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DeLorean Cleared by Jury in Fraud, Racketeering Case

Times Staff Writers

A federal jury found former auto maker John Z. DeLorean not guilty Wednesday of charges that he swindled $8.5 million from backers who bankrolled his failed sports car company in Northern Ireland.

“Praise God,” the dapper, 61-year-old DeLorean muttered as his eyes filled with tears at the end of his ten-week trial. The verdict marked the second time in two years that DeLorean, once a shining star in the board rooms of General Motors, had survived a serious scrape with the law.

In 1984, another federal jury in Los Angeles acquitted him of drug trafficking charges after a sensational seven-month trial in which prosecutors contended DeLorean had tried to smuggle $24 million worth of cocaine into the country to raise cash to save his foundering car firm.

The flamboyant, silver-haired DeLorean has been in and out of the limelight since quitting his job as a top GM executive and announcing plans in 1975 to produce his own, futuristic looking sports coupe called the DMC-12. The scheme was backed by the British government, which granted concessions for a factory in Northern Ireland, and by dozens of investors, including celebrities such as Johnny Carson, Sammy Davis Jr. and Roy Clark.

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Separate Paths

DeLorean also made headlines with his 1973 marriage to Cristina Ferrare, a stunning fashion model who stood by his side during the cocaine trial and then left him a few weeks after it ended. She became a Los Angeles television talk show hostess, while the highflying DeLorean became a “born-again” Christian.

He was indicted again last year in Detroit on 15 counts of racketeering, fraud and tax evasion, in what the government alleged was a complex scheme in which DeLorean used Swiss and Dutch banks, as well as shell corporations registered in Panama and Liberia, to embezzle money from more than 140 of his investors. If convicted of all the charges, he could have faced up to 87 years in jail and $82,000 in fines.

“I can’t even put into words the wonderful feeling,” DeLorean told a news conference after the verdict was announced. " . . . I thank God for giving me a chance to go back and start my life anew.”

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Still Has Troubles

Though Wednesday’s decision freed him from the threat of jail, DeLorean’s legal troubles are far from over. He is still fighting a flurry of claims from the British government and other creditors stemming from production of his gull-winged dream car. About $20 million of DeLorean’s assets have been frozen by court order pending the outcome of bankruptcy proceedings, which resume in Detroit next month.

Mayer Morganroth, an attorney representing DeLorean in more than a dozen civil suits filed by investors, said Wednesday’s verdict should bolster his chances of winning those cases as well. “This supports the position of those who held all along that John didn’t do anything wrong,” Morganroth said.

DeLorean never took the stand but as the trial progressed, he repeatedly told reporters that the charges against him were part of a government vendetta to make up for his acquittal in the California case. And, though steadfastly maintaining his innocence, DeLorean admitted after the verdict that he had been afraid of a conviction. “When you’re a guy my age, any sentence is a life sentence,” he told reporters.

May Resume Career

When asked about his future plans, DeLorean said he might want to resume his career as a car maker. “I still know an awful lot about the auto business,” he said. “I would like to help America become competitive again.”

Howard Weitzman, DeLorean’s lawyer in both the Los Angeles and Detroit cases, hinted after the verdict that his client was considering some kind of legal action as reprisal against the government. “We’re evaluating a number of alternatives and that’s clearly one of them,” Weitzman said.

Prosecutors refused comment after the verdict, but U.S. Atty. Roy C. Hayes later issued a written statement. “The government believes the facts were fairly presented to the jury and accepts the verdict of the jury,” it read.

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The government claimed DeLorean in 1978 used a Geneva-based company he controlled as a front to funnel $8.5 million in investor funds into his own personal accounts and then used it to repay personal loans. But defense attorneys contended the money was a legitimate loan that came from Colin Chapman, a British race car designer involved in the design of DeLorean’s vehicle. Chapman died in 1982.

Stephanie Droll reported from Detroit and Bob Secter from Chicago.


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