Settlement of $ 1.1 million in police car overcharging lawsuit


Settlement reached in a whistleblower lawsuit claiming MN failed to recover all money owed after a multi-year police car overcharging program.

FERGUS FALLS, Minn. – A man who exposed a scheme to double the Minnesota Police Department and Sheriff’s bill on their police cars has settled a lawsuit he filed, saying Minnesota officials had not fully upheld a former government supplier responsible for overbilling.

Steve Kleiber’s civil lawsuit alleged that the Nelson Auto Center in Fergus Falls still owed the state and more than 200 Minnesota law enforcement agencies money over a double billing scandal first revealed over four years ago by KARE 11.

The settlement amounts to $ 1.1 million, nearly half of which is reimbursed to taxpayers.

In a statement to KARE 11, Nelson Auto said it had already paid off everything it owed, but made the “business decision” to settle the case to avoid the cost of further litigation.


Steve Kleiber began sounding the alarm bells in 2015 when he met with officials from the Minnesota Department of Administration and State Patrol investigators.

After reviewing invoices for patrol cars purchased by two local departments, Kleiber says he told state officials he discovered examples of overcharging. They included cases in which police services were billed twice for equipment that was supposed to be included in the base price of the framework contract.

“And they didn’t do anything with it,” he said. “They allowed this to continue.”

Unhappy with what he saw as the state’s failure to act on his information, Kleiber eventually contacted KARE 11.

“Did it eat you?” Investigative reporter AJ Lagoe asked.

“Yes, because it’s tax money,” said Kleiber, who has a background in the auto industry. “I don’t think we should be wasting tax money on making a seller rich,” he said.

Acting on Kleiber’s advice, KARE 11 filed public record requests for patrol car purchase records from 20 different police and sheriff departments.

We found out that each of them had been billed twice.

In a series of reports starting in May 2017, KARE 11 exposed a widespread program of police vehicle overcharging across the state.

As a result of the KARE 11 investigation, Gerry Worner – the former Nelson Auto fleet sales manager – was convicted of fraudulent theft, the state canceled Nelson Auto’s contract and the Department of L ‘Administration has launched an audit to determine the extent of the overcharging.

In December 2017, this audit revealed additional costs totaling $ 803,309 on the sales of 3,235 vehicles. Nelson Auto said it cooperated with the audit and sent reimbursement checks to more than 200 government agencies.

But KARE 11’s investigation did not end there.

By using more public document requests, KARE 11 obtained documents used in the state audit. They included invoices showing what Ford billed Nelson Auto for the vehicles and what the dealership billed the police.

KARE 11 found additional deviations that the initial audit had missed.

For example, records showed that Nelson Auto failed to pass on an increase in the so-called government price concession (GPC), a rebate that Ford gives to dealerships when they sell to government agencies. Nelson’s contract required that any increase in the GPC “be immediately passed on to the state.”

KARE 11’s findings prompted yet another state review.

In March 2018, the Minnesota Department of Administration confirmed KARE 11’s finding that Nelson Auto had received – but failed to forward – more than $ 200,000 in GPC funds from Ford.

Nelson replied that the extra money had been an overpayment from Ford and therefore the automaker should be paid back rather than the taxpayers. The state demanded proof that the dealership had returned the money to Ford.

In February 2019, the state completed another audit which revealed additional additional costs. He found that the “aggregate total surcharge” was $ 975,079 on 3,434 vehicle sales.

In total, records show Nelson repaid more than $ 1.4 million to government agencies and Ford.

Prosecution of whistleblowers

However, Kleiber, in a whistleblower trial, claimed the state always dropped the ball.

“Did state and law enforcement audits lack overbilling? Asked AJ Lagoe of KARE 11.

“Yes,” replied Mark Becker, an attorney representing Kleiber in the whistleblower’s trial. “By our calculations, there is a substantial amount of additional money that needs to be repaid to cities and counties. “

Becker argued that the state failed to enforce a provision of the master contract that he said legally capped the total profit Nelson could make at $ 224.94 per car.

In addition to demanding state audits for missed overcharges, the lawsuit said under Minnesota’s false claims law, the dealership should be ordered to pay fines – and triple damages – for every bogus invoice he has submitted since 2011 to 238 state and local agencies that have bought out of contract.

In court, Nelson Auto and its owners successfully filed motions to dismiss the case. They argued that Nelson’s owners were unaware of their former employee’s overcharging, cooperated with the state’s investigation, and have already reimbursed the amount determined by state officials to be due. reimbursed.

However, when Kleiber and his lawyers appealed, the case was reopened.

The rule

Court records show the two sides recently agreed to settle the case for $ 1.1 million and put an end to the police car double-billing saga.

In a statement to KARE 11, Nelson Auto said:

“The trial court judge dismissed this lawsuit because all the issues had already been decided in arbitration and Nelson Auto had already made the appropriate repayments. We believe this is why none of the more than 200 cities and other government entities have joined or participated in this lawsuit. “

Plaintiff Kleiber has appealed the dismissal and that appeal is pending. But no matter who wins or loses, a new appeal was virtually guaranteed. Nelson Auto therefore made the business decision to settle the case to avoid significant expense and distraction from other calls. “

According to the settlement agreement:

  • $ 478,131 is reimbursed to law enforcement agencies across the state,
  • $ 420,888 goes to Mark Becker and his law firm Fabyanske, Westa, Hart & Thomson,
  • $ 200,980 goes to Steve Kleiber for raising the alarm.

Check below to see how much local law enforcement agencies are getting in the settlement:

In a statement to KARE 11, Becker wrote, “We are pleased to have reached a settlement that provides funds to towns and cities in Minnesota in a case that was initially dismissed by the trial court.

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