Unpaid Auto Sellers Criticize Authorities on Handling of Case

Luxury-car owners who lost thousands of dollars after a Newport Beach dealership closed down last month directed some of their anger Tuesday night at local law enforcement authorities.

Fifteen of the car owners gathered at the Newport Beach office of lawyer Mark Roseman to vent their frustrations and review legal alternatives. Several of the victims insisted that police expressed little concern when they first complained about Auto Gallery as long ago as November.

“A sergeant said not to worry about it,” said Joey Dwiggins, 27, a yogurt company sales manager from Laguna Niguel who, along with his wife Susan, lost $36,000 when they left their 1986 Porsche for the Auto Gallery to sell.

Reports Not Accepted

Jo Moore, a real estate broker from Fullerton, said she first complained to Newport Beach police in early December that Auto Gallery had not paid her for the Dec. 6 sale of her Mercedes-Benz 560 SL, worth $43,000. And she said police advised her, too, not to worry.

Roy Heine, 32, a Laguna Niguel marketing executive who organized the meeting, said police were also hindering the victims by refusing to accept their stolen vehicle reports. Newport Beach police, after consultation with the district attorney’s office, decided that the crime in this case involved embezzlement, not vehicle theft, because the vehicles were legally sold to their new owners.

Without a stolen vehicle report, Heine said, the auto insurance companies are refusing to pay the victims anything under the vehicle theft provisions of their policies.

“So we are stuck,” said Heine, who lost proceeds from the sale of his $25,000 Mercedes.

Newport Beach police and the Orange County district attorney’s office, invited to the evening meeting, declined the invitation and instead set up their own press conference earlier Tuesday. They denied the allegations and charged that some of the 86 people victimized by Auto Gallery of Newport Beach are lashing out for lack of an acceptable recourse.

“We are aware that there’s a lot of upset people, as I would be if this had happened to me,” said Newport Beach Detective Sgt. Todd Wilkinson.

But the real object of public anger, law officers said, should be the Auto Gallery, which owes anywhere from $10,000 to $50,000 to each of the car owners who left their vehicles at the business with an option for the dealership to buy them. Police believe that Auto Gallery President James Anderson left town last month amid an investigation into the possible embezzlement of an estimated $1.3 million in funds from the dealership. He has not been located.

Police said they believe Anderson, 39, fled his rented Newport Beach house with the money. Charges have not been filed pending completion of the police investigation, which is expected in another two weeks.

After Anderson could not be located, corporate owners of the Auto Gallery shuttered the business and filed for bankruptcy protection in federal court. Newport Beach police spokesman Bob Oakley said the car owners have the option of trying to get a share of the defunct company’s assets, which are now in the hands of a court-appointed trustee.

But Roseman, an attorney for some of the victims, said that is not a good option because the victims would only be placed on a long list of creditors. Instead, he urged the victims to file stolen vehicle claims with their insurance companies. If they get a refusal, which he said is likely, Roseman told the victims they could file a bad-faith lawsuit.

Roseman said his contention in the lawsuit would be that embezzlement constitutes theft, and as such should be reimbursable under the auto theft provisions of the victims’ insurance policies.

To accept the reports would enrage as many people as it would please, said Deputy Dist. Atty. Mark Sevigny. If the victims were allowed to file stolen vehicle reports, he said, the cars’ new owners could risk having their automobiles repossessed.

“We will have another group of citizens threaten us,” Sevigny said in the press conference at Newport Beach police headquarters.

Police said they have diligently investigated the case. Oakley said the initial complaints against Auto Gallery started in July but involved payment disputes that were resolved by a simple telephone call from police.

A criminal investigation into the dealership began in November after the complaints increased, Oakley said. Reginald Kennedy, 39, Auto Gallery’s general manager, was arrested Jan. 6 on charges of grand theft by false pretense for allegedly sending bad checks as payment for 10 BMWS owned by a North Hollywood dealership.

On Jan. 11, both Kennedy and Anderson were fired by corporate officers of Auto Gallery’s parent, Laguna Beach Motors. Newport Beach police went to Anderson’s home on Jan. 13 to question him about missing funds, but discovered that he had vacated the house.

Many of the victims at the meeting said they are left owing payments on their vehicles. Duane Campbell, 31, a quality control manager from Santa Ana, said he owed $7,000 to a credit union for a van he had left in the hands of Auto Gallery. Campbell said that after the van was sold in November and he received no money, he told his credit union he could not make any more monthly payments. Consequently, he said, his credit is ruined.

“I can’t buy a toaster on credit right now,” Campbell said.