Winning a lawsuit and actually getting paid are two very different things, and Stellantis just learned that the hard way in eastern Iowa. This week, a Linn County judge entered a default judgment worth nearly $5.5 million in favor of Stellantis Financial Services against Sky Auto Mall, the now-defunct dealership group that used to sell cars out of Newhall and Center Point. Sky Auto Mall did not send a lawyer. It did not file an answer. It did not show up at all, and that is the entire reason Stellantis won.
That is the version of this story every outlet will run today, and it is true as far as it goes.
It is also the least interesting part of it.
The real story is how a dealership can allegedly borrow against the same cars twice, get caught doing it, and still leave the lender holding a piece of paper that may never turn into actual cash. It is also a reminder that this exact fraud already burned a lender for $50 million once before, put more than a dozen people in federal prison, and apparently taught the industry nothing that stuck.
The Scheme Behind the Number
Stellantis Financial Services filed the underlying lawsuit in March, accusing Sky Auto Mall’s owners, Igor, Yelena, and Alex Tovstanovsky, of running a version of a scheme the dealer-finance world calls double flooring. To understand why that is such a specific and damaging kind of fraud, it helps to understand how a car lot actually gets stocked.
Nobody hands a dealer a lot full of cars for free. Every new vehicle sitting under those lot lights is collateral on a loan called a floor plan line, and the dealer is contractually required to pay off that specific loan within days of selling the specific vehicle it financed, typically inside a five-day window. It is a system that runs almost entirely on trust and paperwork, because no lender can post an employee on every lot, every day, physically checking every VIN against its books.
Stellantis says Sky Auto Mall exploited exactly that gap. According to the lawsuit, the dealership pledged vehicles for floor plan financing through Stellantis, then took out a second loan on some of the same vehicles through other lenders, including Ford Motor Company’s financing arm. Cars were allegedly shuffled between the Newhall and Center Point rooftops to keep the duplication from surfacing during either lender’s audit, and some vehicles were reportedly sold to customers without the original floor plan note ever getting paid off, a practice known in the industry as selling out of trust. Stellantis claims roughly $1.4 million in sale proceeds never made it back to the company. The dealership is also accused of keeping two sets of financial records, one reflecting the double financing and one built to hide it.
Wait, Nobody Cross-Checks This?
Not in real time, no. Sky Auto Mall carried Stellantis, Ford, and Chevrolet product across two locations, which made it, structurally, close to an ideal environment for this scheme. Each brand’s captive finance arm audits its own collateral on its own schedule. None of them are looking at a competitor’s floor plan ledger, and a car moved between rooftops or reported “in transit” on the day of a physical count is one of the oldest tricks in the book for buying a few more weeks before anyone notices.
This Exact Scheme Already Put People in Federal Prison
None of this is new, and that is the part that should bother anyone who works in or around a dealership. In 2018, Ford Motor Credit discovered that Reagor Dykes Auto Group, a sprawling Texas dealer network, had spent years running a nearly identical scheme against it, dubbed dummy flooring: pulling the VINs of vehicles already sold, then submitting fresh loan applications against those same VINs to cover unrelated cash shortfalls. The company disguised the resulting hole with check-kiting, cross-depositing checks between banks to keep vendor and payroll checks from bouncing before the float cleared.
The Department of Justice eventually tied more than $50 million in losses to the scheme. Fifteen Reagor Dykes employees were sentenced to a combined 37-plus years in federal prison, and courts ordered tens of millions of dollars in restitution. “Whatever it takes, we need to floor anything and everything,” the company’s chief financial officer wrote in an email prosecutors later used against him.
Eight years and one very public prosecution later, the mechanics allegedly showed up again in Iowa. Nobody has been criminally charged in the Sky Auto Mall case yet. So far, it has stayed entirely in civil court and bankruptcy filings, which is its own kind of instructive: the version of this fraud that gets prosecuted is usually the version large enough, or public enough, to attract federal attention. Smaller ones often just quietly become a judgment nobody fully collects on.
A Judgment Isn’t a Check
Which brings us back to that $5.5 million. It is noticeably smaller than the more than $12 million Stellantis originally said it was owed, and the court filing does not spell out the difference. It is likely connected to the inventory Stellantis already recovered.
Because winning the lawsuit was never really the point. In March, a Benton County judge granted Stellantis a writ of replevin, a court order letting a lender physically reclaim collateral it’s entitled to before a case even finishes, covering more than $12.3 million in vehicles, parts, and equipment. Stellantis had already taken the cars off the lot months before this week’s default judgment existed. The judgment is the formality. The tow trucks were the recovery.
Complicating things further, the Tovstanovskys filed for Chapter 11 bankruptcy protection in March, in federal court in Illinois rather than Iowa. A default judgment against owners already in bankruptcy is often worth exactly as much as a bankruptcy court and a long line of other creditors decide it’s worth, which is frequently a fraction of the number printed on the ruling.
Who Actually Pays for This
Not the people who allegedly ran the scheme.
Seventy-six Sky Auto Mall employees lost their jobs when the doors closed, workers who almost certainly had nothing to do with whatever bookkeeping happened in a back office. At least one customer, from Grundy Center, has publicly said he is still making payments on a car that, because of the alleged out-of-trust sale, is not clearly his in the eyes of a lender anymore. That is the practical nightmare hiding underneath a story about corporate finance: a regular buyer can do everything right, sign the paperwork, make the payments, and still get pulled into a lien dispute they had no way of seeing coming, because the dealer never paid off the loan attached to their specific car.
It is the kind of risk that has nothing to do with a buyer’s credit score and everything to do with which dealership they happened to walk into.
The Part Worth Remembering
This is not the first dealer-finance story The Auto Wire has covered this year that boils down to the same idea: a signature on a floor plan agreement is not the same as control of a dealership, and a lender’s trust in a dealer principal is not the same as oversight. Earlier this summer, a New York dealer was ordered to pay $30 million after a Potamkin Automotive Group affiliate accused him of treating ten stores’ books like his personal ATM. And Stellantis is fighting a separate case right now over a Ventura, California Jeep store that a different lender says sold it fraudulent retail loans.
A dealership lot isn’t inventory. It’s a stack of loans wearing paint and chrome, and the only thing keeping any of it honest is paperwork that mostly nobody checks until the numbers get too big to ignore. Sky Auto Mall is gone. Its former employees are looking for new jobs, its former customers are sorting out titles, and Stellantis has a court order worth more on paper than it will likely ever be worth in the bank. The scheme worked exactly as well as it always does, for exactly as long as it always does, right up until it didn’t.