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Published: Wed, July 20, 2016
Economy | By Melissa Porter

Fiat Chrysler Reportedly Under Investigation by DOJ For Fraud (NYSE:FCAU)

Fiat Chrysler Reportedly Under Investigation by DOJ For Fraud (NYSE:FCAU)

Allegations by an IL auto dealer that Fiat Chrysler Automobiles NV (NYSE:FCAU) had manipulated its monthly sales data have occasioned a wave of scrutiny on the Italian-U.S. automaker. And, the company says it's cooperating with the Feds.

In the civil lawsuit, two Chicago-area dealerships of the Ed Napleton Automotive Group accused Fiat Chrysler officials of pressuring dealers to falsify sales reports. It's believed that the investigation is related to the January lawsuit, where two dealers alleged that FCA offered dealers money to falsely report unsold cars as being sold.

A NY dealer operating a Maserati dealership past year filed a similar suit, claiming he was pressured to pad sales.

Fiat Chrysler's USA shares fell 2 cents to close Monday at $6.73. Sources said that "raids or visits also were conducted in Orlando, Dallas, and California, ... and included current and former FCA employees".

The report has not had more than a temporary negative effect on Fiat Chrysler's share price.

In its statement, FCA said that "in its annual and quarterly financial statements, FCA records revenues based on shipments to dealers and customers and not on reported vehicle unit sales to end customers". The automaker has recorded year-over-year monthly sales gains for 75 straight months, a streak that has been helped by an automotive industry that has been recovering for six years but is still viewed as a major achievement for the automaker.

Reporting to fleet and business sales director Francis Bleasdale, English takes over responsibility for the national corporate and leasing team, helping to grow sales and looking at ways to further improve the corporate customer experience.

Fiat Chrysler is under investigation for allegedly inflating its sales figures.

It reported a 7% rise in its monthly sales in June - its best result for that month since 2005.

According to some of the automakers, auto dealers are allowed to make purchases of cars for their own use in order to meet month-end sales goals.

The company said it confirmed the probe after media reports about it. Bloomberg News reported the investigation earlier Monday. Fiat Chrysler in October increased its reserves by $866 million to cover future warranty and recall costs.

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