By Bill Smith, BBB Investigator
Better Business Bureau is proud to have helped the Missouri attorney general’s office with a dramatic case that resulted in criminal charges this week.
Two Tennessee men who were the focus of BBB alerts in 2012 and 2013 have been arrested after Missouri Attorney General Chris Koster charged them with five counts of felony fraud in connection with an auction business in Poplar Bluff, Mo.
The men, Donnie M. “Tiger” Smotherman and Leon McGregor, formerly operated under the names Midwest Public Auction, USA Services, Extreme Live Auction, Auction Pro Liquidators, Auction Pro Services, Auction Stars, Recreational Complete, Equipment Plus and Xtreme Auction.
BBB|St. Louis first issued a warning about Smotherman, McGregor and Midwest in September 2012 after several businesses filed complaints against the company. Customers from nine states told BBB that Midwest Auction used misleading sales tactics to obtain business. Some customers said they lost tens of thousands of dollars when their consigned items sold for prices that were much lower than promised.
BBB issued a second warning a year later after a second set of auction houses with ties to Smotherman, Recreational Complete, Equipment Plus and USA Services began receiving similar complaints from consignors.
Michelle Corey, BBB president and CEO, said then that “the company names have changed, but the game appears to be the same.”
Smotherman maintained that the operation was legal and ethical. “We did it by the book,” he told BBB.
Attorney General Koster is now following up on BBB’s earlier releases. In a lawsuit against Smotherman and the auction companies, Koster accused the defendants of multiple violations of Missouri’s Merchandising Practices Act, including misrepresentations, false promises, deception and unfair practices.
In some cases, Koster said, company representatives provided business references that traced directly back to associates of Smotherman and McGregor.
Koster said that consumers lost at least $1.1 mllion as a result of the companies’ practices.
The criminal charges against Smotherman and McGregor carry potential penalties of two to four years in prison, up to one year in the county jail and/or a fine up to double the amount of gain, or not exceeding $20,000.