Transcontinental Warranty Fake Auto-Service Warranties Lands Execs In Prison

After pitching $40 million in fake auto-service warranties two former telemarketing executives are sentenced to five years in prison and a fine of $15,000 each.

Christopher Cowart and Cris Sagnelli of Florida pleaded guilty last December to federal fraud charges arising out of the telemarketing sales practices of Transcontinental Warranty, a Florida company selling so called “auto warranties” through robo dialing and voice blasting. Cowart was the acting President and Sangelli Vice President of the company.

The Criminal Information alleged that Transcontinental Telemarketers falsely implied that they were calling from, or were affiliated with automobile manufacturers, represented that the consumer’s factory warranty had expired or was about to expire, and offered consumers the opportunity to extend or reinstate their factory warranty.

However, Transcontinental had no affiliation with any automobile manufacturer and had no ability to extend or reinstate the manufacturer’s warranty. Instead, Transcontinental was selling vehicle service contracts from third party companies. These contracts provided some coverage for automobile repairs similar to, but not identical with, that of a factory warranty.

The Criminal Information alleged that Transcontinental used another company to act on Transcontinental’s behalf to robo-dial customers throughout the United States. The company used equipment that could automatically dial every telephone number in an area code, play a pre-recorded message telling the customer that their auto warranty was supposedly expired or about to be expired and then transfer the call to Transcontinental telemarketers.

The Criminal Information alleged that consumers “were inundated by a tsunami of unsolicited and unwanted calls,” that “the calls were relentless and the recipients of these calls for the most part found it impossible to make them stop.” Once the customer answered a call, it was transferred to a Transcontinental telemarketer who told the customer that he or she was calling from the “Warranty Service Center,” which the Information alleged was a “fictitious name” implying that the call was from the warranty service center of the automobile customer – Source.

Illinois’ top federal prosecutor, Steven Wigginton, says that the two men were “driven by greed” and that “these businessmen learned the consequences of operating a scam on American consumers,” after ultimately selling more than 15,000 questioned warranty contracts, Wigginton said. “This sentence should send a message loud and clear to other businessmen who prey on innocent consumers with these type of scams that we will come after you and in the end you will be facing a lengthy prison sentence” – Source.

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