LAKEWOOD, Colo. -- 7NEWS has learned that subpoenas will be issued as early as next week to financial institutions dealing with Don Massey Pontiac in Lakewood.

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State Investigates Massey Car Dealership For Alleged Fraud

The dealership is being investigated for illegally "packing" contracts with vehicle warranties and insurance products, inflating the incomes of customers to lending institutions and misleading lenders about the cars being purchased, 7NEWS Investigator John Ferrugia said.

The investigation could be expanded to other Massey dealerships owned by Sonic Automotive Inc., one of the largest auto retailers in the country.

7NEWS has spoken with several former employees at Don Massey Pontiac in Lakewood who have detailed transactions where they said consumers ended up paying thousands more for cars than they were worth and lenders made loans on vehicles that were worth far less than they were led to believe.

Copies of such deals were turned over by one employee to state investigators.

That employee alleges that the dealership fraudulently inflated the incomes of buyers so banks would make bigger loans -- allowing consumers to buy more expensive cars that they could otherwise not afford.

The employee also alleges that Massey represented lower priced cars to lenders as having expensive equipment and options that didn't exist -- allowing larger loans on the vehicles, and allowing the dealership to pocket more money from the loans.

Michael Cooke, executive director of the state Department of Revenue, told 7NEWS that these allegations were referred to her through the attorney general.

Cooke will formally advise the Colorado Motor Vehicle Dealer Board of the allegations at a meeting Thursday morning. She said she is opening a formal investigation which could, if accusations are proved, lead to criminal charges.

The owners of Don Massey Pontiac responded by saying through a spokesman that they could not comment because they have not been contacted about any pending or possible investigation.

But they released a statement, saying, " Our company's highest priority is the fair and ethical treatment of every customer in every transaction."

The allegations against the Massey dealership are nothing new to Sonic Automotive Group. There have been investigations into Sonic Dealerships in North Carolina, South Carolina and Florida, and a lawsuit in Oklahoma.

In some cases, Sonic agreed to cash refunds to customers.

Watch 7NEWS for updates and developments on this story.

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