HUNTINGTON BEACH — A complaint seeking $3 million in civil penalties for misleading sales tactics was filed Thursday against Friendly Ford of Huntington Beach, a new-car dealership that advertises widely on television, as well as some of its officers and directors.
After a two-year investigation, the complaint, which also seeks restitution for victims, was filed in Orange County Superior Court by the state attorney general, the state Department of Motor Vehicles and the Orange County district attorney.
Michael R. Botwin, a deputy attorney general, also confirmed that the DMV is conducting an ongoing criminal investigation of Friendly Ford.
The civil suit contends that Friendly Ford sales people tricked customers into paying $1,000 to $5,000 more for cars by making false statements and engaging in deceptive practices during sales negotiations. It also alleges that the dealership, which last year had gross sales of $55 million, failed to honor advertised prices.
"The conduct we have alleged goes far beyond sharp sales practices," Atty. Gen. John K. Van de Kamp said in a prepared statement.
"Customers were repeatedly lied to when they were negotiating sales contracts so that they unknowingly agreed to higher interest rates and incidentals, such as protection plans, service contracts and insurance, which they may not have wanted," he added.
Marshall G. Mintz, the attorney representing Friendly Ford, which did business until May, 1989, as Wilson Ford, said he had not yet seen a copy of the complaint. He contended, however, that the allegations are "totally without merit."
Mintz said that if Friendly Ford was engaged in wrongdoing, the investigating authorities would have taken action many months ago to stop it. "Why did they allow these alleged improper activities to proceed for over a year?" he asked.
In response, Botwin said the agency has been moving as quickly as possible considering the large scope and complexity of the case. And the attorney general is taking steps to obtain a court injunction to halt the alleged fraudulent practices.
Also named as defendants in the lawsuit are Ralph Williams, the general manager of Friendly Ford, who appeared in numerous television ads for the dealership when it operated as Wilson Ford; Richard G. Wilson, the dealership's president, a director and formerly a principal shareholder; Carl Westcott, another former large shareholder; and Rock Armstrong, the dealership's vice president, secretary, treasurer and a director.
The suit also seeks $500,000 in penalties and restitution from First Interstate Bank, which used Friendly Ford as its agent to obtain vehicle lease contracts.
Restitution also is being sought from four firms that acted as assignees of vehicle sales or lease contracts--Comerica Acceptance Corp., Far Western Bank, Ford Motor Credit Co., and Lendco Acceptance Corp.
JoAnn Black, supervising special investigator for the Irvine district of the Department of Motor Vehicles, said investigators have identified between 60 and 100 victims of the alleged misleading sales practices.
Elise Schuster, a resident of Hawthorne, said she drove to Huntington Beach on New Year's Eve in 1988 to take advantage of advertised low prices on new cars at the dealership then known as Wilson Ford.
Schuster, 26, said the sales people at the dealership convinced her that, in order to establish a credit rating, she should pay 20% interest to buy a 1988 Ford Tempo. She said she also agreed to pay for an extended warranty and many other options that she didn't want.
After six hours of discussion, Schuster signed "a stack of papers," she said, but only after the salesman assured her that she could refinance and renegotiate terms after six months. "But when I went back in six months to refinance it, I was told I had been misinformed," she said. "The result is that I am paying $24,000 for a $10,000 car."