Car Dealer Accused of Bilking Sellers Arrested in Hawaii

The former president of a Newport Beach luxury car dealership accused of bilking sellers out of tens of thousands of dollars has been arrested in Hawaii and will be returned to Orange County, police said Friday.

James Anderson, a Canadian national who ran the Auto Gallery dealership until earlier this year, was arrested by FBI agents at a house in Honolulu Thursday afternoon. Police said he was charged with 41 counts of grand theft and with unlawful flight to avoid prosecution.

Newport Beach Police Detective Douglas Parmentier said Anderson, 39, is suspected of pocketing thousands of dollars from the South Coast Highway dealership from June, 1987, until late January. He sold luxury cars on consignment but allegedly refused to pay the original owners their share of the selling price.

Parmentier said between 95 and 100 sellers lost their cars. The value of the cars--which included Porches, Mercedes-Benzes and at least one Rolls-Royce--totaled $1.6 million, he said.

2 Others Sought

Two other men, one of them the Auto Gallery’s former manager, Reginald Kennedy, are also sought in connection with the case.

Kennedy, also 39, of Newport Beach was expected to surrender to police within the next week on grand theft charges, according to detectives. Parmentier would not identify the third suspect, saying only that he had been an employee of the dealership.

Both Anderson and Kennedy were fired Jan. 11 by Laguna Beach Motors, which owns Auto Gallery.

Authorities said Anderson apparently left Orange County for Hawaii shortly after police began investigating reports of irregularities at the dealership. When police went to his rented Newport Beach house in January to question him, they found that the house had been abandoned.

Parmentier did not indicate whether any money had been recovered in Anderson’s arrest. He said a tip helped lead police to the suspect.

Anderson, police said, will be arraigned in Honolulu on Monday. If he waives extradition, he will be returned to Orange County immediately to face the charges.

One problem with the case, police said, is that the people who lost their cars also lost their share of the profit, police said. The people who bought those cars, police said, did nothing illegal and in fact legally own the cars.

Claims Denied

That has led to another problem: Because the cars were sold legally, some insurance companies have refused to pay the sellers anything under the vehicle-theft provisions of their policies.

“There are two sides to this story,” Parmentier said. “You can’t take 95 cars away from people who bought them in good faith. There are a lot of victims here.”

According to Parmentier, some insurance companies are now agreeing to pay for the losses.