O.C. Auto Chain’s Financial Dealings Anger Customers

The financial problems of Jim Slemons’ automotive empire have left at least 10 Southland residents fuming because Slemons dealerships failed to pay nearly $200,000 in loans for cars after accepting them as trade-ins, The Times has learned.

Several outraged Slemons customers say their credit records have been sullied by loan delinquency notices on cars they traded in months ago. And in at least three cases in the past four weeks, checks issued to Slemons customers to pay off trade-ins have bounced.

The cars were trade-ins at the former Jim Slemons Acura and Honda dealerships, both of which have been sold in recent months, and at Jim Slemons Leasing and Jim Slemons Imports in Newport Beach, a Mercedes-Benz dealer.

Malcolm McCassy, general manager of the Slemons chain, acknowledged the organization’s growing financial troubles Wednesday and said company officials are exploring several ways to raise cash, including the sale of all or part of the Mercedes-Benz dealership.

McCassy said that after The Times detailed Slemons’ financial woes in an article early this month, he received two offers from area car dealers to buy Slemons Imports. He said talks are being held with one of those dealers; he declined to identify either of them.

But sources said one is the Penske Corp., a national organization that owns several auto dealerships in Southern California.

In addition, McCassy said, several oral proposals have been received from investors who want to buy a sizable interest in Slemons Imports.

Slemons has also hired a Santa Monica-based business consulting firm to try to turn the operation around.

In the meantime, Slemons personnel have been told by investigators from the Newport Beach Police Department and the state Department of Motor Vehicles that any bad checks written after July 10 will result in criminal prosecution.

Delbert L. Wright, supervising deputy district attorney at Harbor Municipal Court in Newport Beach, said he was apprised of the bad checks issued before that date but did not believe that there was enough information to build a criminal case around them.

The Times has identified three bad checks with an aggregate value of $51,000 that were issued by Slemons dealerships before July 10.

In addition, a San Diego attorney retained by Marine Midland Bank in New York said his firm is preparing a lawsuit against the various Slemons operations, which will allege that at least five leased cars financed by the bank were traded in months ago and have not been paid off.

The suit will list $110,000 in unpaid balances owed by Slemons, and several more cases may be added later, the attorney said.

Locally, one Newport Beach couple, Andrea and John Bertrand, filed a $25,000 damage suit Wednesday against the Slemons operation.

Andrea Bertrand, a Santa Ana escrow agent, said she and her husband, a professional yachtsman, traded in a leased 1989 Acura Legend a few days before Slemons’ Acura dealership was sold in early April.

They leased a 1991 Acura, and Slemons was to pay off the $21,135.78 owed on the 1989 model, she said.

Bertrand said she has since received several delinquent notices from Chase Manhattan Bank, which financed the 1989 Acura lease and has had several heated discussions with Slemons officials.

In a June 19 letter, the chief financial officer for Slemons Imports, Robert O’Keefe, said the lease had been paid off and wrote that making the payoff “was the sole responsibility of Jim Slemons Imports. . . . We assume full responsibility for any late charges you incur as a result of our lateness.”

On July 18, Bertrand said, she received a call from a collections agent with Chase Manhattan. “He told me he had some bad news, that the check from Slemons had bounced.”

Walter and Natalie Hochner, owners of a printing business in Irvine, said they are still making $750 monthly payments on a Jeep Wagoneer they traded in at Jim Slemons Leasing on April 10.

After complaining to Slemons personnel several times about the tardy payoff, the Hochners said, they were given an $18,900 check to send to their lender.

That check, issued June 26, was returned unpaid by the bank in early July, Walter Hochner said.

A third bounced check from Slemons resulted in a delinquency notice on Santa Ana real estate investor Scott Mosher’s record.

Mosher said an $11,000 check that Slemons issued in late July to pay off a 1988 Thunderbird taken in trade in April was returned unpaid July 15. On Tuesday, Mosher signed an accord releasing Slemons from liability for the late payments if the car is paid off within 30 days--and if Slemons installs a fancy stereo outfit in Mosher’s new Mercedes-Benz.

Ken and Kim Lepore never got a payoff check from Slemons. Instead, the Rancho Santa Margarita couple are fighting with Mercedes-Benz over delinquent lease payments on a car they traded to Slemons in early June.

The Lepores have received a delinquency notice from Mercedes-Benz Credit Corp., which financed the lease on the Mercedes they traded to Slemons.

“We called and told them that we had traded the car in and that Slemons was supposed to pay it off,” Ken Lepore said, “but they were pretty rude and just told us that it was our responsibility.”

A spokeswoman for Mercedes-Benz Corp.’s Santa Fe Springs office said Wednesday that the company is “distressed” and is investigating the situation.

Mercedes-Benz might well be distressed. Slemons is a major flag-bearer for the German luxury car maker. In 1990 it was the nation’s fourth-largest Mercedes-Benz dealership in volume, selling 1,231 new Mercedes-Benz automobiles, according to an Auto Age magazine survey.