Posted Dec 03, 2013 01:41 pm CST
Federal prosecutors are trying to put a damper on private sales of BMWs to China, where the cars can fetch nearly three times their U.S. sticker price.
Prosecutors have seized dozens of the cars at ports and millions of dollars held in related bank accounts, the Wall Street Journal (sub. req.) reports.
Typically, exporters seeking a lucrative profit hire straw buyers to buy the cars in the United States before shipping the vehicles to China, according to court filings. Prosecutors assert the transactions are fraudulent when those buyers don’t disclose the nature of the deal to the car dealers and insurers. Often the buyers sign documents agreeing not to export the cars. Meanwhile, the exporters may seek to avoid sales taxes with fake companies and names.
Car companies claim they are entitled to change their prices in different markets. They also point out the need to vary equipment and warranties based on the country where the vehicle will be purchased.
Defense lawyer Ely Goldin, who represents a couple whose cars were seized, says the government is getting involved in what is, at most, a contract dispute between the car dealers and the exporters. “Why should a buyer of a car be prohibited from exporting a car after he paid top dollar for it?” Goldin said in a Wall Street Journal Interview. “It’s called capitalism.”