you can identify that. 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Appears to be a mailer. Q. Are you familiar with that particular mailer? You've probably seen a million of them, so how could you know? A. Exactly. Q. Assume Exhibit Number 1 was received by [Consumer 1] at or around the time she entered into the deal with your store in November of 1998. But regardless of that, when you say Exhibit 1's a mailer, who mails them? MR. VIGGIANI: Object, form. THE WITNESS: That's going to depend which mail company we're using. Q. (BY MR. INGALSBE) I guess you just answered my question. It's not mailed by the dealership, is it? A. No. Q. All right. An independent outfit does that kind of stuff? A. Yes, sir. Q. And when a customer responds to the mailer -oh, by the way, Exhibit Number 1, is that a tent sale? A. It appears to be. Q. I don't know. You're the boss. A. I don't remember this piece. Q. Well, let's assume that it's an actual 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 photocopy of an original mailer which involved your store. Does it say anything about your store? A. I don't see anything about our store, no. Q. Jesus. That is interesting. Let me ask you this. Have you for the past three or four or five years had tent sales at the Palm Beach Mall? A. Yes, we have. Q. And as far as Fort Pierce Toyota will actually appear along with other dealerships? A. I believe the one that we did was just us. Q. Was it just you? A. I believe it was. I don't remember. Q. Okay. I note that this particular mailer, Exhibit 1, says Toyota, Chevy, Pontiac, Honda, Dodge, et cetera. Have you ever conducted a tent sale along with other models of vehicles?

18 A. Absolutely. 19 Q. You have? 20 A. Yes, sir. 21 Q. Have you ever done it in Palm Beach County? 22 A. I don't recall. 23 Q. What other stores, in your recollection, do 24 you tent sale along with? 25 A. Over the years? 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Sure. A. Every one of them in St. Lucie, Martin, Indian River County probably. Q. So, in any given tent sale, how many stores are generally represented? A. Depends. Could be one, two, three, four, five, six or 20. Q. In those situations, do the lenders also have a table where they can sign people up? A. Occasionally. Q. What lenders in your experience? A. I've seen from Barnett Bank, First National, Ford, GMAC. Q. Okay. A. A bunch of them, actually. Q. All right. Take a look at what I've marked Exhibit Number 2 and identify that if you can. A. It's a buyer's order from Bev Smith Toyota. Q. And it's a typed buyer's order, isn't it? A. Yes. Q. Now, in any given deal jacket, is the -- isn't the handwritten buyer's order supposed to be there, as well? A. Sometimes. Q. When sometimes isn't it? In other words, who 59 1 2 3 4 5 6 7 8 9 10 11 12 makes the decision not to put the handwritten buyer's order in there? A. Well, it could have been misplaced, but the printed one we absolutely make sure that it stays in the deal. Q. But as far as the handwritten one, it doesn't matter? A. Doesn't matter. Q. The dealer services of 289.50, would you describe that as just additional profit? A. I would describe it exactly the way it's disclaimed on the buyer's order.

13 14 15 16 17 18 19 20 21 22 23 24 25

Q. That's the only way you would? A. Yes, sir. Q. Isn't that 289.50 simply added to the price of the vehicle? A. No, it's dealer service. Q. But it's added to the price of the car? A. The customer pays for it, yes. Q. That's right. And it's noncommissionable, isn't it? A. It's noncommissionable, yes. Q. So, when you invoice the deal internally, the price of the vehicle is the 18,995 plus the 289.50, isn't it? 60

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A. No, sir. Q. It isn't? A. No, sir. Q. How is it differentiated? A. I don't know that, but, you know, we don't include it in the selling price of the car. Q. Well, you don't internally I'm talking about. A. That's what I'm talking about. Q. All right. And do you -- to your knowledge, does the accounting office have a breakdown of where the 289.50 goes? A. I don't have any knowledge of that. Q. Okay. Do you know how much of the 289.50 is determined to be dealer profit? A. I have no idea. Q. Part of it, isn't it? A. Yes, sir. Q. What, if anything, does Bev Smith Toyota advise the customer as to where or what that 289.50 is? A. It's written right on the buyer's order, sir. Q. It's up to the customer to read it and understand it, correct? A. If they ask, we tell them. Q. But if they don't ask? A. Then we just show it to them. 61

1 2 3 4 5 6 7

Q. Well, you show it to them along with the other financial disclosures on the right-hand side of Number 2, right? A. Exactly. Q. What, if anything, does the sales -- well, in this case it would be F and I. What, if anything, does F and I discuss about the rescission agreement?

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. If the deal's not approved, they will read the rescission agreement to them and ask them to sign it. Q. Well, Exhibit Number 2 doesn't appear to be signed. A. The deal was probably already approved before we signed it. Q. Well, okay. My question to you -A. If the deal's approved, we don't sign it. We don't have to sign it if it's already approved. Q. All right. Based upon the signature in the box on the left-hand side of Exhibit 2, which is rental, lease car or demonstrator, it is checked and signed. Was this a rental a lease or a demonstrator, if you know? A. I don't know. Q. Who buys the cars? This was a used car, wasn't it? A. Yes, sir. 62

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Q. Who buys the used cars on behalf of the dealership? A. Wow. Q. A lot of people? A. A few people, yeah. Q. Do you? A. I have. Q. On or around November of '98 were you one of the buyers? A. I still am. Q. All right. Did you ever attend auction sales by, say, Alamo rental cars or other rental agencies? A. Yes, sir. Q. Based upon your review of this and understanding that this is a used 1998 Toyota Camry, do you have an opinion of whether it was likely to be a former rental vehicle? A. The only thing I know from looking at that is it was a purchased unit. Q. What does that mean? A. We purchased it. Where, I don't know. Q. All right. It wasn't a trade-in vehicle? A. It was not a trade-in. Q. How do you tell it was a trade? A. Stock number. 63

1 2

Q. A.

What is it about the stock number that -Starts with a nine.

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. All right. Take a look at what I've marked as Exhibit Number 3 and identify it if you can. A. It's a retail installment contract. Q. And just based upon the existence of that particular contract at 16 and a half percent, do you expect that there was a rate spread? A. It would be speculation on my part. Q. So, you don't know? A. I don't know. Q. Let me show you what I've marked as Exhibit Number 4. And I'll put it next to Exhibit Number 3, but what is Exhibit 4? A. A retail installment contract. Q. And they're both Ford Credit contracts, correct? A. Appears to be, yes. Q. And are they dated the same day? Can you tell? No, you can't. I don't know if you can. A. I can't tell. Q. Let me ask you this question. In the ordinary course of your business when there is a recontract a day or two or three later, the recontract is dated the same date as the first contract, isn't it? 64

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A. I don't know that. Q. You don't know that? A. I don't know that. Q. Okay. Who would know that, F and I? A. F and I. Q. Maybe not. Looking at Exhibit 3, the first payment is due -- this looks to be the first contract now. The first payment due on 4 is January 1, 1999. And the first payment due on Number 3 is January 4, 1999. Does that give you any indication that perhaps Exhibit 4 preceded Exhibit 3? A. It would be an assumption on my part. Q. You don't know? A. No, sir. Q. What are the changes between 4 and 3 or 3 and 4 that caused the total of payments to be different on the two contracts? A. I don't know. Q. I didn't know either until I think I just saw it between Exhibit 3 and Exhibit 4. Exhibit 3 is a 60-month contract and Exhibit 4 is a 72-month contract, isn't it? A. There you go, yes.

24 25

Q. A.

So, that would be the difference? Yes. 65

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Q. Based upon your knowledge, training and experience, is it more likely that the deal that was bought by Ford Credit in this case was a 60-month contract as opposed to a 72-month contract? A. I don't know that. Q. You don't know that? A. (Shakes head.) Q. Do you know whether 60-month contracts are more likely to be approved than 72-month contracts on a used car? A. Depends on the quality of credit. Q. So, your answer is? A. I don't know. Q. Does it make a difference? A. I don't believe it makes a difference, no. Q. Okay. Excuse me a moment. (An off-the-record discussion was held.) Q. (BY MR. INGALSBE) I'm going to just mark the front page of the installment contracts. Take a look at what I've marked Exhibit Number 5 and identify that if you would. A. Buyer's order from Bev Smith Toyota. Q. And it's a [Consumer 2] buyer's order? A. Yes, sir. Q. And look at Exhibit Number 6. What is it? 66

1 A. It's retail installment contract. 2 Q. World Omni? 3 A. World Omni, yes. 4 Q. That's a [Consumer 2] contract? 5 A. Yes, sir. 6 Q. Take a look at Exhibit Number 7. What is it? 7 A. Retail installment contract. 8 Q. On what bank? 9 A. Barnett Bank. 10 Q. Is that [Consumer 2], as well? 11 A. Yes. 12 Q. Looking at Exhibit 6 and 7 next to each other, 13 based upon your knowledge, training and experience, 14 which contract came first? 15 A. Did the customer sign first? 16 Q. Yes. 17 A. I would probably be willing to bet it was the 18 World Omni one.

19 Q. Because of the lower interest rate, the 5.99? 20 A. No, because of the amount financed. 21 Q. 16 -- all right. So, the amount financed was 22 reduced by just about 2,000 bucks, right? 23 A. Exactly. 24 Q. And just based on your knowledge, training and 25 experience without, you know, this as a fact, is it 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 likely they conditioned the deal? A. They probably conditioned the deal, had to give more money for the trade to make the deal stay on the road. So, the customer got a better deal. Q. Okay. Do you consider Exhibit 7 a better deal than Exhibit 6? A. Oh, absolutely. Q. All right. The total sale price of Exhibit 7 is $23,840.40. And the total sale price of Exhibit 6 is $21,633. Do you still think Exhibit 7's a better deal for the customer? A. Absolutely, based on the amount financed. Q. Okay. Looking at Exhibit Number 8, identify that if you would. A. It's a signed rescission agreement. Q. Now, clearly that rescission agreement is in addition to the one that appears on the buyer's order. Is that Exhibit Number 8 the form rescission agreement that you guys occasionally use today? A. I don't believe it's occasionally. I believe we use it on every deal. But I couldn't swear to that. Q. And based upon your response then, do you use that rescission agreement in every deal, one on the buyer's order and one separate form like Exhibit 8? A. Yes, sir. 68 1 2 3 4 5 6 7 8 9 10 11 12 13 MR. INGALSBE: I don't have anything else. MR. VIGGIANI: No questions. We'll read. (Witness excused.) (The deposition was concluded at 11:50 a.m.) (Plaintiffs' Exhibit Nos. 1, 2, 3, 4, 5, 6, 7 and 8 were marked for identification.)

14 15 16 17 18 19 20 21 22 23 24 25 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 70 1 CERTIFICATE OF OATH 2 STATE OF FLORIDA ) COUNTY OF PALM BEACH ) 3 I, the undersigned authority, certify that 4 [WITNESS] personally appeared before me and was duly sworn. I, [WITNESS], do hereby certify that I have read the foregoing transcript of my deposition given on Monday, October 1, 2001; that under penalties of perjury I declare that the facts stated in it are true and correct subject to any changes in form or substance entered here.

______________________ Date

_______________________________ [WITNESS]

5 WITNESS my hand and official seal this _____ 6 day of October, 2001. 7 8 _______________________________ 9 Cindy C. Bender, R.P.R. Notary Public, State of Florida 10 11 12 CERTIFICATE 13 STATE OF FLORIDA ) COUNTY OF PALM BEACH ) 14 I, CINDY C. BENDER, R.P.R. and Notary Public, 15 State of Florida, certify that I was authorized to and did stenographically report the deposition of 16 [WITNESS]; that a review of the transcript was requested; and that the transcript is a true and 17 complete record of my stenographic notes. 18 I further certify that I am not a relative, employee, attorney, or counsel of any of the parties, 19 nor am I a relative or employee of any of the parties' attorney or counsel connected with the action, nor am I 20 financially interested in the action. 21 DATED this _____ day of October, 2001. 22 23 _______________________________ 24 Cindy C. Bender, R.P.R. 25 71 1 2 RULE 1.310. 3 4 5 6 7 8 Page: _________ Line: ________ 9 Now Reads:______________________________________________ Should Read:____________________________________________ ERRATA SHEET FLORIDA RULES OF CIVIL PROCEDURE PROVIDES, IN PART: (e)"...Any changes in form or substance that the witness wants to make shall be listed in writing by the officer with a statement of the reasons given by the witness for making the changes..." Page: _________ Line: ________ Now Reads:______________________________________________ Should Read:____________________________________________ Reason for Change:______________________________________

10 Reason for Change:______________________________________ 11 Page: _________ Line: ________ Now Reads:______________________________________________ 12 Should Read:____________________________________________ Reason for Change:______________________________________ 13 Page: _________ Line: ________ 14 Now Reads:______________________________________________ Should Read:____________________________________________ 15 Reason for Change:______________________________________ 16 Page: _________ Line: ________ Now Reads:______________________________________________ 17 Should Read:____________________________________________ Reason for Change:______________________________________ 18 Page: _________ Line: ________ 19 Now Reads:______________________________________________ Should Read:____________________________________________ 20 Reason for Change:______________________________________ 21 Page: _________ Line: ________ Now Reads:______________________________________________ 22 Should Read:____________________________________________ Reason for Change:______________________________________ 23 Page: _________ Line: ________ 24 Now Reads:______________________________________________ Should Read:____________________________________________ 25 Reason for Change:______________________________________ 72 1 2