An Iowa dealership has laid off its staff after Stellantis filed a lawsuit last week alleging it ran a $12 million loan scheme, potentially signaling a broader problem coming to light.
The details: The automaker claims the dealership (Sky Auto Mall, which operates locations in Newhall and Center Point, Iowa) engaged in what’s known as “double flooring,” by securing financing on the same vehicles from multiple lenders, including Ford, ABC KCRG reported.
Sky Auto’s layoffs include 30 employees at the Newhall location and 46 staff members at the Center Point store.
Stellantis is also seeking approval at a March 20 hearing to seize vehicles, parts, and equipment from the dealership, which could be valued at more than $20 million.
The lawsuit also names Sky Auto’s owners (Igor, Yelena, and Alex Tovstanovsk) as defendants, alleging the fraud involved transferring vehicles between the Newhall and Center Point locations to conceal the scheme.
What they’re saying: “...by doing so, each lender would fund the purchase of these vehicles at both dealerships, thereby receiving the proceeds of the advances made to purchase the vehicles themselves, rather than having those proceeds paid to manufacturers or auction houses,” claims Stellantis in the lawsuit, with Sky Auto’s owners pocketing $1.4 million, per ABC KCRG.
In simpler terms, the claims suggest the dealership borrowed money from multiple lenders for the same cars, pocketing the cash instead of paying for the vehicles.
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Why it matters: Alleged floorplan or lending fraud can, and often does, spiral into operational shutdowns, job losses, and franchise risk.
It also adds pressure on lenders and OEMs to tighten oversight, which could mean more scrutiny of inventory financing, transfers, and documentation across the dealer network.
Between the lines: The allegations against Sky Auto and its owners come less than two weeks after reports of a $1.5 million auto loan bust in Florida, underscoring what Frank McKenna, chief fraud strategist at Point Predictive, contends is a broader problem in the business.
Point Predictive logged nearly 5,000 reports of bust-out fraud perpetrators in 2025, which McKenna said is likely only a fraction of the total.
The rate of these bust-out frauds is rising, up about 16% year over year in 2025 compared with 2024, McKenna added.
His point: "Fraud often hides in plain sight,” McKenna told CDG News, via email. “Once you look, you start to find it. Lenders digging deeper into their portfolios are now finding more hidden fraud behind those unexplained defaults than ever before. This isn't over yet. I expect we will see more significant frauds coming into light this year."
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