New records uncovered in the wake of a year-and-a-half long KARE 11 investigation reveal that double billing on police squad cars sales by a state vendor may be more extensive than previously known.
The overcharges involve scenarios where law enforcement agencies in Minnesota purchased squad cars with specialized equipment packages using the state’s master contract with Nelson Auto Center in Fergus Falls. In some instances, the agencies were then charged a second time for the same component options included in the package.
The new findings are in addition to the overcharges KARE 11 exposed last year in an investigation we called “Double Billing the Badge.” That investigation prompted a criminal investigation – and refunds of more than three-quarters of a million dollars.
A letter obtained by KARE 11 through an open records request describes the newly discovered overcharges. Elizabeth Hayes, Minnesota’s Chief Procurement Officer, told Nelson Auto the state had uncovered examples of the package pricing overcharges like this:
Hennepin County bought a Ford SUV from Nelson Auto. Invoices show Hennepin paid for an upgrade called the “Ready for The Road Package” at a cost of $2,979.
However, Hennepin was also charged separately for some of the components included in that package. Nelson Auto billed an additional $797 for front headlamp lighting, $371 for tail lamp lighting, $415 for rear lighting, and $481 for ultimate wiring.
Since those four components were already included in the “Ready for the Road Package” Hennepin was charged twice for those options.
The Minnesota Department of Administration calculates the package pricing overcharges on that one vehicle alone cost taxpayers in Hennepin County an extra $2,109.
The letter from the state to the dealership indicates it has found other instances of the package pricing overcharges and that a complete review of all police vehicle contract transactions involving package pricing is proceeding. In addition, the letter to Nelson indicates the state has discovered additional overcharges that went undetected in an earlier BCA audit.
Brent Nelson, the owner of Nelson Auto, responded to the Department of Administration by email writing: “We continue to be willing to reimburse discrepancies you are raising that were not apparent in the audit.”
The state has not given a timeline for completing that review.
The state’s audit was launched after KARE 11 exposed systematic problems with purchases made using state contracts.
A criminal investigation resulted in the felony theft by swindle conviction of Nelson Auto’s former fleet manager Gerry Worner. He pleaded guilty and was sentenced in July.
No one else from the dealership was charged. The owners say they cooperated with the investigation and with an official state audit of squad car sales dating back to 2010.
The audit found that more than 200 police agencies had been overcharged on 3,225 vehicles. As a result, Nelson Auto sent refund checks totaling $803,309.
If you have a suggestion for an investigation,
or want to blow the whistle on fraud or government waste,
email us at: investigations@kare11.com