From Detroit Free Press
CHICAGO — The controversy over DaimlerChrysler AG’s lending policies in Chicago, where the company is under a boycott and sales of the automaker’s vehicles continue to erode, appears to have escalated.
Two longtime Chicago automobile dealers accuse DaimlerChrysler of harassing them because they plan to testify in a federal lawsuit on behalf of a former dealer, who accuses the automaker of racist lending policies. They say the company has made unreasonable requests for documents through subpoenas.
Michael Christopoulos, president of Olympic Dodge in Chicago, and Pat Fitzgibbons, owner of South Holland Dodge in a suburb of Chicago, are coming to the defense of plaintiff Gerald Gorman.
In February 2003, Gorman and some of his minority customers filed separate lawsuits against DaimlerChrysler, alleging that Chicago-area DaimlerChrysler executives wouldn’t give loans or fair interest rates to black customers at his two dealerships because the stores were located in minority neighborhoods. A dealer in Texas, Rick Perez, and his customers filed similar lawsuits against DaimlerChrysler in late 2003.
DaimlerChrysler has maintained that it does not tolerate discrimination and that the Chicago lawsuits are a smokescreen to cover up financial and legal improprieties by Gorman’s dealership, including falsifying information on credit applications. The company has dismissed the Texas lawsuits as copycats.
Chrysler spokesman Jason Vines said he did not know why Christopoulos or Fitzgibbons would accuse the company of wrongdoing, denied that the company has harassed or tried to intimidate them and said this case is really about Gorman.
“This guy mismanaged his dealership. This guy defrauded his own customers. And when he got caught, he created a smokescreen of racism,” Vines said.
Christopoulos and Fitzgibbons, the former chairman of the Chicago Auto Trade Association, recently told the Free Press that, like Gorman, they witnessed top DaimlerChrysler executives in Chicago using racial slurs and observed suspicious lending decisions involving DaimlerChrysler’s computerized system for evaluating and approving automobile loans.
“I had customers that came to my dealership to buy automobiles – were turned down because I’m in a primarily and predominantly minority area,” Christopoulos said. “I’ve got the names of the people, so I don’t know how they’re going to say this never happened to me, because it did.”
In depositions for the Gorman case, DaimlerChrysler employees have alleged that the company’s longtime former Chicago zone manager, Erv Sirovy, regularly used racist language in the office for years and asked the race of a loan applicant at least once. But both Christopoulos and Fitzgibbons said they also plan to testify that Sirovy’s replacement, Ben Boggs, also made racist remarks related to financing of vehicles for minorities.
While Sirovy said he was fired from DaimlerChrysler in 2001, before DaimlerChrysler said it was aware of his remarks, Boggs is still employed with the company. DaimlerChrysler has said it investigated allegations that Boggs used racial slurs and found them to have no merit.
Because of their impending testimony, both Christopoulos and Fitzgibbons said they believe that DaimlerChrysler is trying to intimidate them.
Christopoulos said it would probably take a month to produce all the documents that the company has asked for in subpoenas. DaimlerChrysler has asked his store to turn over all its advertising for the past four years that “relates in any way to financing” and paperwork “for each and every customer that purchased a vehicle with financing from Olympic Dodge” between Jan. 1, 2000 and June 30, 2003, among other documents.
“This was designed in my opinion … to scare me into not testifying for Mr. Gorman,” Christopoulos said.
Fitzgibbons received a similar subpoena.
“I’m a witness – not a litigant,” Fitzgibbons complained. “It’s quite intimidating.”
Gorman’s attorney, Chris O’Hara, called DaimlerChrysler’s latest moves “harassment and delay” tactics.
Vines said the company’s lawyers are being very thorough in their subpoena requests because the charges are so serious.
“We don’t believe it’s excess at all and in no way serves as intimidation,” he said. “When you’re trying to get to the crux of a matter, you want to be thorough.”
The lawsuits against DaimlerChrysler have sparked enormous controversy in Chicago, where they have received substantial media coverage and contributed to a high-profile, and seemingly successful, boycott of Chrysler, Dodge, Jeep and Mercedes-Benz vehicles.
Between January and May of this year, overall sales of new vehicles were down 3 percent in Chicago’s Cook County. But they were down 26 percent for DaimlerChrysler’s products, according to new-vehicle registration data from Southfield-based R.L. Polk & Co. In 2003, when the boycott began, new-vehicle sales for DaimlerChrysler were off 19 percent in Cook County compared to the prior year, but they were down only 4 percent nationwide.
If the boycott is the reason for the lower sales, Vines said, “it is grotesquely unfortunate considering the facts that are starting to bear out in this case.”
Depositions taken of Gorman’s customers do allege suspect sales practices at one of Gorman’s two dealerships, such as customers being charged arguably excessive fees, financing charges and prices. Five of the eight plaintiffs in a lawsuit filed by customers in Chicago have asked to withdraw from the case.
According to the depositions, there were lies on some customers’ credit applications, such as incorrect income levels, but it’s unclear where those misstatements originated. Testimony taken from at least one DaimlerChrysler employee suggested some of the misstatements originated at a place in the company’s computer system that neither Gorman nor his employees had access to. DaimlerChrysler also has fired one of its own employees in connection with the fraud.
Several of the vehicle purchases that DaimlerChrysler is pointing to as proof of improper behavior at Gorman’s store occurred after the automaker said it cracked down on fraud problems at the dealership.
DaimlerChrysler never reported to police the alleged fraud at Gorman’s dealership, which it said it discovered by January 2001, nor did it shut down Gorman’s two dealerships before he filed his lawsuit two years later. Gorman sold his Marquette Chrysler-Jeep store in January 2003, and his Dodge of Midlothian store went out of business in October 2003.
Vines said that is because “you can’t take the keys out of a bad dealer’s hand in one day.”
This latest flare-up in the dispute seemed to begin after May 20, when DaimlerChrysler sent a letter to its dealers that updated them on the developments in the two Chicago lawsuits. In the letter, the company accused Gorman of unethical business practices, denied wrongdoing and wrote that “in the end, Chrysler Financial shut down a dishonest, crooked dealership that was duping and defrauding both its customers and Chrysler Financial.”
Christopoulos said the letter irritated him and several other dealers, who said the company should have known better than to try selling that position to businessmen who have dealt with the company and its management for years. Soon afterward, an anonymous fax – signed “A Fellow Dealer” – was sent to Chicago-area dealers challenging DaimlerChrysler’s position.
Then, on May 27, Christopoulos wrote a letter to DaimlerChrysler that questioned whose “brainstorm” it was to send the letter.
“I believe all of those things happened here at Olympic Dodge, and in addition, we have been coerced by” senior managers, Christopoulos wrote. “You know for a fact that loans for customers have been turned down at my dealership then later approved at other dealerships. … The one thing they do agree on is that DaimlerChrysler, and most notably their senior management, is not to be trusted.”
On June 6, Christopoulos was served with a subpoena at home at 10:30 p.m.
“They could have served me at my office,” he said. “If someone was genuinely interested in getting these things, and not attempting to intimidate you, they would call at 10 o’clock in the morning.”
Vines said Christopoulos was not at the office when the company initially tried to serve him.
Three days later, DaimlerChrysler responded to Christopoulos’ letter.
“Chrysler Financial has not discriminated against the customers of Olympic Dodge or any other dealership on account of the customer’s race,” wrote Peter Guthrie, manager of the company’s Chicago business center.
“Chrysler Financial purchases retail installment contracts of vehicle buyers living in all neighborhoods throughout the Chicago area.”
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