2 Former Honda Execs Guilty in Bribery Case : Autos: Pair had said the practice was accepted in firm’s corporate culture. Verdicts open door to flood of dealer lawsuits.
Two former top executives of American Honda Motor Co. were found guilty Thursday in connection with a massive bribery scheme involving dealers around the nation. The jury trial was part of what prosecutors call the largest commercial bribery case in U.S. history.
The verdicts were handed down against Dennis R. Josleyn and John W. Billmyer in federal court in Concord, N.H., after a four-month trial. The men did not deny taking the bribes, but argued that the practice was acceptable behavior in Honda’s corporate culture--a position both the car maker and the prosecution strongly denied.
Honda issued a statement saying the verdicts “close the book on a painful and difficult period in our history” and show that the convicted executives “deceived our company and abused our reputation.”
Josleyn, 48, was convicted of racketeering, fraud and conspiracy charges and faces up to 35 years in prison. Billmyer, 66, was convicted of conspiracy and faces up to five years’ imprisonment. Sentencing is scheduled for Aug. 28.
At least $15 million in cash and goods was accepted between 1978 and 1992 by a group of American Honda sales executives led by James Cardiges, an executive vice president who worked at the firm’s Torrance headquarters.
Prosecutors said the bribery ring demanded the payments from dealers in return for extra allotments of hard-to-get Honda and Acura models and for lucrative Honda franchises. The scam reached its peak in the 1980s, when hot-selling Hondas were in short supply.
The verdicts against Josleyn and Billmyer open the door for what is expected to be a flood of additional civil suits against American Honda by dealers not involved in the bribery ring. They are expected to claim that they sustained huge financial losses because of the favoritism shown to those who did pay bribes.
“Even if Honda didn’t know about it, that ignorance doesn’t protect the company from liability for improper acts its managers committed within the scope of their employment,” said Jesse H. Choper, a professor of corporate law at University of California, Berkeley.
At least 30 dealers nationwide have already filed damage suits against American Honda, and Los Angeles attorney Lawrence Silver said Thursday that he expects to file several new cases within a week.
A federal grand jury originally indicted 24 people in the case--20 of them former managers who worked at offices around the country. Only Josleyn, of Penn Valley, Calif., and Billmyer, of Raleigh, N.C., stood trial, however.
Charges against two Honda dealers have been dropped and the other dealers--including Cardiges--all pleaded guilty before the trial started in late February.
A federal investigation is continuing on the East Coast, said Assistant U.S. Atty. Michael Connolly. Evidence gathered during the probe is being referred to authorities in other jurisdictions as well. Connolly, who headed the prosecution team in New Hampshire, declined to provide any other information.
He said the trial proved that a group of renegade executives “harmed American Honda Motor Co.” He dismissed defense allegations--and testimony--that the company’s president and others who were not indicted knew of the bribery ring as early as 1983 but did not act until an in-house investigation began in 1991.
Defense attorneys said they plan to appeal the verdicts. Josleyn attorney Mark Sisti said he was “surprised and greatly disappointed” that the jury wasn’t swayed by defense testimony.
Many dealers and other auto industry insiders say now that there were plenty of clues to show that something was amiss at American Honda in the 1980s.
“It was common knowledge that something was going on,” said Scott Tassone, finance director at Costa Mesa Honda. “You’d see a bunch of sales reps wearing $1,000 suits who were making only $2,500 a month, and you had to wonder, how’d that happen?”
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Times staff writer Ross Kerber contributed to this report.
