by Iowa car dealership accused of financing fraud
The Sky Auto Mall dealership in Iowa is at the center of a scandal and lawsuits from two automotive giants — Stellantis Financial and Ford Credit. The company is accused of selling vehicles without paying off the loans on them and of fraud with so-called “floorplan” financing, where a dealer receives a loan using inventory as collateral. As a result of these events, 76 dealership employees have already lost their jobs.
The dealership, which operates with franchises for Chevrolet, Ford, and Stellantis brands — Chrysler, Jeep, Dodge, and Ram — allegedly owes millions of dollars. According to the lawsuits, Stellantis Financial is demanding over $1.4 million, and Ford Credit — $1.2 million. The lawsuits were filed a few days apart, after which the mass layoffs occurred.
Stellantis lawsuit: double financing and hidden records
Stellantis filed a lawsuit on March 2nd in Linn County District Court, seeking damages exceeding $12.3 million. Alexey, Igor, and Elena Tovstanovski are named as co-defendants in the case. As the company claims, the Center Point dealership violated the terms of a credit line established in November 2023.
The lawsuit alleges that the dealership then turned to another lender to finance the same vehicles.
According to the plaintiff, this scheme lasted for several months, and Stellantis continued to issue advances despite signs of the dealer’s deteriorating financial condition.
The role of Ford Credit and the discovery of 81 vehicles
Ford Credit filed its lawsuit on March 5th, claiming a debt of over $6.6 million related to the dealership’s second location in Newhall. As it became known, it was Stellantis who alerted Ford Credit about possible violations in February. Following this, the two finance departments compared lists of vehicles in financial circulation and discovered 81 vehicles that had been financed by both institutions simultaneously.
According to documents, the dealership acknowledged the fact of double financing and provided records indicating attempts to conceal these actions.
Stellantis also claims that vehicles were moved between the dealer’s locations without notifying the lenders, allowing for double advance payments. Furthermore, double bookkeeping was allegedly maintained to create the impression that only one lender held title to the inventory.
Consequences and financial violations
The Stellantis lawsuit states that proceeds from sales exceeding $1.4 million were withheld and not transferred to the lender. Ford Credit, for its part, claims that the Newhall location exceeded its credit limit by more than $1.2 million. These actions led to significant financial losses for both automakers and undermined trust in the dealer financing system itself.
Similar cases of “double financing” in the automotive trade are not unique, but the scale of this case attracts particular attention. They point to potential weaknesses in the monitoring system for floorplan loans, where dealers can temporarily manipulate inventory between different lenders. The result is often not only multi-million dollar lawsuits but also business collapse and mass layoffs, as happened in Iowa. This situation may lead to increased regulatory oversight and audits by automakers’ financial services of dealer networks to prevent similar schemes in the future.
