Auto Exec’s Arrest Stunned Acquaintances : Probe: But industry insiders say they saw signs of trouble for former American Honda executive Jim Cardiges as early as 1992.
Children in the exclusive Nellie Gail subdivision dubbed Jim and Effie Cardiges’ home “The Castle” for its domed, octagonal turret.
Business associates who socialized with the couple agreed that the $760,000 house, with its extra-wide hallways and carpeted, air-conditioned garage, was indeed palatial.
The home and the couple’s refined tastes--he wore gold Rolex watches and $1,000 suits, she appreciated fine jewelry, both drove expensive cars--seemed to be in keeping with Jim Cardiges’ position as a high-ranking executive at Torrance-based American Honda Motor Co.
Neighbors described the family as warm, gentle people. Cardiges’ business associates described him as a regular churchgoer at St. Paul’s Greek Orthodox Church in Irvine, where he’d recently served as chairman of an important fund-raiser.
So friends and neighbors were stunned when federal agents arrested Cardiges at his home March 11 and charged him with taking an estimated $5 million in kickbacks and bribes in return for awarding Honda franchises to dealers across the country.
Cardiges and his family have declined to comment. But his attorney, Philip Israels, said Cardiges fully expects to “prevail in court.”
Federal investigators allege that the scheming was fueled by the law of supply and demand. As customers clamored for Honda and Acura automobiles in the 1980s, the economic value of those car dealerships skyrocketed.
As early as 1992, there were signs that Cardiges’ situation might be more complicated than it appeared. He surprised acquaintances and business associates by abruptly resigning from American Honda, where he had been the top executive in the U.S. sales division.
Cardiges, now 48, told associates then that he wanted more time to look after his personal businesses, including J. Car Consultants & Development, which he ran from an office in his home. Cardiges also spent considerable time--and as much as $1 million of his own money, according to court documents--on Worldwide Dyve Inc., a small company in Corona that made sportswear.
“His premise was that he’d resigned, which we all found very surprising,” said an Orange County businessman who socialized with Cardiges in the early 1990s. “It was unusual because someone of his age resigned so suddenly.”
Speculation among auto industry insiders about Cardiges was fueled in late 1992 when disgruntled Honda dealers in New Hampshire testified in federal court that company executives tilted the dealer selection process and car allocations to favor franchisees who paid bribes.
In early 1993, Cardiges’ successor in the Honda sales division acknowledged in an interview that “a small number of people have tarnished us.” And in June, a Detroit automobile-industry trade magazine reported that the FBI intended to question Cardiges.
Former Honda executives who pleaded guilty in recent months to related fraud charges told investigators that Cardiges logged various illegal payments in a black, leather-bound notebook, according to an affidavit filed by prosecutors in U.S. District Court in Santa Ana. The document says one former executive asserted that Cardiges kept $150,000 hidden in a brown paper bag in an unoccupied condominium.
The former executives also told investigators that Cardiges--whose annual salary at Honda was never more than $143,892--accepted automobiles for his children and niece from Honda dealers in Virginia and New York. Investigators allege that Cardiges accepted bribes and kickbacks, including a new Mercedes Benz and a $20,000 baby grand piano.
He allegedly ordered one car dealer to buy $24,000 worth of furniture for him at high-end retailers, such as Glabman’s Furniture in Costa Mesa. According to court filings, investigators were told that another dealer footed the bill for a Hong Kong shopping spree where Jim and Effie Cardiges purchased expensive vases for their home.
FBI agents confiscated some of the furnishings after searching the house for evidence on the night they arrested Cardiges, who is free on $200,000 bail and scheduled to appear in federal court in Concord, N.H., by March 31 to enter a plea.
Former Cardiges associates say they were shocked by the arrest and the allegations that subsequently came to light.
Among them is Al Hornsby, vice president of the Professional Assn. of Diving Instructors, a Santa Ana-based group that licensed Worldwide Dyve to manufacture sportswear in 1991. PADI contracted with Worldwide Dyve in large part because of Cardiges’ reputation as “an important executive at Honda,” Hornsby said.
The agreement was profitable for PADI and Worldwide, Hornsby said, but Cardiges opted not to renew the licensing agreement late last year.
Instead, Cardiges called real estate broker Larry Null, who had helped Worldwide Dyve find office space in Corona, for advice about “shutting the business down,” Null said.
Worldwide’s demise, Null said, followed a bitter disagreement between Cardiges and Harry Youngman, an accountant who also served as Worldwide Dyve’s manager. “It was real obvious that they had a falling out,” Null said.
Youngman, who handled Cardiges’ accounting and tax work for eight years, subsequently provided federal investigators with an inside look at Cardiges’ finances, according to an arrest warrant and criminal indictment filed in federal court.
Cardiges reported more than $1 million in “consulting income” from Honda dealers during 1991 alone, Youngman told investigators.
Youngman, who could not be reached for comment, also told federal investigators that Cardiges set up J. Car Consultants & Development to help shelter his non-Honda income. And, the court records say, he told investigators that Cardiges used his consulting income to buy investment properties and to pump more than $1 million into Worldwide Dyve.
The small clothing company’s ample budget made an impression on industry executives accustomed to dealing with less well financed start-ups. Cardiges’ willingness to spend money also was apparent to associates who visited the executive’s home.
During a party, one Orange County businessman said, Cardiges took guests on “a mandatory tour” that included the carpeted garage. Cardiges boasted of having bought a Mitsubishi 3000 GT sports car for his youngest son’s 16th birthday, the associate recalled. And he told of a garage in the Trabuco Canyon area where he stored more than a dozen other cars.
“He was very status- and image-conscious,” another former business associate said. “For him, what he drove and what he wore were very important. You knew that just from listening to his conversations about what to do with his money.”
