Chrysler Fires Back At Ex-Dealer
Automaker says Chicago seller who accused company of racist lending engaged in fraud
Brett Clanton, The Detroit News, May 19
DaimlerChrysler AG’s Chrysler Group fired back at a former dealer on Monday who has accused the automaker of racist lending practices, saying he was “engaged in a massive fraud scheme” that included lying on customers’ credit applications and conning buyers into taking bad loan deals.
Chrysler also filed court documents Monday seeking a swift end to a discrimination lawsuit brought against the company by customers of former Chicago-area dealer Gerald Gorman.
“In the end, Chrysler Financial shut down a dishonest, crooked dealership that was duping and defrauding both its customers and Chrysler Financial,” the company said in a statement.
The moves came in response to a separate court filing Monday by six customers, all African-Americans, who asked a federal court in Chicago to grant class action status to their discriminatory lending case against Chrysler Financial, the automaker’s finance arm, which originally was filed last year.
As a class action, the case would be open to thousands of Chrysler customers nationwide who may have the same complaint, and expose the automaker to a rash of unwelcome media attention.
In a statement Monday, Chrysler called the potential class action case “a smoke screen to cover up financial and legal improprieties on the part of the dealer, Gerald Gorman.”
Attorneys for the six African-American plaintiffs and Gerald Gorman could not be reached Monday for comment.
The lawsuits gained national attention, drawing civil rights activist Al Sharpton to Chicago in February to lead a demonstration against Chrysler at the Chicago auto show.
Gorman, who used to own two Chrysler dealerships, sued Chrysler last year, alleging that the automaker routinely turned down loan applications from his minority customers. The case still is pending.
But Chrysler said Gorman made an issue of its loan approval system only after the automaker questioned his business dealings.
Chrysler said Gorman had been overcharging customers and profiting from the gains, spending hundreds of thousands of dollars owed to the automaker to instead bankroll his wife’s political campaign, vacation homes and personal credit cards.
Chrysler uncovered 54 fraudulent contracts worth more than $1.3 million at Gorman dealerships, which spurred the automaker to revoke Gorman’s dealer licenses in 2002, the company said.
Though the automaker is owed back payments, it is not filing a countersuit against Gorman, said Chrysler spokesman Jason Vines.
The automaker said court documents made public Monday will prove the customers’ accusations of discrimination are unfounded.
One of the main documents cited by the company is the deposition of Jerrell Coburn, a Chicago resident who would be the lead plaintiff in a class action suit.
Chrysler claims Coburn’s loan application was never submitted to Chrysler Financial — so Chrysler could not have rejected it.
And when Coburn was shown a copy of his loan application during his deposition, he acknowledged that it did not include key financial information, including a past bankruptcy, that he had provided to the dealership.