8 Plead Guilty, 5 Indicted in Honda Motor Fraud Case : Litigation: Former executives of firm’s U.S. division allegedly took bribes from would-be dealers.
Federal prosecutors Monday announced indictments against five former executives of Torrance-based American Honda Motor Co. and said eight others have pleaded guilty to charges stemming from alleged preferential treatment in awarding car dealerships and allocating certain popular Honda models to dealers.
Assistant U.S. Atty. Michael J. Connolly in Concord, N.H., said Monday that the charges stemmed from activities that occurred between 1979 and 1992. The individuals face charges ranging from fraud and bribery to racketeering and conspiracy.
Some of the former Honda executives were accused of taking an estimated $10 million in bribes, including payments of between $100,000 and $750,000, from people seeking new Honda and Acura dealerships. The indictment also alleges that some of the executives took cash and expensive gifts from dealers in return for increasing allotments of the most popular Honda and Acura models.
Some of the 13 executives face up to 35 years in prison on fraud-related charges, Connolly said.
The criminal charges and guilty pleas--entered in recent months--followed a yearlong federal investigation sparked by a 1991 civil lawsuit in which a New Hampshire dealer alleged that the company failed to deliver his allocation of Acuras.
The investigation subsequently spread to dealers in 26 states, including California, Connolly said.
American Honda executives are cooperating with investigators, federal prosecutors said.
The company is “outraged and saddened . . . (because the) criminal activities . . . represent a betrayal of trust that harmed the company and defrauded American Honda of millions of dollars,” American Honda Executive Vice President Thomas Elliott said Monday in a news release.
An internal investigation by Honda uncovered some schemes designed to defraud the company, Elliott said, but the incidents were viewed as “isolated violations.”
The five executives charged Monday include former Senior Vice President Stanley James Cardiges of Laguna Hills.
The FBI said agents with warrants to seize furniture, gifts and records arrested Cardiges on Friday at his home.
Among the eight who pleaded guilty to charges including conspiracy are Robert N. Rivers of Irvine; Mark L. Benson of Corona del Mar; Thomas A. Caulfield and Robert A. Mazzitelli, both of Foothill Ranch, and Edward A. Temple of Newport Beach.
According to the indictments, Cardiges and Dennis R. Josleyn of Penn Valley, Calif., diverted as much as $3 million in advertising and sales training funds to their own pockets. Investigators also allege that executives accepted Rolex wristwatches, $1,000 business suits, furniture and cash.
Connolly would not say whether the federal investigation will be broadened to include other automobile companies. “Since it’s an ongoing investigation, I can’t tell you whether or not it will eventually expand,” he said.
Elliott of American Honda said the company, a subsidiary of Japan’s Honda Motor Co., will take “aggressive legal action” against those who are found to have defrauded the company.
Honda is also developing a “financial disclosure policy” for all senior executives, he said.
