Concealing the trail: As one Leavenworth man discovered, all too often flooded vehicles end up back on the used car market

LEAVENWORTH, Kan. -- Nobody would knowingly buy a vehicle that's been in a flood. So how is that so many of them end up in the used car market?

To find out, Fox 4 Problem Solvers followed the trail of a flooded truck and discovered the dark side of an industry that resells these cars to an unsuspecting public.

“I’ve been lied to by everyone along the way,” said Rolly Galliart of Leavenworth, Kansas. He’s talking about the supposedly reliable truck he bought for his son from a used car dealer in Lee’s Summit.

The morning his son left for college at Iowa State was the morning Galliart learned the truth about that truck.

“We are on the interstate doing 65-70 miles per hour, and the next thing you know the car just starts slowing down," Galliart said. "There are semis behind me. Dear God, come on truck."

The truck ended up at a repair shop in Ames, Iowa, where its murky past was revealed.

There was mud inside the door panels, water in nearly every part of the truck -- even as high up as the steering wheel.

Galliart knew there could be no other explanation except that it was a flood vehicle. But how did a car that should have been junked end up on a used car lot in Missouri?

“It’s extremely common,” said Kansas City attorney Bernard Brown, who has been battling consumer fraud in the car industry for 30 years. “It’s a dirty industry. It’s an industry built on concealing the trail.”

Brown estimated about 60 percent of all flood cars eventually wind up back on the market -- just follow the trail of Galliart’s truck.

That trail starts next to the banks of Ninnescah River near Wichita, Kansas. That’s where the previous owner of Galliart’s truck lives.

He confirmed to Fox 4 Problem Solvers that when the river flooded last year, the truck -- a 2011 F-150 -- was nearly submerged. The water rose above the steering wheel.

Since the owner only had liability coverage, he never reported the truck to his insurance company. If he had, the truck would have been placed in a national database of flooded vehicles.

Instead he traded in the truck at Mel Hambelton Ford in Wichita, which offered him about $4,000 as a trade-in and dragged it out of his yard. Mel Hambelton told him the truck would be scrapped. The owner remembered signing salvage papers at the dealership.

So why wasn’t it?

To find out, Problem Solvers paid a visit to Mel Hambelton and spoke to a man named Stan who said the dealership had no comment.

But that’s OK. There’s a paper trail. According to a sales receipt obtained by Fox 4, Mel Hambelton sold the truck two months later at the I-70 Auto Auction in Topeka for about $13,000.

There’s no mention of flood damage on the receipt even though that’s something Mel Hambelton was required by law to disclose.

Brown said car dealers regularly use auto auctions to unload cars with serious problems, selling them to other dealers who can then pass them off to customers.

“Only dealers go (to these auctions),” Brown said. “The public doesn’t know (what goes on).”

Problem Solvers visited the I-70 Auction and spoke to owner Dan Carlson who said he would never knowingly sell a flood car without disclosing it, but he knows they pass through his auction.

“It probably shouldn’t (happen),” Carlson said. “But does it surprise me? Does it shock me? No.”

The next stop for that truck was Auto Enterprise in Lee’s Summit. It was Auto Enterprise who bought it at auction and resold it to Galliart and his son Anthony.

The sales manager said they were unaware the truck had ever been in a flood when they sold it to Galliart. However, a Car Fax report shows the truck was inspected twice by Auto Enterprise’s neighbor Don Kahan Motors.

It also sat an usually long time on Auto Enterprise’s lot -- nearly nine months -- before it was finally sold for about $1,000 more than Auto Enterprise paid for it at auction.

Galliart said all he has heard are denials from everyone involved.

“The point is Mel Hambelton knew it was flood damaged and say they didn’t know,” Galliart said.

The auction company said they didn’t know. Auto Enterprise said they didn’t know.

"I’m going 'No way,'" Galliart said.

The good news is that even before Fox 4 Problem Solvers got involved, Auto Enterprise agreed to give Galliart his money back.

As for the truck? It went back to the I-70 Auto Auction. Who knows where it is now?

So how do you protect yourself from buying a flooded vehicle?

There’s only one fool-proof way: You should have the car inspected by a repair shop before you buy it. An honest car dealer should be more than happy to let you do that.