Carvana Settles With Illinois Secretary Of State, Admits Wrongdoing

SPRINGFIELD, IL — State motor vehicle regulators and troubled used-car dealer cut a deal that allows the company to continue selling cars in Illinois.

As part of its settlement with the state, Carvana admitted wrongdoing and agreed to surrender the $250,000 bond it had posted.

The Phoenix-based company also agreed to allow for the Secretary of State's Police to conduct inspections before and after licensing — and for the secretary to summarily suspend and revoke Carvana's dealership license again if it fails to comply, according to Secretary of State Alexi Giannoulias.

Carvana's license to sell cars in Illinois was suspended last year following an investigation that began in February following a series of consumer complaints, Giannoulias said in a video message.

"Carvana had been illegally issuing out-of-state registration permits to Illinois vehicle owners and had failed to transfer ownership titles in a timely manner — both violations of Illinois law," Giannoulias said.

By selling cars without proper title and registration, the company put its consumers at risk of getting pulled over by police and facing criminal penalties, according to the secretary of state's office.

"As part of the agreement, Carvana admitted wrongdoing and acknowledged that it violated the state's vehicle code," Giannoulias continued. "While the state will allow Carvana to continue to operate, this agreement gives my office the authority to suspend and revoke its dealership license again if it fails to comply moving forward."

During Carvana's suspension, it was permitted to continue selling cars in Illinois according to terms set by a DuPage County judge's temporary restraining order, which forbade it from issuing temporary license plates or registration permits and required it to register titles though Illinois-licensed third parties.

"Carvana admits that, in certain instances, in connection with the Summary Suspension and Revocation, it failed to transfer title to the purchaser within 20 days from the date of sale of teh vehicle," according to the terms of the five-page settlement. "Carvana otherwise denies the remaining allegations."

Giannoulias said his office's settlement with Carvana suggests it has "zero tolerance" for corporations that lie to consumers and violate the law.

"Under this administration, you have my word that I will do everything to ensure that proper safeguards are in place to protect Illinoisans regardless of how they purchase a vehicle," he said.

Customers who continue to have issues with the title or registration of vehicles they purchase were encouraged to contact Secretary of State Police at 630-693-0551 to file a complaint.

As part of the terms of the settlement, Carvana also agreed to dismiss a civil suit it filed in DuPage County against the Secretary of State's office.

Separately, the DuPage County State's Attorney is prosecuting Carvana's general counsel, Paul Breaux, on 27 misdemeanor counts of failure to transfer vehicle titles by a dealership and 50 counts of improper use of titling and registration. That case is not affected by the settlement with the state.

Alan Hoffman, Carvana's head of corporate affairs, said the settlement allows the company to "move forward in our journey to becoming the largest automotive retailer."

Company officials “look forward to working with Secretary Giannoulias to ensure customers continue having access to the best car buying and selling experience possible," he said, in a statement that did not acknowledge wrongdoing.

The 11-year-old firm has operated an eight-story "car vending machine" — a tower for displaying recently sold used cars ready to be picked up — in Oak Brook since 2019.

The same month the Illinois Secretary of State's Police investigation opened, Skokie village trustees approved a controversial zoning amendment to permit Carvana to erect a 14-story glass tower between a Cook County forest preserve and the Edens Expressway. The project was placed on on hold until the matter of Carvana's state licensing is "completely resolved," village officials said.

In 2022, Carvana's stock fell 98 percent, and the company laid off at least 4,000 workers. Last week, the company announced it would spread its losses out from last year over the next three years through a tax provision called net operating losses. Analysts suggested the company's board is adopting a defensive stance to ward off a potential takeover.

As of last month, the company continued to move forward with construction of its first Long Island facility.

Related:

• Carvana Again Suspended From Selling Cars In Illinois
• $250,000 Bond To Allow Carvana To Sell Cars In Illinois Again
• Skokie Carvana Tower On Hold After Suspension Of Illinois License
• 'Right-Sizing' Carvana Won't Say If It Still Plans To Build Skokie Tower
• Critics Cry Fowl As Skokie Trustees Welcome Carvana Tower