Walser Automotive charged with tax evasion in alleged scheme to sell new cars as used

Walser Automotive Group, one of Minnesota’s largest car dealers, allegedly participated in an elaborate criminal scheme to avoid paying at least $350,745 in state sales taxes.

The state of Minnesota alleges Edina-based Walser and one of its subsidiaries worked with an Orono auto broker to purchase new cars through shell companies in Montana and then sell them as used vehicles — evading taxation in the process.

Family-owned Walser operates 16 vehicle dealerships in the metro area under an array of brands, including Chevrolet, Buick, Chrysler, Honda, Nissan and Kia, according to its website. Walser also owns several dealerships in Kansas.

Walser Automotive, Walser Preowned Sales and William F. Ward of Orono were charged Jan. 27 with felony tax evasion in Hennepin County District Court. The alleged scheme involved 34 vehicle transactions made from March 9, 2020, through August 2023.

“We have not yet been provided a copy of the complaint, so we cannot speak to the details at this time,” Walser Automotive Group CEO Andrew Walser said in a statement.

“We do not believe we did anything inappropriate and will be prepared to share those facts in court,” he said. “We’ve built our business in Minnesota over the past 70 years by living out our core value to always do the right thing.”

Ward, 58, could not be reached for comment.

Ward worked under contract with Walser Automotive to buy and sell high-end vehicles. Walser provided the money and some operational functions such as filling out paperwork and storing vehicles for transactions made by Ward.

Some of the vehicles obtained by Ward were registered in Montana, their titles put in the name of a Montana limited liability company that existed on paper only, the court papers allege.

Montana does not have a motor vehicle sales tax. Using a Montana limited liability company and registering vehicles in its name is a “well-established” tax evasion scheme.

Ward would buy cars and initially ask sellers to put the title in the name of Walser Investments, which Ward owned. Then, Walser formed Green Hornet Holdings to buy cars that Ward had brokered.

The Montana companies would assign a vehicle’s title to Walser Preowned, which would in turn sell it to a buyer Ward had lined up. Walser and Ward would split profits evenly from the sales.

But the vehicles weren’t used, therefore Walser Preowned was not entitled to buy them tax-free and sell them under its used-car license, the complaint said.

The complaint said that Ward and several Walser “officers and staff members” denied that they used a Montana company to evade Minnesota sales taxes.

They denied knowing that under Minnesota law a new car must be placed in “actual operation” before it is considered used.

Walser Preowned was also charged with selling new vehicles without the proper license, a misdemeanor. Ward was also charged with brokering vehicles without a broker’s license, also a misdemeanor.

Demand for new cars began to far outstrip supply with the onset of COVID in 2020. In high demand times, a low-mileage recently manufactured vehicle could fetch a higher price than a new car, the complaint said.