It’s safe to say that SCM has never before reported on an Apple Auctioneering Company sale — until now.
Apple Auctioneering Company is an affiliate of Apple Towing Company, Houston’s largest towing company, and it bills itself as the “nation’s leader in seized asset management & government liquidation.”
Apple seemed to hit the jackpot on July 7, when it completed the sale of 10 high-end vehicles that had been seized from convicted drug kingpin Alvaro Lopez Tardon. Top sales were a 13,088-mile 2003 Ferrari Enzo and a 1,082-mile 2008 Bugatti Veyron 16.4. Other cars included a 2009 Maybach 57S, a 2006 Ferrari F430, a 2014 Rolls-Royce Ghost, a 2011 Bentley Continental GTC and several luxury SUVs. See the accompanying list above for complete sale results.
Crime story
Tardon, 39, was the head of a gang known as “Los Miami.” A Spanish national, he began his career working for a drug trafficker in Spain. He and his brother Artemio decided to start their own competing criminal enterprise — and won a bloody war with their former boss. Tardon directed the enterprise largely from Miami, while his brother managed operations in Madrid.
Tardon’s business plan was simple. Los Miami exported about eight tons of Colombian cocaine from Peru into Spain. Most of it was sold there, but some was smuggled to other countries. Predictably, large amounts of cash were generated. Tardon moved the cash into the United States, using couriers and wire transfers through his Spanish luxury car dealership and a network of shell companies and accounts. Once in the United States, Tardon invested the money in Miami real estate, expensive cars, expensive watches and other items.
The beginning of the end came when Tardon’s personal Santeria priest was arrested in Miami International Airport carrying a briefcase containing over 21,000 euros. One setback led to another — Spanish police raided his Madrid cocaine lab and seized financial records. A former partner admitted to smuggling cocaine, an ex-girlfiend admitted to helping Tardon buy Miami condos with drug proceeds, and 20 members of Los Miami were arrested and charged in both countries.
Tardon was convicted of numerous money-laundering charges. U.S. District Judge Joan Lenard imposed the maximum sentence she could — 150 years in prison — ordered the forfeiture of an estimated $14 million of property and imposed a $2 million fine.
Appeal promised
Tardon’s attorney, Richard Klugh, promised an appeal. Klugh criticized the conviction by questioning how the money-laundering statute could possibly apply to people who did not commit any crimes in the United States. Klugh argues that Tardon was convicted for “spending money,” not “laundering money.” Klugh argues that it is not illegal for people to simply spend money in the United States — even if it might have been obtained illegally in other countries.
Prosecutor Tony Gonzalez claimed that the United States’ criminal justice system is much tougher than those in other countries, pointing out that the longest possible prison sentence in Spain is one year.
Klugh countered that the different treatment is grossly unfair. Tardon was essentially sentenced to a life term. Meanwhile, his equally guilty brother is out of Spanish prison, got a lot of his forfeited money back, is back running the Spanish dealership and is “driving a Ferrari around sunny Spain.”
The Apple Auction
Kevin Scully owns Apple and serves as its auctioneer. His brother Mike owns Apple Towing, and they and their families work closely together in both businesses.
They contract with the U.S. Marshals Service to manage its seized property. Management involves storing and caring for the assets while the legal process goes on. Ultimately, Apple ends up auctioning off a lot of seized assets. Apple maintains a number of storage facilities around the country for this purpose.
Scully told “Legal Files” that this was not an unusual auction for them, but they did pull out a few stops to maximize the recovery from this very valuable collection.
To make the best impression, Apple rented Miami Marlins Park for the one-day preview. They put a lot of effort into pre-auction publicity, with the auction covered by 16 TV and radio stations.
Apple does not charge a bidder registration fee or a buyer premium. The only registration requirement is that bidders must post a $25,000 bid deposit to be allowed to bid.
Their online auctions have a “soft close” feature. A bid within the last five minutes before the close will extend the close by an additional five minutes. Successful bidders must pay in full by wire transfer or cashier’s check within 48 hours of bid confirmation — and remove their car within 10 days.
All cars sold
This auction attracted 9,000 online views and 39 registered bidders. Of those, about 15 actually attended the viewing to see the cars for themselves. The rest bid off the numerous photos posted online. Eight bidders purchased all 10 cars — a very impressive 100% sell rate!
All 10 cars carried reserves — as they always do with U.S. Marshals Service auctions — but all seemed to exceed their reserves without trouble. Scully says he never knows what the reserve is on a car. He keeps taking bids until the end, and then the U.S. marshal in charge tells him if it’s a sale or not.
Scully is the kind of auctioneer who really likes to get into what he is doing. He wanted to know the cars as best as he could before selling them, so he personally prepped all 10 of them for the preview. He hand-washed and waxed them, vacuumed them, and drove each of them around the parking lot. He knew where every little scratch or blemish was, and he was able to give limited driving impressions to anyone who asked.
If buying a car in one of these auctions seems scary, Scully claims it is safer than buying at a typical consignment auction.
These cars were the property of owners who proudly maintained them and used them. The day they were seized was just another day in the owner’s car ownership, and the seizure was sudden and unexpected.
In contrast, a car doesn’t get into a consignment auction until the owner makes the decision that, for whatever reason, he doesn’t want to own it any more. Some owners have obvious motivation to exaggerate about the condition of the car.
Title transfer
Buyers get title through a U.S. government SF-97 Certificate to Obtain Title, which is similar to a bill of sale. The SF-97 is all you need to title the car in any state. It is the same document you would receive if you bought a surplus government vehicle, as they are never registered or titled while in government service.
The sale is conducted under court order, which conveys free, clear, unencumbered title to the purchaser. Liens and ownership claims are resolved in the foreclosure process before the sale is conducted.
However, the process does not “wash” the title. If the car previously carried a branded title, it will be branded when re-issued by the licensing state.
Is this a good deal?
So let’s play appraiser here and see if we think these cars were well bought or well sold. The Enzo is the obvious example, as “Legal Files” recently reported on the sale of a similar Enzo (July 2016, p. 48). “That” Enzo had been very badly crashed and extensively rebuilt by Ferrari, with appropriate certification.
“This” Enzo was seized in whatever condition it may have been in on a given day, and no inspection or repair work had been done. However, we can only guess if any was needed.
The Enzo in the July 2016 “Legal Files” was heavily damaged — but repaired to the highest possible standard. The Enzo in the Apple Auction presumably avoided damage (a CARFAX report would tell us), but we really don’t know if a drug kingpin with an endless supply of money would actually take good care of his car. That Enzo was a 1,553-mile car. This Enzo was a 13,088-mile car, which is rather high mileage for an Enzo.
Donald Osborne, ASA — who is probably laughing already — said that a low-mile, undamaged, single-owner Enzo would push $3 million, while a three-owner equivalent would push $2 million. Although Osborne did not specifically opine about the $1,734,436 sales price of the damaged and rebuilt Enzo, he did not question that it reflected market value.
The Enzo in the Apple Auction sold for $2,099,400, or about 20% more than the rebuilt Enzo. Which Enzo is worth more? That Enzo took a big hit for the crash damage and reconstruction. This Enzo took a strong hit for the high mileage and uncertain maintenance history. However, it doesn’t seem like it took a very big hit for the venue.
On balance, I’d say that Apple probably did a very good job of getting good value for the taxpayers here. ♦
Cars Seized - Auction Result
2003 Ferrari Enzo - $2,099,400
2008 Bugatti Veyron 16.4 - $1,225,400
2009 Maybach 57S - $110,400
2011 Mercedes-Benz G-Class - $88,600
2010 Mercedes-Benz G-Class - $73,700
2010 Land Rover Range Rover - $48,000
2006 Ferrari F430 - $100,100
2013 Land Rover Range Rover Sport - $42,800
2014 Rolls-Royce Ghost - $187,000
2011 Bentley Continental GTC - $123,800
John Draneas is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.