The former general manager and six other people who worked at California's largest Chevrolet dealership have been charged with cheating customers by including hidden costs in sales contracts and then lying about the charges, according to a Los Angeles grand jury indictment unsealed Thursday.
Four former employees of Gunderson Chevrolet of El Monte--James Hoban, 45, of Irvine, who was general manager; Michele Davis, 55, of Norco, the former finance director; Randolph Cooper, 36, of Irvine, former used car manager; and Ronald Crumer, 53, of Corona, former finance manager--were released Thursday on bail ranging from $10,000 to $50,000. Their arraignments were set for June 18.
The three other defendants have not yet appeared in court.
Donald Robert Poteete, 56, of Los Angeles, a former finance manager for Gunderson Chevrolet, was arrested Thursday at his home. Hamid Ghanian, 40, of Fitchburg, Wis., who was general sales manager, is scheduled to turn himself in to Los Angeles authorities Tuesday.
A bond hearing for the seventh defendant, Patrick Albert Fisher, 53, of Mission Viejo, a former finance manager at the dealership, has been delayed because he is hospitalized with a heart ailment.
The indictment, which follows an investigation by the state Department of Motor Vehicles and the Los Angeles County district attorney's office, alleges that between December 1998 and May 2000, the defendants changed the terms of deals on car purchases and leases without the consent of customers at the dealership, owned by Auto-Nation of Fort Lauderdale, Fla.
The indictment also alleges that the suspects gave false and misleading information about the costs of vehicles and the amount of monthly payments.
As a result, more than 1,000 customers were overcharged, some as much as $6,000, said Deputy Dist. Atty. Jeffrey McGrath.
The problem began in late 1998 shortly after the longtime family-owned dealership was bought by AutoNation, and the company hired Hoban to run its sales team.
McGrath said Hoban began assembling a team of employees who were willing to deceive customers.
AutoNation, which did not endorse the behavior and has cooperated with prosecutors, had held a training seminar in which it told Hoban and his staff that it would not tolerate deceptive sales tactics. But Hoban, who made $400,000 a year, told his employees to ignore it, McGrath said.
He had sought $1-million bail for Hoban and Davis. McGrath said the two are working at other car lots. McGrath said Hoban is a sales manager in the Los Angeles area, but he did not know where Davis is working.
"The threat to the public is real," McGrath said. "These people do not feel what they did was wrong."
But attorneys for Davis and Hoban said that the allegations have been exaggerated and that the matter belongs in civil court, not criminal court.
Hoban's attorney, Gary Lincenberg, also said that setting a $1-million bail would be excessive.
Hoban "fully intends to make his appearance in this court," Lincenberg said. "There is no flight risk whatsoever."
Superior Court Judge David Wesley agreed that $1-million bail was too high. He set Hoban's bail at $50,000 and Davis' at $20,000. He set bail for Cooper and Crumer at $10,000 each.
Wesley also denied a request by McGrath to bar the defendants from working on car lots while the criminal case is pending.
Oscar Suris, a spokesman for AutoNation, would not comment on the charges.
However, he said AutoNation has tried to make amends to its customers, including hiring a new management team.
The company also has issued refunds to hundreds of customers and last month settled a $2.5-million civil lawsuit with others.
"For a year we have been working with all the authorities in this matter and addressing customer concerns," Suris said.