Former directors of a defunct used car dealership in Fredericton have pleaded guilty to several fraud charges in connection with vehicle trade-ins and sales that left customers on the hook to third-party creditors for tens of thousands of dollars.
Peter Kennedy, former director of W&P Auto Sales, pleaded guilty in New Brunswick Court of King's Bench on Tuesday to 12 counts of fraud exceeding $5,000, and two counts of fraud not exceeding $5,000.
Kennedy appeared in court in person, alongside his associate, William Cornford, who pleaded guilty to two counts of fraud exceeding $5,000 in value.
The two, who were not in custody, were allowed to remain on a release order pending their sentencing, which was scheduled for Feb. 1, 2024.
Crimes happened over a year
Tuesday was supposed to be the first day of the men's trial before Justice Thomas Christie.
However, at the outset of the proceedings, Christie revealed Crown prosecutors and defence lawyers had agreed to a statement of facts, and the two men were prepared to make guilty pleas.
Christie convicted Kennedy first, and began by reading out each charge against him, all of which related to things that happened at the Riverside Drive dealership between April 2018 and May 2019.
Crown prosecutor James McConnell then read out the statement of facts agreed to by the Crown and Kennedy.
According to the statement, it was common for W&P Auto's customers to trade in their former vehicles at the time of purchasing a vehicle from the dealership, so that the value of the traded-in vehicle would be deducted from the purchase price.
In each case of fraud, Kennedy advised the customer that W&P Auto would pay off the loan remaining on their trade-in vehicle, when he knew the company would not do so, or he was "wilfully blind or reckless as to this fact."
In one case, customer Michelle MacAulay traded in a 2014 Hyundai Accent valued at $5,000 for a 2012 Dodge Ram valued at $23,800.
Kennedy told MacAulay her existing $15,500 loan with EdenPark on the Hyundai would be paid off.
Following the sale, Kennedy would send MacAulay biweekly payments to cover her loan payments, but he stopped doing so in July 2019.
The following month, EdenPark wrote to MacAulay saying her loan for the Hyundai had an outstanding balance of $14,458.88.
However, in March 2019, W&P Auto had sold the Hyundai to Roxie Palmer for $12,000 without Kennedy disclosing to her the outstanding lien by EdenPark.
Because of the lien, EdenPark had the Hyundai repossessed from Palmer on Sept. 4, 2019.
The statement of facts doesn't say whether Palmer was ever compensated for the money she paid W&P Auto for the Hyundai.
Other instances detail similar fraudulent acts involving other customers, with some losing their cars and others taking significant hits to their credit scores.
Cornford defrauded brother
After convicting Kennedy, Christie moved on to Cornford, who sat next to Kennedy in the accused box.
Christie prompted McConnell to read the agreed statement of facts, which revealed W&P Auto was having "significant cash flow issues" in August 2019, and Cornford drew upon personal resources to help keep the company liquid.
According to the statement of facts, Cornford took a second mortgage on his home, and obtained personal loans from friends and family.
"Cornford took no steps to halt or slow down the operations of W&P nothwithstanding his awareness of the cash flow issues," says the statement.
"He kept operating the business with the hopes that it would recover without taking into account that continuing operations could put the property of clients at risk."
One of the two charges Cornford faced stemmed from a trade-in that ultimately led to his brother being defrauded.
On Oct. 10, 2017, Charlie and Nancy Cornford traded in a 2007 Chevrolet Silverado valued at $8,000 for a 2015 Ford F150 Lariat valued at $38,500.
In April 2019, William Cornford took out a loan against the Ford truck in the amount of $52,087.07 with Zag Bank using an old copy of the registration for the truck, which showed him as its owner.
The loan resulted in a lien against his brother's truck.
"Mr. W. Cornford acknowledges signing the documents resulting in a lien against his brother and sister-in-law's Lariat," the statement says.
"Mr. W. Cornford states that these documents were provided to him, and that he signed them without looking at the details; however, he acknowledges that in failing to properly review this documentation he was either wilfully blind or was recklessly placing his brother and sister-in-law's property at risk."
On Jan. 12, Zag Bank had the truck repossessed as a result of William Cornford's non-payment on his outstanding loan.
Five of the charges Kennedy faced were jointly laid against Cornford as well.
McConnell told Christie those charges were being held over without pleas, with the intention or having them withdrawn at sentencing.
Another fraud charge Kennedy originally faced was also being held over, with a plan to later withdraw it, McConnell said.
While the two won't be in custody pending their sentencing, they are subject to an order to have no contact with any of their victims.
The two men's convictions come after they successfully applied to have another batch of fraud and theft charges against them stayed.
The 25 charges against both men were in connection with commercial entities they allegedly defrauded. Because of the excessive length it took for them to get to trial, Court of King's Bench Justice Terrence Morrison granted the stay, which effectively put a permanent pause on any proceedings.
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