Missing Couple Blamed for Alleged Car Scam : Courts: Judges uphold lawsuit claiming that two dealers contributed to losses suffered by 14 others by unquestioningly buying autos they should have known were underpriced.
Call it the battle of the Toyota dealerships. Or car wars.
Nearly three years after car brokers Dan and Mayumi Nishikawa bought first-class flights to Japan for themselves, their children and their cat, auto dealerships throughout Southern California are winding up a messy civil lawsuit, which alleged that the couple wrote $1.8 million in rubber checks in 1991 so they could, in effect, defraud them out of 129 pricey automobiles.
Lawyers for the car dealers say the Nishikawas, who cannot be found, told car dealers that they and their Torrance-based PIAA Inc. car brokerage were “ethnic brokers,” who bought new cars and sold them to Asian and Asian-American buyers wary of non-Asian car salespeople.
But lawyers for 14 car dealerships--13 Toyota franchises and Lexus of Santa Monica--alleged the Nishikawas actually had pulled off a “Ponzi-like scheme” on them by gaining their trust over several years, then writing bad checks on one huge, final purchase of cars.
The dealers alleged in a suit in Los Angeles Superior Court that the Nishikawas were aided by a lack of caution at Toyota of North Hollywood and Koreatown-based Han Kook Motors Inc. The lawsuit--pitting the 14 dealerships against the two others--alleged that the Nishikawas resold many of the autos they bought to those two dealerships, at prices so low the dealerships’ executives should have been suspicious of the sales.
Last Thursday, a state appellate court panel generally agreed with that assessment. The three-judge Appellate District panel, with little comment, upheld a 1993 Superior Court ruling in favor of the 14 dealerships. The panel’s decision means that whatever happened to the money--and to the Nishikawas--the lower court order stands, requiring Toyota of North Hollywood and Han Kook Motors to pay about $1.8 million to the dealerships for the cars, plus court costs and interest.
“It was the basic principle of robbing Peter to pay Paul until the whole thing collapses,” said Norris Bishton, a lawyer representing the 14 dealers, who also owns one of them, Toyota of Garden Grove.
Court testimony by an employee of PIAA--or Pacific Imported Automobiles of America--described the Nishikawas as doing very well for themselves--trading up from a small rented South Bay apartment to several posh houses, and living a lavish lifestyle complete with weekly shopping trips to Rodeo Drive for $5,000 suits and a white limousine to ferry their children to school, according to court documents.
Just about everything else in the case remains hotly contested, including whether the Nishikawas spent the money on their posh lifestyle as they went along, lost it in bad business deals or absconded with the loot at the end, when the alleged scheme collapsed.
Toyota Motor Sales USA, which oversees all Toyota franchise dealerships in this country, declined to comment. “They tried to stay out of it, legally they stayed out of it, but they are in the middle of it,” because they must deal with parties on both sides, one lawyer said of Toyota.
One Toyota executive, who asked not to be identified, agreed, saying the parent corporation has taken great pains to stay neutral. “It would be between the dealers,” said John Matt, vice president of sales for Toyota Motor Sales USA. “Certainly there was a dispute and a conflict between the dealers involved.”
According to testimony and court documents, the Nishikawas were middlemen of sorts who over several years bought thousands of brand-new Toyotas and Lexuses from dealers from Carlsbad to Thousand Oaks to San Bernardino, then sold them at cost, or a loss, to Han Kook or the North Hollywood dealership, while keeping some of the proceeds for themselves.
But all that, lawyers for the 14 dealerships allege in court documents, was part of an even larger setup to gain the trust of dealership executives before defrauding them in a big final score. In October, 1991, the Nishikawas bought 179 new cars for about $2.6 million, sold most of them to Toyota of North Hollywood and Han Kook Motors, then left the country before anyone realized they had paid for the cars with nonexistent funds, lawyers allege in court documents.
Toyota of North Hollywood and Han Kook Motors “should have been more suspicious that something was wrong,” because the Nishikawas had been selling them cars for less than the Toyota factory’s wholesale price, Bishton said. “They knew (something was wrong), but they chose to look the other way.
“It was like someone was saying to them, ‘We’ll sell you $100 bills for $90 apiece,’ ” Bishton said. “The court found they . . . chose to look the other way while continuing to buy the cars in bad faith.”
As for the Nishikawas, Bishton said, he tried to get authorities to extradite them to the United States to face criminal prosecution. “I could never interest law enforcement in looking for them,” Bishton said. “It has been very frustrating. They have got away scot-free.”
A spokeswoman for Los Angeles County Dist. Atty. Gil Garcetti and an official with the state Department of Motor Vehicles said they were unaware of any criminal investigations into the Nishikawas or the car deals.
A lawyer for Toyota of North Hollywood and Han Kook Motors sees things entirely differently. J. Douglas Post contended that his two clients did nothing wrong, and that at least some of the other 14 dealers were improperly benefiting from the bulk sale of the cars to PIAA, falsely reporting them in such a way as to rack up lucrative incentive benefits from the factory.
Bishton denied any wrongdoing on the part of his clients.
Indeed, Post said, the court failed to uphold most of the arguments by lawyers for the 14 plaintiff dealerships, including their allegation that the Nishikawas and the two dealerships had engaged in a conspiracy or unfair competition.
Post said the 14 dealerships prevailed only on a so-called “conversion claim” against North Hollywood and Han Kook Motors, in which they claimed continuing ownership rights to the cars because they were never paid by PIAA. The two dealerships, however, claimed that the original 14 dealers lost their ownership rights when they sold the vehicles to PIAA on credit, and not for cash.
Where the cars involved are now was unclear. Lawyers said they were probably resold long ago.
“It is way too complicated to explain,” said Post. “We thought we should have won everything.”
Post said that the 14 dealers sought $15 million in their original suit, and that that figure was whittled down to a judgment of less than $2 million.
As for the Nishikawas, Post said: “They lost the money. They didn’t go back to Japan with a $2-million pot of money. There may have been shopping trips to Rodeo Drive and whatnot,” Post said.
“But most of the cars that they didn’t get paid for was money lost by the Nishikawas. PIAA lost that money in the business of buying and selling cars.”
Post said his clients’ only failing was an innocent one. “The judges found that we should have known that these plaintiffs retained some ownership rights to the cars they sold to PIAA by virtue of that fact that they didn’t end up getting paid,” Post said. “There was no way for us to know that.”
He said the Nishikawas were selling the cars at a loss to build up a relationship with the dealers on both sides, and that they ultimately wanted to recoup their losses by opening a retail facility in Torrance to sell cars to the public.
Much speculation remains regarding exactly what it was the Nishikawas were trying to accomplish by buying so many cars and then selling them at or below their cost to other dealers.
Some speculated that they had planned to open their own dealership or car lot, and recoup some of the profits. But since the Nishikawas never answered court summonses demanding that they appear in court for the civil trial, no one may ever know, say lawyers involved.
“I don’t know if we’ll ever know exactly why they did it. It sounds like an awful way to run a railroad,” said another attorney for the 14 dealerships, Thomas S. Nessinger. “They purchased plane tickets for themselves, their children and their cat in 1991, just when the whole thing was crashing, and just kind of left some American employees to sit there and face this mob. So I guess the cat is on the lam too.”
