DAVENPORT, Iowa — General Motors filed a lawsuit against Iowa
dealership Leep Chevrolet, which does business under the fictitious name
of Lujack Chevrolet. The domestic automaker charged the operation with
“widespread fraudulent and unlawful conduct.”
According to court
filings, GM alleges that Leep implemented a scheme — known as the “Daisy
Chain” plot among the Leep franchise — to defraud the automaker in
reporting “dozens, if not hundreds” of false retail sales of new
Chevrolet cars to customers.
GM alleged that the dealer then
transferred those falsely reported vehicles to affiliated dealerships
controlled by Michael R. Leep, Sr., who then offered them for sale at
his Indiana-based group. The vehicles, GM reported, were marketed to the
public as “used vehicles that were just like new.” In the complaint, GM
said the alleged scheme violates the GM Dealer Sales and Service
Agreement and applicable law.
In an e-mailed statement, Gurley
Leep’s COO, Don Reese, denied the charges. “In reviewing the notice, we
disagree strongly with the allegations and consider them entirely
unfounded and without merit,” he wrote. “This action is unprecedented
and will be vigorously defended. We have prided ourselves on having
exceptionally strong relationships with the 30 manufacturer partners we
have represented over the past 35 years. While dealers and manufacturers
have disagreements from time to time, we are confident that when the
facts are presented, the courts will find [them] in our favor.”
A spokesperson for General Motors declined to comment on the ongoing litigation.
to GM’s claims, various employees of the Leep Group were involved in
multiple car purchases, with some transactions even occurring in the
same day, while more elaborate paperwork involved sales of as many as 27
vehicles to one employee in a matter of about two months. The reason
for the misleading reporting, GM claimed, is that Leep Chevrolet was
subject to closing its doors in a “wind down agreement” during the
period of GM’s corporate bankruptcy.
Included in the court filing
were monthly sales transactions from 2011 and 2012. They showed that the
operation sold 38 new vehicles in February 2011, but then reported 282
vehicles sold in November 2012 — the dealership’s best monthly total
that year. With the favorable sales and fake customer surveys, the
dealership reportedly received thousands of dollars in payments from GM
under the GM Standards for Excellence program.
at substandard levels for an extended period of time, Leep’s reported
retail sales in November 2012 were among the highest volumes reported
that month by any Chevrolet dealer in the country,” the complaint read.