Complainant learned that WALSER AUTOMOTIVE GROUP, LLC (“WALSER AUTOMOTIVE”), WALSER PREOWNED SALES, LLC (“WALSER PREOWNED” and, collectively with WALSER AUTOMOTIVE, “WALSER”), and WILLIAM FREDRICK WARD [DOB REDACTED] worked together in a way that evaded Minnesota motor vehicle excise/sales tax and violated Minnesota motor vehicle dealer and broker license laws. SUMMARY At times relevant to this complaint, WALSER AUTOMOTIVE, based in Edina, Hennepin County, Minnesota, was the parent company of several Walser-branded motor vehicle dealerships (licensed as new motor vehicle dealers) around the Twin Cities.
WALSER AUTOMOTIVE was at relevant times also the parent company of WALSER PREOWNED, a licensed used motor vehicle dealer with its principal executive office address in Edina, Hennepin County, Minnesota, and a physical location in Eagan, Minnesota. WARD (through a Minnesota corporate entity he controls) was at relevant times an experienced automotive broker who connected interested parties with high-end motor vehicles that could be difficult for others who lacked WARD’s connections and knowledge to find or acquire.
At times relevant to this complaint, neither WARD nor his corporate entity had a motor vehicle dealer or broker’s license. WALSER PREOWNED had a used motor vehicle dealer license in Minnesota but not a new motor vehicle dealer license. Beginning in approximately 2017, WARD worked under contract with WALSER AUTOMOTIVE to acquire and sell high-end vehicles. WALSER AUTOMOTIVE provided the funding and infrastructure (such as staff to complete paperwork and warehouse space to store vehicles when needed) used in the transactions.
Some of the vehicles, once obtained, were registered in Montana and titled in the name of a Montana limited liability company which existed on paper only, taking advantage of Montana’s lack of a motor vehicle sales tax. The titles were then transferred to WALSER PREOWNED and sold to WARD’s clients. WARD and WALSER split the profits from his sales evenly. After the onset of the COVID-19 pandemic in 2020, demand for new vehicles began to far outstrip supply. The price a new vehicle dealership can charge for a new vehicle is sometimes restricted by factors including the manufacturer’s contract with the dealership, such that in high-demand times, a low-mileage, recently manufactured car sold as “used” may fetch a significantly higher price than a “new” car because the price of the “used” car is not restricted in the same way.
Additionally, new vehicle dealerships are only allocated limited supplies of new vehicles from the manufacturer(s) with which they have a franchise agreement. And new vehicle dealerships also face legal and practical obstacles to selling new vehicles from manufacturers with which they do not have a franchise. WARD and WALSER titled new cars through the Montana LLC to give them the appearance of being “used” cars, tax-free, so that they could be acquired, again tax-free, by WALSER PREOWNED under its used dealer license and then sold for a profit.
