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New Jersey legalizes direct Tesla sales
- pc86 12y agoHere's the question - can I, as a PA resident, buy a Tesla directly in NJ now and simply transfer it to PA?
- warmwaffles 12y agoYes.
- dangrossman 12y agoYou can. You can also buy one in-person at Tesla's five retail stores in Pennsylvania, or from your computer anywhere.
- shiggerino 12y agoWhat prompted this law in the first place? Can someone from the US shed some light on this? I just don't understand how you can ban selling what you manufacture to whomever you like outside of a planned economy.
- wheaties 12y agoOh, it's easy. It's through things like regulatory capture, funding campaigns and thus having direct access to congressional workers, having people appointed to regulatory bodies that are partial to your stance and/or other means of influencing non-elected officials. Basically, if you can't beat them through normal market means, pass laws so they can't beat you. Sounds cynical but take note, back when cars were first coming out the laws that were passed in response to them were designed to impede the adoption, not promote.
- ptaipale 12y agoIn more plain language: car dealers (companies and their workers) lobbied for politicians to ban competition. They give campaign funding, and in exchange they get legislation like this ban.
- amalcon 12y agoYour explanation doesn't really make sense. Consider: who would benefit most from the removal of these laws? The obvious answer is the General Motors Corporation. They could own their own dealerships, getting better control of customer experience and a bigger cut of the profits. It's not like they're short on capital such that they would be forced to franchise anyway. As the largest automaker in the world for most of the last century, they would get a significantly outsized benefit compared to any competitor. Now for a rhetorical question. Who has more political power in the U.S: car dealerships in aggregate or General Motors? Answer: General Motors, of course! Another rhetorical question: Does Tesla have more political power in New Jersey than GM as well, given that the exception was carved out specifically regarding the type of vehicle they produce? edit: New Jersey is no stranger to economic protectionism. They actually prohibit self-service auto refueling as a jobs program, which would seem to be more threatened by Tesla than car dealerships. I'm not trying to argue that it doesn't exist, just that it doesn't explain what's going on here.
- adventured 12y agoThese are state laws. General Motors had less influence at the state and local level than the auto dealerships did. At that level it's about intimate relationships, those dealership owners directly knew and financed their local politicians and GM did not. GM was facing a nearly impossible 50 state battle, spanning thousands of politicians, in trying to do anything about the dealership cartels. Instead, GM was ultimately ok with a truce with them so long as GM could control issuing (or revoking) the dealer licenses.
- amalcon 12y agoMichigan has auto dealer licensure requirements, which (as far as I can tell, though I am not a lawyer so you shouldn't believe me) are very similar to those in New Jersey. Car dealerships do not have more political influence in Michigan than GM does. Also, if it were just a political fight between businesse interests, GM could just go over the states' heads: people frequently buy cars across state lines, so the commerce clause reasoning for a law prohibiting these laws wouldn't even be as tortured as it usually is.
- Will_Do 12y agoThey're amazingly common in the U.S. The idea is that car manufacturers would be able to undercut dealerships on prices and thus bankrupt the dealerships[1]. So it's just classic protectionism. The question why the law should protect entities that everyone hates is the baffling part. [1] http://www.justice.gov/atr/public/eag/246374.htm http://www.justice.gov/atr/public/eag/246374.htm
- ghaff 12y agoI'm no fan of car dealerships but a lot of the hate has to do with the fact that it's such a penny-pinching business (for both consumer and dealer) at most mainstream brand dealers. From what I've heard, if you go into a BMW dealer the experience is usually quite good. But certainly I don't see why a manufacturer who doesn't have an existing dealer network shouldn't be able to sell in whatever way it chooses.
- benihana 12y ago>From what I've heard, if you go into a BMW dealer the experience is usually quite good. It's not - it's probably better than your average Dodge dealership, but there's nothing inherently different about BMW dealers - they make their money on services and accessories that you don't need like most other dealerships. They'll overcharge you for an oil change (which is typically cheaper, but not much, at an indie mechanic - but it's irrelevant because changing a BMW's oil is so so simple your grandmother can do it) like any other place, but they might offer you some muffins while you wait in the lobby. BMWNA (BMW's North American operations) will keep the dealerships in line if they start watering down the brand value, but you usually have to go through a long and arduous complaint process to get them listening.
- ghaff 12y agoHigh-end car service, even routine service, is certainly pricey. The general storyline I've heard is that you either 1.) Don't care what it costs, 2.) Lease, 3.) Buy with an extended warranty and plan to get rid of it at the end of the warranty, or 4.) Either have an indie mechanic you like or do it yourself.
- caw 12y agoThe ban was created after Tesla started selling, and now it only lifted the ban for zero emission vehicles as far as I can tell (didn't read the whole bill). If Ford or GM wanted to sell direct, they couldn't. In the more generic case, states have these laws on the books to protect the local franchise dealers. These people buy cars from a particular manufacturer, usually multiple brands. In order to protect these dealers from the perceived threat that an automaker could come in and sell direct (thus undercutting their business), laws were enacted to require a franchise to sell vehicles. Thus Ford couldn't come in and sell vehicles unless they created their own franchise, which would raise their costs to be on par with the independent franchises. I think the justification for the protection is the local jobs and businesses.
- edvinbesic 12y ago"The ban was created after Tesla started selling, and now it only lifted the ban for zero emission vehicles as far as I can tell (didn't read the whole bill). If Ford or GM wanted to sell direct, they couldn't." Which is a damn shame. When shopping for a car every manufacturer currently has a 'build your own' tool online where you can build you car to spec and you get a rough estimate. However, in my experience, this estimate is never honored by dealers. The last car I purchased had an item on the sticker price called 'Dealer improvements' that was $6000, and after talking to the dealer he would "cut me a break and not charge me anything" so I would be getting the car for $6000 less right off the bat. When I inquired as to what exactly did they improve he refused to answer in detail. I'm sure my experiences are not unique. I would love to just press an Order button at the end of the vehicle builder and have it delivered to my door or somewhere close to my home.
- ghaff 12y agoSounds like you need to go to different dealers. I'm no fan of the dealer experience but I have gotten prices and costs online and certainly never had a dealer try to tack on $6K. Maybe it was some particularly in-demand model. At least one dealer I've bought a car from has been "no haggle"; the price on the sticker was the price. The problem with getting rid of dealers is that most people will still want somewhere to test drive, someone local to handle paperwork, and there would need to be a service network in any case. Tesla will still have dealers. They'll just be owned by the company. And the experience will doubtless be comparable to existing high-end car dealers.
- ghaff 12y agoBasically, franchises arose because auto [Edit: manufacturers] didn't originally want to establish a broad set of factory stores. States then generally passed laws over time to keep manufacturers from coming in and competing with the franchisees because they'd have various advantages in doing so. (And it probably didn't hurt that the dealers by then were often well-established local businesses.) There's also been something of an anti-trust trend against vertical integration though that's really at the federal level so may not apply here (e.g. studios not owning theaters).
- surge 12y agoRight, these laws made sense 50-60 years ago, but now all the dealerships are established and Tesla as a new unproven company that has a comparative low volume of sales can't simply get dealerships to sell their cars plus it may violate agreements with competing car companies that they also sale. In this case there is no established Tesla franchises that would lose, and Tesla can't simply just get dealers to start selling their cars . So basically these laws now serve little purpose except protecting dealers/manufacturers that sell combustion engines from new competition.
- msandford 12y agoIt would probably make sense to rewrite the laws to somehow say that car manufacturers can't compete with existing dealer franchises within a certain mile/population radius and can't revoke dealer franchises simply to open up new territory for themselves. But to say that no auto manufacturer can operate direct sales is silly since there are now new car companies being formed.
- mikkom 12y agoWhy would you need any kind of such laws in a free market?
- TheHypnotist 12y agoBecause they would easily put franchise dealers out of business.
- Donzo 12y agoI'm with Mother Jones in blaming Ronald Reagan: http://motherjones.com/politics/2009/02/why-you-cant-buy-new-car-online http://motherjones.com/politics/2009/02/why-you-cant-buy-new...
- rayiner 12y agoThe regulatory capture argument someone made below is hard to square with the history: http://www.americanbar.org/publications/franchise_lawyer/2013/summer_2013/has_traditional_automobile_franchise_system_run_out_gas.html http://www.americanbar.org/publications/franchise_lawyer/201.... At first, cars were sold directly to consumers by manufacturers, and independent dealerships were rare. It's really hard to explain using a regulatory capture or lobbying model how car manufacturers, huge incredibly profitable companies at the time, lost their bid to preserve the status quo. In reality, these were consumer and economic protection laws. States didn't like how much money was flowing from their economies to Detroit, and by making direct consumer sales illegal they gave a lot of leverage to franchises, which are local businesses. They also justified the laws on consumer protection grounds--local car dealers would be a lot more responsive to customers than a megacorp in Detroit. As for the "planned economy" aspect--remember that the ideas of what constituted unreasonable interference in the economy were very different back then. The revolution of applying economics principles to government didn't really happen until the 1960's and 1970's. Before that, quite extensive interventions in the economy were routine. For example, prior to the 1970's, the Civil Aeronautics Board set airline ticket prices! That would be amazingly controversial in the U.S. today, on either side of the aisle, but was par for course back in the day.
- MollyR 12y agoThat was very insightful. In reference to local car dealers part. So states were mainly only interested in the money, but then justified it under the guise of consumer protections. Is that fair to say ? Or did states really care about consumer protections ? And in the pursuit of truthiness, and not creating a false dichotomy, are both those wrong ?
- rayiner 12y agoTo get legislation like this passed, you build a coalition. So the consumer protection angle isn't just a guise so much as it is an angle to get the support of consumer-minded legislators. As for whether these justifications are wrong--it's hard to say. From a jobs point of view, it's probably still not a win for NJ for those dealerships to shut down and have NJ money flow over the internet directly to California. The consumer protection angle is a lot weaker in a day and age where Tesla can monitor your car's stats over the internet.
- qwerunf 12y agoThe Planet Money podcast did a fantastic episode answering your exact question: http://www.npr.org/blogs/money/2013/02/12/171814201/episode-435-why-buying-a-car-is-so-awful http://www.npr.org/blogs/money/2013/02/12/171814201/episode-...
- scott_s 12y agoI was going to post this, too. rayiner's answer in this thread is also excellent, but this episode of Planet Money gives much more historical background.
- raldi 12y agoLots of lobbying by special interests who stood to make a lot of money by preserving the middleman-filled status quo.
- grandalf 12y agoThe NJ car dealers are extremely rich and powerful so this is quite a significant event. It's too bad that it takes something as exceptional as a Tesla to incentivize the public to fix the system, but at least it is happening. Disclosure: I think my current car might be my last non-Tesla
- themartorana 12y agoTesla didn't do anything really. Christie has national ambitions and knows that keeping Tesla out of the NJ market and bending over to support the current NJ regime won't play well on the national stage. His story was different when Tesla was first banned. But then he wasn't running for national office.
- twoodfin 12y agoHis story was different when Tesla was first banned. But then he wasn't running for national office. That was 11 months ago. I'm pretty sure Chris Christie's political ambitions haven't radically altered in the meantime. The original "ban" was a perfectly reasonable reading by a regulatory body of the existing law. Regulatory bodies shouldn't be in the business of rewriting unpopular laws; that's the legislature's job, which appears to be what happened here.
- krschultz 12y ago"Regulatory bodies shouldn't be in the business of rewriting unpopular laws; that's the legislature's job, which appears to be what happened here." Thank you. This point needs to be made 100x more often. These days it seems that the regulators & judges bail out the legislatures mistakes all too often. The onus is on people to convince their elected representatives to rewrite laws that are flawed or outdated.
- mtgentry 12y agoI'd be willing to bet they discovered during polling just how much people love Tesla and their hand was forced.
- rcarrigan87 12y agoCan someone please shed some light on the arguments from the other side. How were these dealership protection laws ever justified by politicians?
- higherpurpose 12y ago"Jobs" is probably the "official" argument. If the middlemen go extinct, people will lose those jobs.
- notwhereyouare 12y agowhich never technically existed in the first place for that company, so the "people" who would be out the job, wouldn't have that job in the first place
- djrogers 12y agoI'd have to imagine that the number of jobs created at a Tesla franchise wouldn't dramatically exceed the number of jobs created at a Tesla direct showroom...
- bko 12y agoFrom Elon Musk: > It is worth examining the history of these laws to understand why they exist, as the auto dealer franchise laws were originally put in place for a just cause and are now being twisted to an unjust purpose. Many decades ago, the incumbent auto manufacturers sold franchises to generate capital and gain a salesforce. The franchisees then further invested a lot of their money and time in building up the dealerships. That’s a fair deal and it should not be broken. However, some of the big auto companies later engaged in pressure tactics to get the franchisees to sell their dealerships back at a low price. The franchisees rightly sought protection from their state legislatures, which resulted in the laws on the books today throughout the United States (these laws are not present anywhere else in the world). The intent was simply to prevent a fair and longstanding deal between an existing auto company and its dealers from being broken, not to prevent a new company that has no franchisees from selling directly to consumers. In most states, the laws are reasonable and clear. In a handful of states, the laws were written in an overzealous or ambiguous manner. When all auto companies sold through franchises, this didn’t really matter. However, when Tesla came along as a new company with no existing franchisees, the auto dealers, who possess vastly more resources and influence than Tesla, nonetheless sought to force us to sell through them. http://www.teslamotors.com/blog/people-new-jersey http://www.teslamotors.com/blog/people-new-jersey
- bko 12y agoThis is great news. People often forget that dealerships often abuse their power and take advantage of consumers. This is especially true since purchasing a car is a large purchase with information asymmetry (although new resources have made this less true). It's especially appalling how dealerships often discriminate on race and gender [0] I am disappointed that this move only applies to zero-emission vehicles but hopefully this will lead to future legislation undoing the protection granted to dealerships. [0]http://islandia.law.yale.edu/ayres/Ayres%20Siegelman%20Race%20and%20Gender%20Discrimination%20In%20Bargaining%20%20for%20a%20New%20Car.pdf http://islandia.law.yale.edu/ayres/Ayres%20Siegelman%20Race%...
- jaxbot 12y agoOn the other hand, this could be an incentive to purchase zero-emission vehicles instead of the alternatives, as the buying experience would be theoretically much better than that of going to a traditional dealer.
- pavlov 12y agoYes. It's like visiting the websites of two competing software vendors. One has a plain-as-day pricing table with a $100 / month plan and a big blue "Buy now" button. The other company's Pricing page just reads: "Call us for a quote". Given the choice, who would ever go with the company that makes you talk to an enterprise salesman? Somehow car dealers in the U.S. have managed to enshrine this sleazy sales model into state laws, which is certainly an amazing feat of lobbying.
- morcheeba 12y ago"Call us" is if you're lucky. More like drive over to our place and we'll talk about it over stale coffee.
- trjordan 12y agoPro-tip: if you're calling them, they don't have a $100 / month plan to sell you. There aren't many companies that sell most of their business at $5,000 / month through the website. And for those that do, talking to a sales rep gets you a discount just for picking up the phone. Also, having moved from programming to sales/marketing, I'm a bit more sympathetic towards the "call me" model of selling. There's a lot of companies (like mine) that aren't deliberately withholding information, but instead are training and enabling reps to walk you through a process that can't be navigated with blog posts and product pages alone. We do monitoring, and most of our customers treat our sales reps and pre-sales engineers as free consultants. Nothing magical about it, but talking to a human is valuable for problems like "how to a unify monitoring for my 1,000 servers are 24 teams which runs apps that are a result of 17 acquisitions".
- dhimes 12y agoInteresting. As a co-developing story, a post a few days back led me to the Berkshire Hathaway (Buffet's group) web site, where I read their latest newsletter. It seems they just bought a car dealership company. http://www.berkshirehathaway.com/news/MAR1015.pdf http://www.berkshirehathaway.com/news/MAR1015.pdf
- ck2 12y agoDoes Tesla do free firmware upgrades for all owners, regardless if they are the second, etc. owner? Because that is another thing that will crush dealers. Gas car manufacturers will not update ECU software unless the car is either in warranty or its an actual recall.
- alimoeeny 12y agoTo my limited knowledge most (maybe all) of the software in Tesla model S can be updated over the air, using cars cellular internet connection.
- mikeash 12y agoThat's correct. It's possible for a service center to load software over a wire, but that's only necessary when something goes wrong. In the normal course of events, the car pops up a little alert saying there's a software update available, and asking when you want to install it. Updates are free forever (although one expects that updates for older hardware will stop being made eventually). It's basically like an iPhone in this regard.
- vvanders 12y agoYep, ownership doesn't matter.
- sib 12y agoThat's not uniformly true. Mini dealers would upgrade firmware for cars out of warranty.
- benmw333 12y agoWhy only (4) stores? Why only "zero-emissions" vehicles? There should be zero limitations on direct to consumer sales for any manufacturer of any product.
- deleted 12y ago[deleted]
- millzlane 12y agoWhy would anyone care what I buy with my own money and how I spend my free time if I don't harm others?
- damon_c 12y agoI'm concerned that your machine guns have the potential to harm others. The rest though, by all means...
- randomdata 12y agoMaybe we could create a law that makes harming others with machine guns illegal...
- damon_c 12y agoSo obvious right? Well, we already have laws that make the possession of heroin illegal. They are broken all the time. With regards to the original point about silly laws that prevent us from spending our money and free time in ways that don't harm others, if person A is walking down the street and person B illegally uses heroin on the same street, person A is not likely to be harmed. You can't really say the same about person B and his/her machine gun.
- cgriswald 12y agoYou have established that person B is not going to follow the law in any case. So if there is a law in place preventing person B from possessing a machine gun, person B is still going to acquire a machine gun and use it illegally and person A is still harmed. You haven't solved the problem by moving the solution further up the chain, but you have prevented responsible, law-abiding folks from acquiring a machine gun. Laws against possession of heroin and laws against possession of fire arms work the same way with a lot of the same externalities. So it is odd that you would point to the failure of one to advocate for the other.
- danvoell 12y agoThere must be a big election coming up.
- naskwo 12y agoSuggestion: go to Amsterdam Schiphol. Take a Tesla Model S to the city. Then make up your mind about the "Apple of cars". The consensus in NL is that you're better off with a Porsche Panamera than a Tesla, most likely with a less painful (although still painful) amortisation. Certainly, if you're taller than 180cm, drive before you buy into the hype.
- retroencabulato 12y agoCan you speak for an entire country?
- mfringel 12y agoIt appears that you're implying an obvious conclusion based on a very specific experience, but I don't follow the implication. Can you elaborate?
- ogejkahg 12y agoA few points: 1) The Model S sells almost exactly the same number of units as the Panamera in Holland. I have absolutely no clue why you're claiming consensus when the market says it's a toss-up. 2) I'm tall. I'm a Tesla owner. My partner is also tall. He's also a Tesla owner. It's one of the best cars for tall folks on the market. I have no clue what you're on about. You appear to be talking out of your ass for no obvious reason, except that you dislike Tesla. Get a life.
- ctb_mg 12y agoA Porsche Panamera vs Tesla comparison is a poor one at best, knowing both the public perception of these brands and the products they have produced.
- rconti 12y ago1. What? Why the airport? Why drive that particular route? What is it about being in Amsterdam proper that makes the car worse than it was at the airport or on the motorway? What does this have to do with Apple? What's the comparison being made? 2. Ok? Why? 3. I am, in fact, 182cm, and was just in a Model S yesterday. I had tons of headroom. I've driven them with a helmet on and had no issue. Though I will note, on the ride home yesterday, I sat in the back seat. When I rested my head on the headrest (which I almost never do in a car), I noticed my head brushed the sloping roofline, which is a common problem in sloped roof designs like the CLS and Panamera and A7. In fact, because I have a long torso, I find that my head often scrapes the roof in the driver's seat of (taller) friend's cars, until I adjust the seat downwards.
- DEinspanjer 12y agoI can understand why they would have needed to limit this bill to only the exclusive manufacturers of ZEV just to get it through legislation, but I'm curious whether it would allow the other manufacturers to spin off the ZEV portions of their businesses into subsidiaries and then be eligible to sell directly as well. It is a very contentious subject, but some people argue that part of the reason the existing big manufactures don't put enough effort into making and offering ZEV is because they can't rely on the dealers to actually sell them. Reasons given for this is that the ZEV compete directly with the hybrid and gas vehicles on which the dealers have far greater inventory and profit margins, so they have little to no incentive to sell the ZEV. If ZEV subsidiaries of the manufacturers could be guaranteed a chance to sell them then that might be cause for them to spend more effort on making them work.
- frandroid 12y agoManufacturers can make hybrid inventory contingent on ZEV sales, or offer all kinds of other incentives.
- kevster 12y agoWill be interesting when Apple with all their cash starts to fight these laws when they want to sell their i-car.
- lordbusiness 12y agoAgreed on this point. How will the balance of power manifest when Google, Apple, Uber, others with deep pockets start selling cars without haggling or BS in a 'car store'? The future is bright after all!
- AustinDizzy 12y agoMeanwhile here in West Virginia, our legislature just banned Tesla and Uber from operating in-state. This is the same legislature that changed the motto of the state from "Wild and Wonderful" to "Open for Business" only to have the constituents petition and vote to change it back. Our policymakers make no sense at all, I'd like to replace most of them.
- habitmelon 12y agoI'm surprised 4 hours have gone by and no one has made a joke about Teslas on a bridge.
- brianstorms 12y agoGreat news yes, but there are other states that are still big problems. Among them, one that the media appears to not even know about: New Mexico (maybe they don't realize it's a state). In NM, the NMADA (New Mexico Automobile Dealers Association) has basically crafted the laws such that no manufacturer can have a single store OR service center anywhere in the state. All have to be franchises. Because, you know, we have to protect the dealer franchises, otherwise we might have better consumer choice and better consumer experiences and that would be a nightmare. If one owns a Tesla in New Mexico, and ever needs service, a Ranger has to drive down from Denver. If they're available. If the weather cooperates. Range anxiety? Meh. RANGER anxiety is a huge problem. Imagine finding out you could not buy an iPhone or even find a Genius Bar in the State of New Mexico because the franchises selling other mobile phones had bought the legislature and banned iPhone from the state. That's the situation with Tesla. And nobody knows about it, and nobody seems to be doing a damn thing about it.
- mikeash 12y agoI thought maybe this had changed, since Tesla's "Find Us" map has a "Coming Soon" service center in Albuquerque. Upon further research, it looks like that's just an expression of desire and optimism on Tesla's part, and they're still not actually legally permitted to build one.
- brianstorms 12y agoNope. That "coming soon" is wrapped in an Elon-style reality distortion field and should be interpreted as "we intend to have one there one day." What they don't tell you is they cannot open it. And that there is NO WAY it is opening soon. How do I know? Well, I contacted the Governor of New Mexico's office, and I contacted the Global VP of Sales/Service at Tesla. That got me a call from a Tesla regional manager who told me plainly, "New Mexico is worse than Texas" and that the laws are set up in such a way that there isn't much that can be done. The law on the books states that the dealerships are protected by the force of the State Police and should any young whippersnapper auto manufacturer, say, Tesla, come sneakin' into town and try to set up shop, well the dealers will be there with the full force of the state government behind them, to make sure Tesla crawls back into the hole it came from . . . in some other state. The New Mexico legislature won't consider new proposed laws until Jan 2016. You can bet I will be working on my representative in Santa Fe to introduce a meaningful law modeled after the legislation recently passed in other states that has allowed Tesla to do business including service its existing customers. It is remarkable how protectionist these auto dealers are. They're staring into the future and the future is staring right back, and the future has no sympathy. They must know they're on the wrong side of history. They don't care.
- Butah 12y agoToo bad Utah can't get their act together. Even after Tesla built a showroom and stocked it with cars, the state legislators voted to keep the existing stealership cartel laws on the books.
- joshdance 12y agoI was following the vote. A few said they didn't have time to read it, didn't know what the bill ramifactions were, but I agree, we have to get our act together. :)
- spiralpolitik 12y agoIt's the 21st century. I find it amusing that I can order my computer build to order in less than 30 seconds and I know I'm getting the same price as everybody else. Yet to order a car I have to spend days/weeks of research, spreadsheets, emails, phone calls and I still won't get the car I want. The auto industry is ripe for disruption. The sooner the dealership model is replaced by something more consumer friendly, the better.
- ams6110 12y agohow do you know you are getting the same price as everyone else? online sales certainly are not immune to pricing tailored to the individual buyer... in fact they are in the best position to do that compared to a brick-and-mortar retail seller.
- jpatokal 12y ago> at up to four locations in the state Hooray for dismantling pointless regulation, but why leave this part in then?
- tw04 12y agoIt's definitely a win for the people but it's sad the only reason this happened is Christie's advisor told him his presidential bid was dead in the water without it. This guy is a grade-A crook of the worst kind. I don't know that I've ever seen a bigger fraud.