Fraud ?

My nephew recently received a modest inheritance, and went to a local car dealership to buy a VW, his first car. He paid $4,500 and dealer (arranged) financed the rest. They let him drive home that day with the car, something called on-spot delivery. About ten days later, my nephew received a call from the dealer- they told him the financing did not go through, and he needed to come back to the shop and give an extra $1,200 down payment; and he needed to sign a second, new, contract. Their was a perceived threat to repossess his car- he was under the impression that he would also lose his $4,500 investment, plus his credit would be damaged. Being young and inexperienced and afraid, my nephew agreed, came in and gave the extra money and then some, and signed the new contract- this a common auto sales trick called 'Yo-yo'- they initially send you out and then later snap you back in for more money, just like a yo-yo.
I called the states Attorney Generals office about this matter- they told me that this happens all the time, and legally a car dealer cannot force anyone to sign a second contract. If financing falls through, they have ten days to cancel the first contract, retrieve the vehicle, and then fully refund your money. The company probably committed a fraud, yet my nephew still signed the second contract, which normally would be binding. The Attorney Generals office suggested we go to civil court and set an appointment with a judge to settle the matter- they also agreed that my nephew signed the second time under duress, which voids the contract; and he is entitled to getting all his money back- $9,500, and the car would be returned to the dealer. The dealer is not entitled to receive any money for the miles put on the car during the time that my nephew 'owned' it. ( Getting my nephew into court could be very hard- he is pathologically shy, but thats another issue).
I am asking my great legion of readers for any and all info they might possess concerning auto fraud and what to do about it. Thank you.

Also- he is currently in default. Does anyone know how this might impact the outcome or does this not matter, since a fraud seems to have already been committed?