A district judge has cleared the way for Stellantis Financial Services to take possession of $12.3 million in vehicle collateral from two Sky Auto Mall dealerships in eastern Iowa.
The details: The decision, known as a writ of replevin, was issued by 6th Judicial District Judge Valerie Clay amid the lawsuit filed by the Stellantis finance arm against the auto retailer for defaulting on vehicle loans and engaging in an alleged fraud scheme, The Gazette reported.
For context, the alleged scheme called “double flooring” involved transferring vehicles between the two Sky Auto dealerships in Center Point and Newhall without notifying lenders.
In doing so: Each lender would unknowingly finance the same vehicles at both locations.
Sky Auto allegedly carried out the scheme by keeping dual accounting records, one reflecting the fraud and another presenting a distorted version of the Stellantis loans.
According to the suit, the auto retailer also sold vehicles and kept the proceeds, which Stellantis claims includes $1.4 million it is owed.
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Worth noting: Stellantis had not acted on the judge’s ruling at press time, but Ford Credit, which also has a writ of replevin tied to similar allegations against Sky Auto, asked the sheriff’s office to seize 10 vehicles last week.
Bottom line: Floorplan and inventory financing issues can quickly escalate into a major operational and legal battle, stressing the importance of strong inventory controls, transparent accounting, and clear lender communications.
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