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Troubled Auto Dealership : A Star of Compton's Redevelopment Dims

January 29, 1989|MICHELE FUETSCH | Times Staff Writer

COMPTON — Except for some office furniture stacked in the middle of the floor, the showroom is empty. So are the outdoor car lots. The service department is deserted, the shelves stripped of auto parts. There is only one employee now--a watchman--where as many as 65 people used to work.

And instead of having a steady flow of city sales tax revenue and rent money, Compton has a vacant building in its auto mall, a bounced rent check for $9,000, and an IOU for $115,887 on an unpaid loan.

Brett Mitchell Chevrolet, a firm heavily subsidized with city redevelopment money, closed late last month after the state Department of Motor Vehicles suspended the firm's operating license for 30 days for a series of law violations.

Shortly afterward, General Motors removed the cars and auto parts as collateral for what Mitchell owes its finance company subsidiary, a GM spokesman said. Last week, the DMV canceled Mitchell's business license, and state tax officials slapped a lien against his firm.

For the 30-year-old Mitchell, the legal and financial problems may have permanently derailed a fast-track business career that seemed to be soaring last May when the U.S. Small Business Administration honored him as "Young Entrepreneur of the Year."

For city officials, Mitchell's problems amount to what could be a major redevelopment failure. Despite heavy financial investment in the Compton Auto Plaza and in individual dealerships there, the city has not been able to attract more than four dealers to an auto mall originally designed for 14.

Mitchell insists that the DMV action is the result of a bureaucratic mix-up by the state and that he will soon reopen for business. "We stand ready to fight and defend ourselves against all charges," he said in a brief telephone interview this week.

However, Al Mateer, head of the DMV's legal division, said: "I will be a very surprised person if he gets his license back."

When Mitchell's license was suspended Dec. 22, the DMV said he had not paid about $4,400 in registration fees and fines for cars sold by his dealership last year. It also charged that he resold car loan contracts. For example, the DMV said, Mitchell sold a loan contract on a car to the Bank of America, pocketed $20,766 and then resold the contract to General Motors Acceptance Corp.

Two weeks earlier, Mitchell and his wife, Elaine, also 30, were arrested in connection with the alleged writing of two bad checks to Beverly Hills Auto Imports for the purchase of a 1988 Volvo station wagon that cost $27,247. When Mitchell subsequently paid the dealer, the charges were dropped by the county district attorney.

Last week, in conjunction with a hearing held Monday before an administrative law judge, the DMV canceled Mitchell's operating license, saying that for two years he failed to file corporate charter information required by the secretary of state.

Papers Filed Again

Mitchell said in an interview that he had previously filed the appropriate papers but that to please state officials he filed again this week. He also said that since his suspension last month he has paid all the fees and fines he owes. A spokeswoman for the DMV confirmed that the money he owes the department has been paid.

Two more hearings are set for March 16 and 17, however, and the DMV's Mateer said that the state will fight any move by Mitchell to regain his license. Even if the court finds that Mitchell's charter refiling is justification to reverse the DMV, there is still the allegation about resold car loans, which if proven would constitute fraud, Mateer said.

In addition, the State Board of Equalization, which collects sales tax revenue, has issued a lien for $110,721 against the dealership.

GM spokesman Tom Hoxie said that the auto maker is "not going to rush into terminating (Mitchell's) agreement with us." If his license is reinstated and he demonstrates that he is able to pay GM and continue operating the business, Hoxie said, the corporation will return the cars and auto parts.

Even if Mitchell pays his tax lien and solves his legal problems, he still has other debts. The city helped him establish the business in 1985 when it was searching for a new Chevrolet dealer for the auto mall, then the centerpiece of a 66-acre redevelopment zone along the Artesia Freeway. Two previous Chevrolet dealerships had already closed their doors there--Barnett Chevrolet and Plaza Chevrolet owned by Fred Robbin of San Diego. After that the city Redevelopment Agency bought back the dealership showroom, car lots and service garage.

Mitchell owned two parcels of land in Compton's downtown. He sold the parcels to the city and with the money from the sale moved into the auto plaza. The city paid $725,000 for the two parcels, although Mitchell had purchased them less than a year earlier for about $335,000.

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