Chrysler, 2 Executives Face Odometer Fraud Charges

Chrysler Corp. and two senior executives were indicted today by a federal grand jury on charges of selling as new more than 60,000 vehicles that had been driven by company managers for as long as five weeks with the odometers disconnected.

If convicted on all counts, Chrysler could face a maximum fine of $120 million.

The 16-count felony indictment alleged that some of the cars were involved in accidents, were repaired and then sold as new vehicles. The company was charged with conspiracy to commit mail fraud, wire fraud and odometer fraud.

Two company executives, Frank J. O’Reilly and Allen F. Scudder, were each charged with a single misdemeanor count of conspiracy to commit odometer fraud and could face maximum penalties of one year in prison and fines.

Practice Goes Back to 1949

The indictment covers an 18-month period beginning in July, 1985, but it said the practice goes back to 1949 and alleged that millions of cars were sold to consumers under the same circumstances.

Copies of the indictment, handed up in St. Louis, were released in Washington by the Justice Department.

Chrysler has plants in the St. Louis area, and the investigation stemmed from the fact that when Missouri state highway patrolmen stopped Chrysler executives for speeding, they were frequently told by the executives that they hadn’t realized they were exceeding the speed limit because their odometers had just been disconnected.

When the Missouri state highway patrol informed Chrysler, the company responded by telling its executives that if they were stopped for speeding, they were not to use the disconnected odometers as an excuse, according to the indictment.

Scudder and O’Reilly were general plant managers for Chrysler and managed all Chrysler assembly plants. O’Reilly manages Chrysler’s Canadian operations while Scudder, who retired, is on special assignment for the company converting a former American Motors Corp. plant in Kenosha, Wis.