8 Officials Plead Guilty in Honda Bribery Case : Courts: Five are from O.C. Five more ex-executives, including Laguna Hills man, charged in kickback scheme.

Eight former executives of American Honda Motor Co., including five Orange County residents, have pleaded guilty in connection with a $10-million bribery and kickback scheme spanning 14 years, federal prosecutors said Monday.

Five other former Honda executives, including a senior vice president from Laguna Hills who allegedly received $5 million in illegal cash, cars and a baby grand piano, were charged Monday with accepting kickbacks in return for providing preferential treatment to dealers.

The 13 former executives face up to 35 years in prison on fraud-related charges in connection with awarding dealerships and determining which dealers got the company’s most popular models, according to Assistant U.S. Atty. Michael J. Connolly in Concord, N.H., where the investigation began. Efforts to reach the defendants for comment were unsuccessful.

“American Honda is outraged and saddened by the criminal activities,” said Thomas Elliott, executive vice president of the company. “These illicit acts represent a betrayal of trust that harmed the company and defrauded American Honda of millions of dollars. . . . The U.S. attorney has acknowledged that American Honda is a victim of fraud in this case.”

Federal agents arrested Laguna Hills resident Stanley James Cardiges, 48, at his Nellie Gail subdivision home on Friday and confiscated evidence, including furniture and financial records, said Steve Katzman, assistant U.S. attorney in Santa Ana. Cardiges worked for American Honda from 1977 to April 22, 1992, most recently as a senior vice president.

At a hearing Monday in Santa Ana, U.S. District Judge Ronald W. Rose set bail for Cardiges at $200,000. Cardiges, who was charged with racketeering, mail fraud and conspiracy, faces up to 30 years in prison if convicted on all charges.

Court papers made public Monday allege that Cardiges took about $5 million in illegal kickbacks from dealers in return for special consideration. Katzman said court records allege that dealers gave Cardiges three Rolex watches, 10 $1,000 suits and cars that were driven by his family members.

Investigators allege that dealers also gave Cardiges a baby grand piano and $24,000 worth of furniture, and that Cardiges used cash from dealers to finance Worldwide Dive Inc., a company he founded in 1991 to sell sportswear to diving companies.

The criminal charges made public on Monday and the eight guilty pleas 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 26 states, including California, Connolly said, where investigators reviewed Honda’s relationships with half a dozen Honda and Acura dealerships from Chula Vista to Palo Alto.

The scheme involved 30 to 40 of American Honda’s 550 dealers and took place from 1979 to 1992, Connolly said. Federal court documents suggest that the kickback schemes reached into San Diego County and the Sacramento area, but not into Orange or Los Angeles counties.

Federal investigators allege that between 1979 and 1992, some of the defendants took an estimated $10 million in bribes, including payments of between $100,000 to $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.

An internal investigation by Honda uncovered some schemes designed to defraud the company, Elliott said, but the incidents were viewed as “isolated violations.”

Some of the 13 executives worked out of American Honda’s Torrance headquarters. The rest, the company said, worked in regional offices across the nation.

The four other former executives indicted on Monday were Dennis R. Josleyn of Penn Valley, Calif.; David L. Pedersen of Roswell, Ga.; John W. Billmyer of Raleigh, N.C.; and Damien C. Budnick of Orlando, Fla.

The FBI said that agents with warrants to seize furniture, gifts and records arrested Cardiges at his Laguna Hills home on Friday. The four other executives were arrested or surrendered on Monday, the agency said.

The eight who pleaded guilty to charges including conspiracy were Robert N. Rivers of Irvine; Mark L. Benson of Corona del Mar; Thomas A. Caulfield and Robert A. Mazzitelli, both of Foothill Ranch; Edward A. Temple of Newport Beach; Hugh P. Cooper of Wilmington, N.C.; Frederick Meis Jr. of Coppell, Tex.; and Roger Novelly of Medford, N.J.

Assistant U.S. Atty. Connolly would not say whether the federal investigation will be broadened to include other automobile companies.

“This has been focused on American Honda,” Connolly said. “Since it’s an ongoing investigation, I can’t tell you whether or not it will eventually expand.”

Elliott of American Honda said that the company, the U.S. distributor for Japan’s Honda Motor Co. Ltd., will take “aggressive legal action” against those who are found to have defrauded the company. Honda is also developing a “financial disclosure policy” that will be applied to all senior executives, he said.

George Peterson, president of AutoPacific Group in Santa Ana, said the payment of bribes “hasn’t been all that common in the industry in the last 15 to 20 years.”

“The rumors about American Honda have been going on since at least the early 1980s, but it just isn’t the sort of thing you’d expect to hear from Ford or Chevrolet dealers,” said Peterson, whose company offers consulting services to auto makers, importers and dealers. “It seems to stem from having a hot brand and not enough cars to supply all your dealers. Having a Honda dealership in the late 1970s and 1980s was a license to mint money.”

With new-car sales still slumping after four years of recession, there is little incentive now for dealers to pay bribes to get franchises or to secure more cars for their lots, said Jeremy Anwyl, an auto dealership marketing consultant in Santa Ana.

The conduct described in the Honda indictments was “part of the industry a long time ago,” he said. “It isn’t much of an issue any more.”

Times staff writers John O’Dell and Susan Christian contributed to this report.