First: Holy s@&t!! What a nightmare.
Second: +1 on the third party inspection. Was a CarFax run?
Third: I would think that this is not necessarily a failure of the BMW inspection process itself, but an indication of Chapman's desire to SWINDLE somebody. I would also think that this would be fraud in the eyes of the law. Especially with the CPO implied guarantee of the cars "fitness"; that w/o CPO it's kind of buyer beware.