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UI international programs warns students about exporting cars

BY LI DAI | APRIL 20, 2015 5:00 AM

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Members of organizations seeking to purchase new luxury automobiles in order to export them to China for resale are approaching University of Iowa students.

Luxury cars that typically sell at around $50,000 to $80,000 in the United States can be sold for as much as two or three times those prices in China.

“If you purchase a new car and sign an agreement stating that you will not resell to a buyer who is planning to export the vehicle, but then go ahead and do it, you may be exposing yourself to civil liability for breach of contract,” Lee Seedorff, the UI senior associate director of International Students and Scholars, wrote in an email to international students. “Dealerships are often fined by the auto company when this occurs, and they may choose to take you to court to recover the cost of the fine, which can be several thousands of dollars.

“While there is still currently some uncertainty with different outcomes for different cases, it has resulted at times in asset seizures and even criminal prosecution by the federal government.”

The members of these organizations recruit Chinese students on Chinese social media apps, such as Weixin or Weibo, and pay around $500 for Chinese students who provide their driver’s licenses or driving permits and their home addresses because with this information, the organizations can buy luxury cars from car dealers.

The Chinese students also are being required to go with the members of the organizations to dealerships in Des Moines or Chicago to buy the luxury cars and sign the purchase agreements.

UI students Shuang Wang and Rou Zhang, whose names have been changed to protect anonymity, did sell their driver’s licenses and addresses to the members of organizations, who then export the luxury cars.

Both students told The Daily Iowan that they did not know this practice was illegal.

“I just want to make some money from it,” Wang said. “All I need to do is to give the member my driver’s license and address, then I go with him to the dealership in Des Monies to purchase the car.

“When everything is done, I can get $500. This is easy to make some money.”

Wang said if she knew this practice was illegal, she would not want to participate in it for the small profit.

“I think $500 is not a lot of money, compared to the profit that the organization makes,” Zhang said.

Zhang said he should get more than $500 from this practice.

“The organizations must know what they did for car resale is illegal, so I think they should give the students who sell their driver licenses and addresses more money,” he said.

Christopher Malloy, the supervising attorney of Student Legal Services declined to comment on whether the car resale is a common phenomenon at the UI for confidentiality reasons. However, he said, he has read about the phenomenon in the news media.

“If a student purchases a new car and signs an agreement that they will not ship the car to China or resell the car to someone intending to ship the car to China, the car manufacturer or dealer may sue them civilly in court for money damages for breaching the agreement, and federal law enforcement may investigate them very closely to see if they have broken any criminal laws,” he said.

Because the federal criminal law is very broad, he said, there are ways the government could charge somebody criminally after an investigation.

“Most of the consequences have been financial, with asset seizures and civil law suits,” Malloy said. “The criminal penalties up to this point have come from doing something else illegal while engaging in this business, such as using someone else’s identify to purchase cars or evading taxes.”

He said criminal charges could result in cancellations of visas, deportation, or being unable to renew a visa.

“Because this is a relatively new phenomenon, many cases are going through the legal system right now and have not been resolved,” Malloy said. “One case resulted in a criminal conviction for mail fraud, with the defendants sentenced to three years of probation and a $5,000 fine.”


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