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New Indictment Delays Ex-Auto Executives' Trial : Courts: Three former American Honda sales officials, one from O.C., already face fraud and racketeering counts. New charges or even new defendants could be added.

October 21, 1994|JOHN O'DELL | TIMES STAFF WRITER

Federal prosecutors have delayed the racketeering and fraud trial of three former American Honda Motor Co. executives as the government prepares an indictment that would add new charges or even new defendants to the case.

The new action, called a superseding indictment, could be issued by late next week, according to sources. Although such a document could also be used to lessen or even dismiss existing charges, legal experts say this is unlikely.

The trial, originally scheduled to begin Nov. 1, will be postponed until early next year.

The former executives were charged in March in a nationwide probe of dealer complaints that some American Honda officials demanded huge bribes in the 1980s to award lucrative Honda franchises or to increase dealers' vehicle allotments. At that time, the cars were among the best-selling in the country.

How many new charges are being contemplated by prosecutors--or whether the rewritten indictment will reach beyond American Honda in Torrance and into Honda Motor Co. headquarters in Tokyo--could not be learned.

The initial indictment named 17 former American Honda officials. All but three have pleaded guilty, including four of the five Orange County residents charged.

The three former officials who had been scheduled to go to trial Nov. 1 in Concord, N.H., are Laguna Hills resident S. James Cardiges, senior vice president for sales until April, 1992; Dennis R. Josleyn of Penn Valley in Northern California, an American Honda West Coast zone manager until April, 1992; and John W. Billmyer, a Raleigh, N.C., resident and American Honda's vice president for auto sales until March, 1988.

Cardiges and Josleyn are charged with conspiracy, mail fraud and racketeering and face up to 30 years in prison. Billmyer is charged with conspiracy to commit mail fraud and faces up to five years in prison.

Philip D. Israels, Cardiges' attorney, confirmed that his client has been told that there will be a new indictment. Israels said he does not know the scope of the new charges but added that any additions to the list of defendants would support his longstanding claim that "Mr. Cardiges is merely a scapegoat."

A spokesman for American Honda on Thursday said the company could not comment on any pending new indictment but has been cooperating with federal officials in their investigation. Honda, he said, "has been victimized" by the independent actions of a handful of rogue executives who acted without the knowledge or consent of company officials.

The Honda investigation was spawned by a 1991 civil suit in which a New Hampshire dealer alleged that Honda's Acura division failed to deliver his allocation of the luxury cars.

Assistant U.S. Atty. Michael J. Connolly said the probe ultimately expanded to 26 states, including California. Investigators determined that only about 35 of American Honda's 1,200 Honda and Acura dealers had been involved in the kickback schemes that were in operation from 1979 until 1992.

In that period, investigators allege, defendants in the case took as much as $10 million in bribes from dealers who paid the money to get Honda or Acura franchises or to get more of the fast-selling cars than Honda allotted to their competitors.

Cardiges, according to court papers filed in March, led the pack, accepting about $5 million in bribes that he carefully logged into a special black leather ledger he kept locked in a cabinet at his home office.

Prosecutor Connolly said this week that a new trial date for Cardiges, Billmyer and Josleyn will be set on Nov. 18.

Israels, Cardiges' attorney, said he has been told by federal prosecutors that his client will be arraigned under the new indictment that day.

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