By on September 10, 2018

The financial chicanery of a few automotive dealerships continues apace, with a group of Nissan and Hyundai stores finding themselves in several million dollars’ worth of hot water.

Reps for the captive finance arms of those two brands allege that five dealerships owned by auto retail veteran Michael Saporito and former NFL linebackers Jessie Armstead and Antonio Pierce sold nearly $10.5 million worth of vehicles out of trust. Nearly a hundred machines are allegedly missing, as well.

According to Automotive News, someone suspected something was amiss back in July, when audits carried out by Hyundai Capital America came up with discrepancies between the group’s Hazleton Hyundai and Hazleton Kia locations. Not long after this brouhaha, reps from Nissan Motor Acceptance Corp. turned their sights on related Nissan dealerships in Michigan, allegedly identifying more than 400 vehicles that had been financed but could not be located. Last month, lawsuits filed in two separate states purport that Nissan Finance is owed nearly $10 million for vehicles sold out of trust.

In case you missed it last time, here’s a quick course in dealership terminology. For purposes of this post, “out of trust” refers the sale of a car that has been paid for with a loan, but the sale proceeds have not been used to pay back the lender. This creates an unsecured debt the dealer then owes to the finance company.

On July 30, an employee of Data Scan Technologies, hired by Hyundai’s captive finance arm, performed an audit at the Hyundai and Kia stores, identifying 45 Hyundais and 41 Kias — many of which were titled to Hazleton Honda or Hazleton Nissan, according to a verification filing. This is not kosher, as it is said to violate the loan agreements with Hyundai Capital.

If these other stores then granted their brand’s captive finance arms a security interest in the vehicles, that would compound the problem. Folks don’t like it when a person double dips their tortilla chips, let alone floorplan financing. Repayments to the finance companies are reported to also have been missed. Car carriers appeared at a few of the dealer lots and whisked away inventory.

The Nissan dealers in Michigan wrapped up in this debacle currently appear to be in a bit of the shambles. Automotive News reports one of their reporters was told by a person at the store in Dearborn that the place was open but unable to sell or lease vehicles due to “restructuring.” That’s grim. The industry publication went on to say, “On Thursday, Sept. 6, a service department employee at the Dearborn store said all the technicians had left to take jobs with other Nissan dealerships.” Yikes.

Talking heads are speculating the stores aren’t currently dark, thanks to feverish attempts on the part of Nissan to find new owners. Whatever the outcome, the mass exodus of staff will prove a challenge for whoever decides to try and rebuild the place, not to mention the public relations nightmare now associated with those locations. Nissan recently put on a push to increase its market share in the Detroit Three’s playground, with this dealer group being a large piece of that puzzle after All Pro Nissan opened up locations in Dearborn and Macomb about three years ago.

Your author always feels badly for dealer employees who did not create the problem, yet get caught up with — and have their lives affected by — these types of alleged backroom shenanigans. Here’s hoping they all land on their feet.

[Image: All Pro Nissan of Dearborn]

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40 Comments on “Sacked: Dealerships Owned By Former NFL Linebackers Face Legal Action...”


  • avatar
    FreedMike

    Sounds like the Jerry Lundegaard scam.

  • avatar
    OneAlpha

    Why can’t these morons ever just be happy with the millions they make playing some sport? They’re set up for life and they blow it all because it’s not enough to be rich – they’ve gotta be empire-builders.

    I read somewhere that opening a car dealership is Item #3 on the list of things that send professional athletes back to the ghetto from whence they came.

    • 0 avatar
      bking12762

      I can’t wait for this….

    • 0 avatar
      Chocolatedeath

      And somehow these thoughts made it from your brain to a keyboard.

    • 0 avatar
      FreedMike

      I suppose you could also ask Donald Trump why he wasn’t happy with the first billion he made.

      • 0 avatar
        slavuta

        Trump was happy with his first billion. I am sure. this is why he wanted another one. But he literally “built” it. These people are lucky ones. God gave them body, strength, and may be even talent to be what they are. They could of been born with down syndrome. Instead of saying “thanks god for giving us what we don’t deserve”, they decided to test God’s patience. so, they’ve got what they deserve.

        • 0 avatar
          healthy skeptic

          @slavuta

          You make it sound as though all NFL players are lottery winners. Do you have any idea of the time, effort and sacrifice it takes to make it to the NFL, much less become a superstar? Sure they have some innate athletic gifts, but most naturally gifted athletes don’t make it anywhere near the NFL. It takes a lot more than genes to succeed there.

          As for Trump, there’s a guy who should be thanking God daily for the wealth and privilege he received at birth. He is skilled at self-promotion and showmanship, I’ll give him that, but hasn’t built a whole lot that he didn’t somehow run into the ground. If it weren’t for the Apprentice, dude would be little better off than a busted-out ex-athlete.

        • 0 avatar
          formula m

          Finish that bottle of Russian vodka Slav

      • 0 avatar
        Tele Vision

        Probably because Trump spent two billion to make one billion. He’s that good of a businessman.

  • avatar
    I_like_stuff

    What is it with ex-athletes and car dealerships? They all think that because they can throw a ball or run fast, they can run multi-million dollars businesses. Hint: they can’t.

  • avatar
    notapreppie

    Can I get an ELI5 (explain like I’m 5) on this?

    • 0 avatar
      cammark

      I’ll second that.

      From context clues, this story sounds interesting but I feel my shortage of dealership-financials knowledge has obscured the details.

      • 0 avatar
        I_like_stuff

        They sold cars out of trust which basically means they sold cars, took the money and didn’t pay Nissan Finance what they owed on those cars. Dealerships typically take out a loan to buy a car from a manufacturer, when the car is sold, they’re supposed to pay that loan back. These geniuses, figured nobody would notice when 400 cars were sold but the loans were never paid back.

  • avatar
    Fred

    Lawrence Marshall in Hempstead TX was a huge dealership (Chrysler/Dodge/Jeep/Chevrolet/Cadillac/Ford/Hyundai ) that was partially brought down by Ray Childress (Houston Oilers) They blamed it on the economy but within the last couple of years they expanded to a huge lot off the new freeway expansion. I bought my 1999 Silverado from him about a year before they moved.

  • avatar
    Gardiner Westbound

    The car business thrives on deceit at every level.

    Manufacturers overpromise and underdeliver, game fuel economy, emission and crash tests, and cheat on recalls. They do death accounting, calculating if it is cheaper to hide a safety problem and pay death and injury claims than correcting it. Profit trumps morality.

    Dealers provide one of life’s most miserable shopping experiences. Numbers are tossed about; promises made and broken. It concludes in the business office with a polished salesman pressing the consumer to buy expensive extras, add-ons and services of negligible value. Most people leave the dealership exhausted, feeling like they need a shower.

    Service writers and mechanics, incentivized to upsell dubious products and services, cash in on customer trust. Naive clients are sold unnecessary inspections and service work. Unneeded extras are sold on recalls and warranty claims.

    Looks good on ’em.

    • 0 avatar
      87 Morgan

      Wow, just wow.

      Name an industry that does not up-sell please? Church, yup. Veterinarian? Sure brush my dogs teeth for $300…Banking? Let me introduce you to Wells Fargo. Men’s Warehouse? Sure add in the non slip deal so my shirts stays tucked in.

      Not every dealer provides a terrible experience. As someone who has spent most of a lifetime in and around it, the customer does not make it any easier. No one’s car is worth what they think it is, they owe more than it is worth, most can’t do math, have steak and potato taste with a hamburger helper budget, cut corners on the maintenance on their own car, then lie about it. I could on. It is a two way street with the deceit.

      • 0 avatar
        I_like_stuff

        “No one’s car is worth what they think it is,”

        I had a trade in once that KBB, Nada and Edmunds all said should be in the $20K range. Two dealers offered me $12K. I said the hell with this and sold it privately. I got $23K for it. But yeah, you poor car dealers…my heart aches for you.

        Plus what other industry tries to sell me a “protection package” for $700 that is basically a coat of wax? Or how about the four square? Or the extended warranty scams? Yeah Best Buy does that doo. But it’s $30 for an extended warranty on a TV, vs $3,000 for an extended warranty on a car.

        Nobody ever went broke buying a suit form Mens Warehouse. Plenty people go broke buying cars.

        See the difference?

        • 0 avatar
          bking12762

          Those people that go broke purchasing cars should go to the Free Will store to make a purchase.

        • 0 avatar
          87 Morgan

          People make bad decisions buying cars that are more than they can afford. ***THIS*** is not the fault of the car dealer.

          $3000 service contract for 7 years on a 50k car, cost is 4% of the value of the car to get an additional 4 years over factory for coverage totaling 7 years.

          or a $30 Service contract for an additional year on a $700 tv; cost is 4% to get an additional year over factory coverage.

          yeah, makes sense the 3k service contract is a bad idea…see your comment about going broke on the car, more people go broke in the shop without the service contract than those with it….

    • 0 avatar
      Lockstops

      So does every business and most professions.

  • avatar
    Lockstops

    “In case you missed it last time, here’s a quick course in dealership terminology. For purposes of this post, “out of trust” is like giving an NFL player a regulation football, but when they are later scrutinised we find out that some air has been let out of the football.”

    FTFY

  • avatar
    sportyaccordy

    I suspect that as the auto industry continues to contract, we will see more stories like this from the worst performing brands. The last story we heard like this was from a Ford dealer, correct? I believe a few years ago FCA was playing games with the 200; buying them as loaners or dealer cars and then selling them used with like 20 miles to get the prices to a level the market could bear. It’s gonna get ugly folks.

    • 0 avatar
      87 Morgan

      Honestly, the retraction has been slight. If your dealership is swirling the toilet bowl in this market you have no business owning a store in the first place.

      I do agree with you though, it may get rough for some folks here in the next 24 months, kinda depends on how interest rates go though.

    • 0 avatar
      Scoutdude

      You are mixing different things.

      One is a dealer who cheats his bank, which in this case is the mfg, by selling cars and not paying for them.

      FCA playing with the numbers to show sales that didn’t really take place is pretty much the opposite.

      The first is saying you didn’t sell a car even though it was sold why the other is saying that you did sell a car when you didn’t actually sell it.

  • avatar
    jpolicke

    I thought after the GMAC scandal John McNamara went into retirement in Florida. Apparently he started a second career going around the country giving seminars on his technique.

  • avatar
    jpolicke

    I thought after the GMAC scandal John McNamara went into retirement in Florida. Apparently he started a second career going around the country giving seminars on his technique.

  • avatar
    Duaney

    Football players are terrible businessmen

  • avatar
    Tele Vision

    I’m 48 and have owned but one new car in my entire driving life. I can afford them but I’ll likely never do it again. I’m quite happy to spend some time test-driving used cars on a weekend. I don’t lie to the ( invariably ) guys and I pay cash for what I want. It’s not like Ye Auld Days when a three-year-old car could easily be falling apart: today a decade-old pickup with 120,000 Kms might just need plugs/wires/tires/glass/. Easy cheese and no dealership hassles.

  • avatar
    CKNSLS Sierra SLT

    Just traded in my 2012 GMC Sierra on a new 2018 Crew Cab Silverado LTZ. Ultra clean-ultra low miles. Family run dealership. They offered me $21,000.00 for it which was LOW Bluebook. My sources said $26,000.00 was right in the middle of where it should been. After I countered their $21,000 trade in with $26,000.00 it took them a full half-hour to offer me $25,00.00 which I accepted. I really don’t know what took so long-for information I looked up on the Internet in 10 minutes. Other than that-it was a pretty straight forward deal.

    I hate dealerships.

  • avatar
    Erikstrawn

    “Your author always feels badly for dealer employees who did not create the problem, yet get caught up with — and have their lives affected by — these types of alleged backroom shenanigans. Here’s hoping they all land on their feet.”

    You can make a choice where to work. When I got laid off from the dealership, I said “Forget this.” and went into a different industry. The pressure to work dishonestly was worse than any place I’d worked before.


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