By on September 3, 2015

In the opening moments of the above scene from the flick “Fargo,” Oldsmobile dealership sales manager Jerry Lundegaard is working up some bogus paperwork to cover his tracks with General Motors Acceptance Corporation (GMAC). We can infer that he sold some floor-planned cars and did not pay back GMAC, which was the impetus for the movie’s storyline of his bumbling attempt to extort money from his father-in-law.

Jerry’s store may have been “out of trust” with GMAC on a few dozen 1987 Cutlasses, but that pales in comparison to the scheme concocted by New York car dealer John McNamara.

Between 1980 and 1991, McNamara convinced GMAC to advance him $6.2 billion to pay for 248,000 conversion vans that did not exist. It was one of the largest Ponzi schemes in history and ended up costing GMAC $436 million, equal to $725 million in today’s dollars.

We would like to show you a photo of McNamara but none are to be found. That may be because it is believed he went into the Witness Protection Program a few years after his conviction for fraud in 1992. Just picture Lundegaard with a really big brain.

McNamara’s brilliant swindle was deliciously simple. It was based on one undeniable truth he learned from his years of owning a Buick-Pontiac-GMC dealership on Long Island: General Motors and GMAC were too incompetent and too bureaucratic to figure out that they were being scammed.

Born in 1940, John McNamara took over his father’s Port Jefferson, NY Buick dealership in 1978 (car company employees reading this are all now thinking, “Ah, he was a dealer’s son, that explains it all!”) In 1990, he approached GMAC with a request for them to floorplan conversion vans that he was going to have built and then exported. He informed GMAC that his store was going to buy the vans from an Indianapolis conversion company called Kay Industries. McNamara told GMAC he had a buyer for the all the units in Cyprus and they would distribute them throughout Southeast Asia.

Kay Industries was not a recreational vehicle factory but rather an empty office that McNamara had set up, furnished only with a phone that forwarded calls to his operations in Long Island.

There were probably around 30 or so van conversion outfits in the U.S. at the time, the majority of them being located 150 miles north of Indianapolis in Elkhart, Indiana, the center of the domestic RV industry. Using an Indiana address gave McNamara’s fake company credibility, but using an Elkhart address would have been too risky as there would have been too many General Motors reps sniffing around.

McNamara’s Buick store would “buy” the vans from Kay Industries and proceeded to produce MSOs with fake VINs which they forwarded to GMAC to obtain the financing. (It is not clear but we assume the vans were all Fords and Dodges because even the bold McNamara would not risk using Chevrolet and GMC vans so as not to risk GMAC from cross-checking VINs with General Motors.) The vans were then “sold” to another sham McNamara company, an auto export firm called Harbor East Equities, which in turn “sold” them to the bogus Cyprus firm Cydonia Trading Ltd.

So Kay Industries started cranking out thousand of vans per month, instantly becoming one of the highest volume converters in America and GMAC dutifully handed over an estimated $25,000 per phantom unit to McNamara, all based on bogus paperwork.

conversion-van-factory courtesy

A real van conversion factory; McNamara’s facility was an empty office in Indianapolis.

GMAC was oblivious to the implications of a previously unknown company building a high volume of units, despite them working with other van conversion firms. No GMAC official ever drove the 240 miles from their Detroit headquarters to visit Kay Industries. No calls from GM Detroit headquarters to the General Motors Indianapolis zone office were ever placed (“My God, Bob, GMAC is flooring a zillion Ford and Dodge conversion vans out of a factory in your backyard. Go visit them and get them to switch to Chevy and GMC chassis!”)

Instead, GMAC modified its computer systems to accommodate the added volume. They would occasionally shut down their Long Island zone office so employees could concentrate on processing McNamara’s paperwork. Those sessions were nicknamed by employees as, “Mac Attacks,” or “Give McNamara Another Car (GMAC)” days. They gave him 60 days to pay, twice their norm. The bank probably profited $50 million on floorplan interest over the years from McNamara, so they were intent on giving their important client the best service possible.

Meanwhile, McNamara was spending the money like a drunken, well, car dealer. He purchased a golf course in Florida, a private jet, over 100 properties and a Nevada gold mine. In a delicious irony, he bought an auto finance company, one of over 70 firms he owned or in which held a partnership. His net worth soared to over $300 million.

For ten years McNamara paid GMAC back the floorplan loans with interest like clockwork using proceeds from GMAC’s newer loans, but naturally had to increase his volume to maintain his lifestyle. He became a mini-Bernie Madoff, always betting that the stream of cash would never end.

By 1991, Kay was “producing” an astounding 53 percent of all conversion vans built in America. In December of 1991, Kay actually out produced all other U.S. van customizers combined by building 17,000 units on paper. John McNamara’s greed was out of control.

That milestone month triggered the beginning of the end for McNamara. A GMAC bean counter raised a red flag over Kay’s $425 million month and the company soon noticed that the VINs in question never turned up in registration reports. They asked McNamara where the 17,000 vans were located and he said 11,000 were still at the plant being converted and 6,000 were already shipped overseas.

We can only imagine the look on the face of the GMAC official who went to check out Kay Industries and discovered the empty office and realized his company had been snookered. The company notified the Department of Justice.

Vans Courtesy

McNamara was arrested in April 1992 and charged with mail fraud, wire fraud and money laundering. His assets were seized but he did make his $300 million dollar bail, presumably money he somehow made outside the scam.

McNamara later testified that it was “easy” to fool General Motors. When GMAC would conduct surprise floorplan checks at his store, he claimed to always be tipped off as to when they would be coming and would manage to convince them that the vans existed.

This testimony from a later case involving McNamara from an article in the The New York Times may explain why the scam went undetected for so long:

Once, Mr. McNamara said, he received a call from a financing agency official in Detroit, who told him that the company’s computers would not accept the serial numbers the dealer was supplying. “The computer was spitting out the serial numbers,” Mr. McNamara said, adding that the G.M.A.C. employee asked him what he wanted to do about it.

“I asked, what’s easiest for him?” Mr. McNamara recalled. “He said, ‘To override the computer and accept the serial numbers.'” Mr. McNamara said he told the worker it seemed a fine idea to him, and it was done.

He also stated that he gave free service and deep discounts on vehicles to local GMAC officials, a charge GMAC denied.

He would plead guilty in September 1992 and faced 20 years in jail and an $800 million fine.

This is where the story gets blurry. McNamara mysteriously was allowed to remain free and got to keep around $2 million in assets. Lead prosecutor assistant U. S. Attorney Loretta Lynch, now U. S. Attorney General, admitted that McNamara was leading a personal life similar to pre-conviction. He opened an auto parts supply company and continued to live in his Long Island mansion. McNamara transferred all of his homes to his then-girlfriend Diane Dangerfield. (Based on her great name alone, Hollywood should have made a movie about this story.)

It turns out the Feds wanted him to finger some local politicians he admitting to have paid off for favors on his building projects in exchange for a reduced sentence of 5 years and a chance to enter the federal Witness Protection Program. Three of those officials were later acquitted of bribery in 1995.

After that, the news stories stopped. Where is the now 75-year-old John McNamara?

When GMAC pulled McNamara’s line of credit, they would not get reimbursed for $436 million dollars worth of vans. Their reaction to this embarrassing loss was to force the retirement of, or reassign and discipline, a handful of managers. In what must be the greatest corporate spin of all time, GMAC said their internal investigation of the McNamara case “did not reveal systemic problems with GMAC’s operating and control procedures in its core business functions.”

One final note: when John McNamara was first confronted by federal officials he reportedly said, “What took you so long to catch me?” Or as Jerry Lundegaard said above, “I’m cooperating here!”

Get the latest TTAC e-Newsletter!

46 Comments on “The Dealer Who Swindled $6 Billion From General Motors...”

  • avatar

    For every con artist there’s a bureaucrat that is more than willing to cater to the first one’s wishes.

    • 0 avatar

      I just can’t believe this didn’t raise a red flag, or even an eyebrow. It’s like a piece of humorous advice I read once on how to get away with laundering money:

      “Remember, plausibility is key when setting up a front company. No pizza parlor in the world takes in three billion dollars a year.”

  • avatar

    I attended the GM shareholders meeting (conveniently in Ft. Wayne Indiana that year) right after this story broke. The skewering that management got from the floor was hilarious. Roger Smith’s face was even redder than usual, if that was possible.

  • avatar

    Great article.

  • avatar

    Dealership owners/management take note. This is a federal crime that is taken very seriously, no matter how small the lender that has your floorplan may be. My BIL narrowly escaped a prison sentence, but was still convicted of felony crime. His boss (owner) was not so lucky and is still in the federal pokey for a much, much smaller amount of money and # of vehicles.

    • 0 avatar

      Why is it that everybody’s brother-in-law is always shady, inept and involved in some get-rich-quick scheme he lacks the brains and ruthlessness to properly execute?

      It’s kind of like how the guy who marries your daughter or your sister is always a worthless, deadbeat dumbass and everybody’s got a cousin who lives in Buffalo.

      • 0 avatar

        Per Jimmy Buffet everyone has a cousin… in Miami.

        This scam sounds like a classic paper chase, as long as the money keeps flowing who cares. But its truly unbelievable that nobody physically went to see the metal. You think at some point an insurance adjuster would have gotten involved to ensure their assets were covered.

    • 0 avatar
      Piston Slap Yo Mama

      The trick is to steal a fcuk-ton of money. Only one banker went to jail over the billions stolen in the 2008 financial crisis, and it’s regarded that he was a scapegoat & mostly innocent.
      On the other hand you can literally spend months in jail, or even die there for stealing $5 in junk food:
      Never has the saying “go big or go home” been more applicable.

  • avatar

    That’s a hell of a story. I had no idea. And I most people don’t. It reminds me of that movie “The Other Guys,” where cops will gloat over busting someone for theft of a few thousand dollars–meanwhile, there’s a scammer making hundreds of millions, and no one even knows or cares.

    So that means that 53% of the conversion vans of the time were imaginary? (I miss conversion vans dearly, by the way. The ultimate family hauler.)

  • avatar

    I’d like to know what decision-making dumbass at GMAC bought the idea that ONE SINGLE COMPANY processed a quarter-million conversion vans.

  • avatar

    I don’t believe that they couldn’t have found where all the money went. With McNamara in jail, they should have questioned him 24-7 until he revealed where every dime went. Basically everyone was too lazy to pursue this. Our criminal justice system is weak and ineffective.

    • 0 avatar

      Some of the money went into the pockets of corrupt officials like Loretta Lynch. She let him disperse most of his assets as it suited him in exchange for help in trying to manufacture prosecutions of her political opponents, which she failed to do. Oh well. Being incompetent and crooked made her a perfect successor for Eric Holder.

      • 0 avatar

        We need to abolish whatever civil and criminal immunity for prosecutors exists. While we’re at it, let’s apply the same criminal standards for lying and fraud that the DoJ applies to businesspeople to our politicians and public employees. It’s time our rulers had to live by the same rules we do.

        Judges and juries should be informed about whatever plea bargains have been offered prior to trial (so they know the true value the prosecution places on the crime). Likewise, prosecutors should have to explain to judges and juries their rationales for exercising prosecutorial discretion.

        • 0 avatar


          I’d love to see Nancy Pelosi and Chuck Schumer indicted under the same laws that sent Bernie Madoff up shit creek.

          Madoff only stole $65 billion from the American people. How many times that figure have Americans lost to the various tax hikes perpetrated by the likes of liberal Democrats?

    • 0 avatar

      If you steal enough money and make sure the right people are somewhat complicit you will not do serious time. Most political/bureaucratic types want these kinds of problems to go away quickly and quietly, and long trials and extensive depositions cast too much sunshine in too many dark corners.

  • avatar

    On occasion, being close to desperation, I had been known to floor a used car or two at several companies. Once payroll was cleared and cash flow back to normal, everyone got paid. I told myself I was just extending the “float” in the interest of maintaining the status quo and keeping everyone employed. Had it been exposed, fraud would have probably been mentioned. Years later, keeping that store open was mentioned when promoting me to zone officer. It is a fine line between hero and zero.

  • avatar

    Great article, Steve. I had read about this scam before, but you explained it better than I’d seen before. Just think, Michael Moore exposed Roger Smith’s incompetence 3 years earlier, in 1989 in his film “Roger & Me”. The shareholders and directors had the opportunity to clean house – and they didn’t do it. In fact, they never did it until The Great Recession buyout, and then the government did it for them.

    I always thought that this scam is the best evidence that bad management was a bigger problem than the UAW.

  • avatar

    Let Karma catch up to McNamara and all the other swindlers!

  • avatar

    My dad was a salesman at McNamara in the 80s. I almost bought a GN from him but went with the Mustang GT instead. It’s one of my only regrets, never buying a car from the old man.

  • avatar

    What an amazing story .

    I’ve heard so many in my years but this one has amazing amounts of Dollars attached to it .


  • avatar
    87 Morgan

    Having worked for GMAC and the later firm known as Ally, reading this is not surprising. They ‘lost’ similarly with the infamous Bill Heard, or Mr. Big Volume, as he liked to be referred to. GMAC would routinely put the screws to the small guys and allow the larger retailers to swindle them blind. I equate it to the same issue the IRS has, the really smart people work for the cheats, they pay better. So you are left with employees that can only uncover the most basic of fraud while the more sofisticated frauds happening down the street go on unabated until they are too large to continue as a matter or course. Every Ponzi scheme has a break point.

    In terms of GMAC, couldn’t happen to a better and more arrogant group of Asshats in Southfield MI.

    • 0 avatar
      Steve Lynch

      So true.

      I remember Heard’s north Houston store, Landmark Chevrolet, being called Land Shark Chevrolet by the locals.

      Everyone in the business knew that the Heard organization was crooked…except for GMAC. By the time they found out it was too late and it cost them millions of dollars.

      • 0 avatar

        I remember when he closed but AFAIK it was never public information as to why. I once visited Landmark when I was looking for a work van. Took no time to realize I wanted nothing to do with them.

        Are we to understand then, that he was cheating on his floor plan?

  • avatar

    General Motors is a pathetic corporation, having a level of ingrained, systemic incompetence very nearly unprecedented in all of American Corporate History.

  • avatar

    Call him “The Wolf of Port Jefferson.”

    Awesome story!

  • avatar

    ” We need to abolish whatever civil and criminal immunity for prosecutors exists. While we’re at it, let’s apply the same criminal standards for lying and fraud that the DoJ applies to businesspeople to our politicians. It’s time our rulers had to live by the same rules we do.”

    Yeah , right , that’s going to happen ~ I’ll hold my breath waiting……


  • avatar

    IIRC, there was a passage in the Delorean book, where he describes problems with GM computer systems. GM could not tell which vehicles were sold and many dealers were never billed for the units they had been delivered.

  • avatar

    OMG this has the Cohen Brothers written all over it!

    Can’t wait for the film. Now guys, just write the screenplay and get it made. Any suggestions for who gets to play McNamara? Perhaps it can only be Bill Macy.

  • avatar

    How could no one realize that one small dealership was moving absurd volumes of vehicles and NONE of them were GM!!

  • avatar

    Wonderful article. It is amazing that someone would try and get away with this crap.

  • avatar

    Slightly OT: Frances McDormand – one of my faves…

    “I asked, what’s easiest for him?” Mr. McNamara recalled. “He said, ‘To override the computer and accept the serial numbers.’” Mr. McNamara said he told the worker it seemed a fine idea to him, and it was done.”

    Ahh, the “Human Factor”, one of many that made the whole thing possible. Back in the day, computer systems were only as smart as their dumbest operator – these days, internal flags would allow only someone of much higher rank (and IT oversight) to (deliberately) commit fraud on this scale.

  • avatar

    Crazy that he could get away with this for so long – and stay out of jail when caught.

    One question, what does ‘floorplan’ mean in this context?: he approached GMAC with a request for them to floorplan conversion vans

    • 0 avatar

      A floorplan is short-term inventory financing through a line of credit, used by retailers who are selling something that is relatively high in price, expected to sell in a fairly short time (usually one year or less), and more often than not, when there are uniquely identifiable units (such as VINs).

      The entity financing the floorplan for the dealer has a record of the VINs, but unlike the consumer’s loan used to buy the vehicle, the floorplan doesn’t record a lien against an individual vehicle’s title. So when a particular vehicle sells, there is an expectation to pay for that unit within a certain number of days. But if a dealer has a large enough churn, they’re adding and subtracting units at such a pace that one could possibly “skim” the plan by pocketing the money for a particular unit, and burying the deficit in the constant cycle on inventory that is (legitimately) included in the plan’s outstanding balance,

      That’s why financing entities are supposed do a periodic check of VINs, either electronically or with a physical check of inventory. But physical inventory checks are an arduous process, often performed by low-paid newbies of the bank, and…”Hey, young fella/lady! I noticed you took a shine to that unit that I’ve got some money in (due to curtailment, or principal reduction). What say I let you have it for 70% of invoice?”

      Get the drift on how a plan can be corrupted? Or at least, it could have been, back when I audited a few of them for banks, back in the ’80s. Unfortunately, most of the ones I did were for mobile homes, heavy equipment, and cattle, and I think those dealer knew I didn’t have much use for a cut-price house trailer, a piece of oil platform equipment, or a bull.

  • avatar

    The “Floorplan” is a loan that a bank makes to a dealer to finance his inventory. Nowadays the bank shows up at regular intervals and check the VINs on the cars on the lot to make sure that the cars on the books match.

  • avatar

    This is absolutely hilarious. I don’t understand how GM hasn’t gone under yet. There has to be many more examples of this that probably weren’t uncovered or swept under the rug to prevent further embarrassment.

    I’ve never bought a GM car and I’ve never cared to. After reading this story, I don’t think I’ll ever buy a GM vehicle. This type of stupid is hard to get rid of, and based on how they ran things afterwards, I’m sure much of that stupid is still there.

  • avatar


  • avatar

    Someone should hire McNamara to ferret out others , since he knows many of the tricks

  • avatar

    My dad was a salesman at McNamara in the 80s. I almost bought a Grand National from him he kept pushing that damn true coat on me.

    But seriously, I bought a Mustang GT instead. That’s one of my regrets, never buying a car from my dad.

    Speaking of true coat, back in the 70s he sold an undercoating job on a new car. I don’t know why it didn’t get done before delivery (I was just a kid) but he bought a couple cans of undercoating spray from the local auto parts store and applied it himself while lying on the ground. His arms were black up to his elbows when he came home that night. I miss my dad.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Jeff S: NATO was created following WW II as an alliance of free Western European countries to protect themselves from...
  • ToolGuy: Here’s a political question: Why don’t we celebrate on July 2? Or August 2? How about September...
  • Jeff S: Dude you seem to thrive on this and I didn’t see Syke’s comment as starting a political...
  • Art Vandelay: Except that EB didn’t start it…the first political comment was by Skye. Perhaps you skipped...
  • Jeff S: @Art Vandelay–EB is the one that starts these political discussions and whether we like or don’t...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber